The connected revolution will not be televised

Aug. 4, 2021
Several industry speakers talk with Strategies in Light co-chair CLIFTON STANLEY LEMON about how the SSL business should evolve its approach to lighting and controls integration.

In developing the program for this year’s Strategies in Light conference, we have carefully curated speakers and topics that depart from and even challenge the expected stories from the usual suspects. At this moment in history especially, we need fresh ideas and perspectives that advance discourse and help guide our decisions and inspiration as we build business models, organizations, systems, and products for the future. We also have done our best to provide a richer view of the current state of the industry and potential future scenarios that go beyond merger and acquisition (M&A) activity and current and emerging market characterization.

After the advent of solid-state lighting (SSL), the lighting industry has been longing for a heroic “killer app” of comparable impact and salience. Some of this mindset comes from Silicon Valley, which was built on Moore’s Law — an exquisitely dependable metric by which firms could gauge investment risk and reward. Indeed, the roots of SSL technology development and adoption are in the Valley, with one of the key players, Lumileds, being a joint venture of Philips and Hewlett Packard.

SSL efficiency has arguably effectively peaked at feasible commercial scale, and there is much focus now on guiding a maturing technology and ensuring quality. That this does not represent explosive market growth creates consternation for many. My money is on the Internet of Things (IoT) and connected lighting, but this also is perhaps the least understood and most overhyped topic of all things lighting related. Several Strategies in Light speakers — myself included — will make the case at the conference for the huge impending market impacts of grid-connected buildings, which is where IoT and lighting connect in the most important way. How the future of lighting unfolds has much to do with how we manage technology integration, design, workforce development, automation, and business models.

I recently had a most refreshing exchange of ideas with three Strategies in Light speakers: Jim Collin, partner and head of sales, architectural lighting, for Swedish firm Annell Ljus + Form AB; Michael Kershner, CEO of Innovative Lighting Consultants; and Joe Dung, director of total solutions for the Bay Area rep agency sixteen5hundred. Each is involved in innovative business models, customer-focused solutions, and emerging technology integration.

We started by exploring definitions of the term “integrated controls.”

Joe Dung: When I hear the term “integrated controls” from the lighting perspective, it primarily interfaces with the idea of using hardware on the lighting side, to help better suit the space from the HVAC [heating, ventilation, and air conditioning] side. Primarily that’s around occupancy-based controls today. There’s so much more that we’re able to do beyond that, of course. But it kind of begins with occupancy and occupancy data.

Jim Collin: I would go even further with integrated controls, definitely integrating it with the user experience and user control — not just simply based on occupancy. That’s a step up from scheduled, but it’s still kind of too simple for it to work in a greater scheme. And I like the fact that lighting then might take control over HVAC. This is the opposite of what has been going on at least in Sweden, where I’ve been based for the last 10 or 15 years, where HVAC controls the lighting. Of course, it’s better if lighting and HVAC controls are integrated, but that’s just two systems and we need to go even beyond that. We need to have systems integrated not only in the building, but integrated into the business that takes place in the building. Make the user the central focus.

Michael Kershner: We think about this a lot. You guys are totally right about where we’re going with technology, with controls and lighting. The thing we’re not thinking about is how do we make it beneficial to the people who are actually paying for it? For instance, real estate developers — what’s their benefit? Construction costs went up [about] 20% in the past year. And we’re saying to them, “Hey, guess what? You got to meet the next IEC code, and you gotta have these integrated controls.” And they’re [asking], “Why? The contractors are going to charge me more to install them; they’re not going to give me a discount because they haven’t been trained.” Acuity’s stock went up dramatically five years ago because everyone thought they’re becoming an IoT company, but then they couldn’t really figure out how to actually make it beneficial to all the players in the chain, and so in turn, it didn’t really happen then. How do we actually do that? How do we actually make it beneficial to everyone except for the techie lighting people that know about it?

Clifton Stanley Lemon: All excellent and useful perspectives! My big takeaways are: 1) Making controls occupancy-based is an important paradigm shift. Most HVAC control systems in the US at least are currently schedule-based, not occupancy-based like lighting systems. 2) “Integrated” controls may be also thought of as being integrated with user experience, which is definitely not the case with most control systems. 3) Integrating lighting into the business of a building’s tenants and users is even more visionary. How do we do that? 4) The economic incentives for building owners to accept complex new measures like integrated controls have been at the root of problems in adoption and implementation for some time, and enter into many, if not most, of the discussions I am privy to that concern technology adoption.

Since we started talking about IoT in lighting, one of the top benefits was probably asset management. Another is space utilization and people management, which could be surveillance and security or health benefits, like who’s been vaccinated, how close are people, where are they, what are their movement patterns. These are all important but not really the killer apps we’ve expected from IoT all along. That’s what we’re talking about, right, Michael? LED was a killer app. Now what?

MK: But the important question is also who’s the end user, the end customer? If we just think about it as the electrical distributor, or the electrical contractor, or the lighting designer, the specifier — they’re not the end customer and don’t have the same, goals, and cares in line, right?

JD: Michael, I think you hit the nail on the head. I run into these same challenges. We know these are great ideas, to integrate your lighting with smart controls and smart technology into your fixtures, that integrates to your HVAC that can do asset tracking and IoT — all these bells and whistles, we can really do this. From a user experience, data perspective, installation perspective, it makes sense as being the right solution, right? There can be gaps, but for a holistic approach, it is a great solution.

For me, it’s basically about the contracting model. The cost mostly doesn’t really justify these types of solutions just yet. When it comes to going out to bid, and when someone has to pay for it, for some reason, the numbers never make sense. So there’s this huge disconnect between the value of the solution, perceived or real, and the cost that the owner has to pay. We’re running into big challenges with contractors because it’s all so new. Now we’re dividing bidding between scopes of work from division 26, division 23, and even division 25. Now we have all these different contractors that don’t know how to bid this new solution — they’re marking things up too much or double bidding on the same task, even though it’s well defined in the responsibility matrix. Like with LEDs and to some extent with circadian, tunable, or dynamic lighting, I believe that codes are one of the driving forces to get us to a more advanced level of integration of lighting with software, applications, IoT, and other building systems. In my experience, the only people willing to pay for this stuff are on the high end where the use cases are well defined, like big box retailers, or campuses or big developers that have huge portfolios of property under management. They’re the only ones willing to pay for it because they’re willing to make the initial investment. But all the others — the mainstream, the commercial TI, that kind of stuff — integrated installations are few and far between.

CL: Jim, what are you seeing in Scandinavia, Europe, and in the areas you’re working on, in terms of characterizing the return on investment (ROI) and the value to the building owners?

JC: I think our problems are fairly similar to what I’m hearing here. If I jump straight to finding a solution for it, I’ll probably just fall into using a lot of buzzwords. We’ve spoken a lot about the disruption in our industry as something bad and something stressful. In this case, I think it’s actually a great opportunity. I don’t just want disruption; I want a full revolution. Because we need to free buildings from lighting and put lighting on tenants rather than buildings. I think the main issue, the main problem that we face is that we think of what we do as lighting up buildings — buildings don’t need light, people need light. If we take lighting away from the building and put it out to tenants, then the initiative, the incentive, the business models can make sense in a much better and easier way. That’s going to take a revolution of some sort because all the contractors are going to dislike it, because it’s taken away part of their business — it’s definitely a disruption for them. They’ve done it the same way for 30 or 40 years and want to do it forever like this. So I think we need to work together to change it and place the ball where it belongs — with the end user.

MK: I started a company, ILC, in Denver five years ago now. The idea was unique in that we actually integrated design and distribution and pre-construction budgeting into one process, a holistic approach of actually live budgeting as we design. We work with many real estate developers. When we were growing that company, we actually built our own enterprise software because there’s basically no existing software that could go with our business model of being in Revit designing and doing pre-construction budgets instantly and eventually procuring the product from the distributor. With that idea, I’ve started another company with different founders, a software company that we’ll be announcing soon that’s focused on workflow automation.

One of the big things I realized is that the lighting industry has pretty poor efficiency. It’s not just inefficient, but it’s also hard to get great customer service people because companies can’t pay as well as Amazon, for example. This has to do with low efficiency and low profit margins. So the whole idea behind my new software company is how can we bring modern-day software solutions to distributors and reps in the construction industry, starting with lighting and electrical, just because that’s the world I’m in. And then how can we take the data that they’re using and leverage it? Basically, take the back office stuff away from places in the value chain that aren’t doing it efficiently because they don’t have the tools. Use data to make better, faster decisions, help salespeople, help customers.

CL: Jim, how is what you’re doing lining up with this?

JC: I’m with a company that is a combination of a small rep agency and a manufacturer where we focus very much on services towards architects and electrical engineers. I went into this because I see a big discrepancy between the high-end design, super luxury, where we have all the money in the world, and the basic level where we just do lighting as quick and dirty jobs, which is the majority of our work. That makes us suffer in two ways. The first being that the end user gets crappy lighting, which is not good, of course. And the second one is that it’s more expensive and it’s more energy consuming, so it’s worse in every way, basically. So how can we bridge that gap between what we can potentially do and what we currently do in most cases and try to make them connect better? How can we bring more information and more knowledge to the surface for general consumption? To get the baseline up rather than focusing only on the peaks?


So despite our predictions, visions, and relentlessly fabulous technology innovations, the revolution in smart building, smart lighting, and connected grid will more than likely unfold in most unexpected ways. Our three excellent and thoughtful speakers have laid out some of the main parameters of the transformation we’re undergoing now that we’re either not thinking about very much or haven’t yet figured out how to integrate fully. Innovative business models, automation and software, making buildings better for users, and articulating value propositions for owners and users are ultimately superior to technology alone, and design is the real killer app we should be betting on this time around.

The above is a fraction of what was a much longer conversation, which will be continued, naturally at the conference. So tune in online Aug. 24–25 to hear more!

Register now to join us for Strategies in Light to explore the value proposition of connected lighting, how to make it work for customers at various scales, and more.

CLIFTON STANLEY LEMON is CEO of Clifton Lemon Associates, and Strategies in Light co-chair.

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