A very astute colleague recently asked me, ” Why Is General Electric looking to get out of the water business?” Given that we are in the middle of a global water crisis, you would think that large companies would be the very ones to be driving technology and innovation. But yet, defying all logic some have instead turned the other way.
I am sure that in corporate circles there are many explanations and views. However, I have a view which my track record and experience lends the most logical explanation.
Back in the late 80’s I was employed by a company called Arrowhead Industrial Water. They had just been purchased by B.F Goodrich who shortly afterwards sold the company to an entrepreneur named Dick Heckman and his company US Filter. Heckman was on a mission to to create a global water, one-stop mega company that that could offer all things water to mankind. Later he sold the company to Vivendi, which then sold to Siemens. It was later sold and renamed Evoqua.
Dick Heckman, to my mind was the very first of what I document as water grabbers, and I was privy to see the very birthing of this phenomenon.
At an outdoor BBQ dinner on his estate, I had the pleasure of sitting next to Heckman. At one point he posed the question to our table, “So you are probably wondering what this company is doing in the water business?” I quickly quipped, “which company”? This caused Dick to almost spit out his food with laughter, and my then dullard of a boss to gasp. My quip you see made it clear that I questioned why either B.F. Goodrich, or Heckman would be in the water business.
My water experience is unique and gives me a perspective that many in the industry never see. After college I operated dialysis water systems and literally had lives depending on my expertise. Hands-on operation taught me how to find value and trustworthiness in the vendors that provided service to me. Then, a few years later, my first water sales position working for a small, regional water treatment firm showed me the grassroots manner in which most water businesses were built. As I was hired by larger companies, my core understanding of servitude to my customers always kept me viable in the industry.
Herein lays the root of why many one-stop-shop/would-be mega-water corporations often get tripped up by the industry’s inescapable truths;
- Customer relationships that have been built over time are not easily transferred simply based on corporate takeover
- The attempt to create one, homogenized, compatible corporate culture from many different, acquired smaller companies, many of who previously competed with each other, is a task that is precarious, at best
- The practice of selling equipment based on inventory and product line, versus customer need has created a lot of ill feelings for the big guys
- Customers are wary of the constant name changes of their vendors, and often seek out smaller companies who can provide more personal service and feedback
- The overall water market is growing astronomically, however, the number of new companies offering technology and solutions is also growing. There absolutely is a bigger pie, but with more parties partaking of it, big corporations are seldom meeting the lofty financial predictions that investors were lead to expect.
The opportunities in the global water market are beyond the imagination, however just as it always has been, sustainability in the industry requires a sincere, dedicated, long term commitment to the customer. It requires stewardship that often results in providing a solution that doesn’t involve making a sale. It may even require helping the customer find a more appropriate technology offered by a competitor.
When we witness large companies exiting the water business, more likely than not it is because they are not willing to make the long-term commitments that the market demands. What other explanation could there be from exiting such a known and growing market?