Update and Status Report – Decision Making and Ruthless Conditional Ethics

Posted: May 20, 2017 in General Commentary

I have taken a break from publishing to this blog for several months for a reason. I needed some time to stand back and observe and listen without intent to respond or contribute, and to seek counsel of others. The lighting industry has been in a state of flux for more than a decade now. As a veteran spanning over three decades, there is nothing new in this. Here’s a bit of news for those new to this business – the industry has been in flux for over three decades now, the intrusion of solid-state technology is just one more in a long series of adjustments. However, the most recent decade has brought a new character to the industry that, frankly, stinks.

There is now a level of combined ruthlessness and aggressive marketing that has never existed before. This is aggravated by the reaction of the specification market against the lies and deceptive claims of unscrupulous marketers. Coupled to this are economic conditions and intrusion of regulations that has made offering products into the market more difficult than ever. Add to this the profiteering of Underwriters Labs that has made listing LED products a nightmare. Bleed in a large number of new players with unprecedented funding from outside sources, expecting unrealistic results, offering up products of highly questionable value. Pile on corporate level expansion that has elevated IP protectionism (exploiting the antiquated patent protection system) to squeeze the market. Now, add to this the confusion of too many new products and new brands into a market already overwhelmed by too many products and brands. Wedge in the intrusion of the DOE, and the emergence of the DLC and Lighting Facts, not to mention Energy Star, LM-79, LM-80, now TM-30, to mention just a few. Layer on the deployment of a plethora of products invented before defining what market need they intended to serve, and forwarding of theories based on anecdote with little or no scientific founding. Pour in a mess of new influences and corporate leaders who have less interest in design and light itself than they have in profiteering, backed by technologists who have little or no respect for design. Splash into this new formula the plethora of source level products that change continually, and the presence of the internet that has exploded exposure to everything at once. Now, stir all this up in a frenzy of activity spanning just 10 years, and you have a confused messy stew that no longer resembles what preceded it. Like a pot pie, let’s cover all of this with a thick crust of China sourced components, products and contract manufacturing that transforms the whole mess inside out. Lighting has changed, for better and worse – over a very short period of time.

Lighting 2017 is profoundly changed from Lighting 2005, and a distant memory of Lighting 1981 when I entered it as a rookie graphic artist convert to electrical/lighting designer for an electrical engineer. The days of design free-for-all that drew me into the business 36 years ago and sustained me for 20 years are over. Period. Sold-state technology and the players behind it saw to that, while unscrupulous marketers, the economy, and government influences (local and national) hammered it home.

While discussing this with a trusted peer (who entered lighting in this recent transition, who has zero experience of what preceded it), I was advised that it is what it is, that I need to simply accept that, or get out of the business. The advice was that to compete and participate in this new market space, I need to be more ruthless, that business is business, separate of who I am otherwise. I need to set aside my personal desire and ideology may have to be set aside to profit from the market in its new state. There is some truth in this, and I accept the advice at face value. I see this in the faces and acts of the fresh PhD’s and MBA’s I experience in management positions. I see this in the acceptance of made-in-China as the new norm of lighting, shoving the once home-brewed market aside. I see this in the reliance on exploited labor markets to drive costs down to advance profits across the entirety of solid-state technology. I feel this in the de-personalization of this industry. That does not mean I accept it as matter-of-fact, or agree with it, I just see and feel it. The idea put forth that I must come to accept this, or get out of the business, made me think a great deal about doing just that. Then I thought…

Quit Lighting? Not a chance.

My business is at a point where I have come to the end of a business model that lasted longer than I expected, while opportunities for new pursuits has left me in the proverbial state of disarray. In this, I have been exploring several new ideas in an effort to suss out ideas that might lead to new business. For example, following a customer’s lead, we’ve developed a line of light-cure products for use in fiberglass fabrication and repair, potting material curing, adhesive and coating cure application. We also created an LED source color evaluation tool for designers to view and compare LED CCT’s and the impact they have on project color samples. I also have a line of industrial grade task lighting that out-performs the junk coming from China in every measure save one – price. We even make a version of our task light that is designed for Navy ship bridge map lighting, with red/white selector and integrated dimmer with special swivel base. None of these have been heavily marketed to date, so have not realized any real sales success. There is a reason for that – we were busy meeting the needs of our consulting customers.

Over the last eleven years, my time was absorbed helping others see their dreams and aspirations. The companies I have helped make the transition are now experiencing growth of more than 27% year over year, have experienced a relatively smooth transition from conventional lamps to LEDs, and have rebuilt themselves to address the changes in the market, with out help. We have assisted electronics product manufacturers as they deployed solid-state component development of entered lighting for the first time. I’ve deployed LED technology to replace HID in UV light curing. I have also assisted in the development of LED based photographic lighting, another market being transformed by solid-state technology. I’ve been part of evaluating market opportunities for venture capitalists, and trained hundreds of new market entries in lighting, lighting market, and solid-state integration into lighting. I’ve even assisted a major glass manufacturer in evaluating opportunities in lighting. I have thousands of hours of personal investment experimenting, testing and evaluating solid-state technology to be ready to meet customer needs. I even built a shop facility specifically configured to enhance our capacity to prototype and test products for customers without facilities to do so for themselves. This has all been put ahead of my own interests and product development and marketing, as supporting our service customers was put over our product pursuits.

In addition to this, is ten years as a contributor and editor at Architectural SSL and now NZB. Further, I have delivered dozens of presentations, at my expense, at conferences across the country. Lighting is a part of who and what I am, and is the foundation for the value I bring to those I interact with.

Quit lighting? No way.

There is a fallacy individuals and businesses frequently fall into. It’s called the “Sunk Cost Fallacy.” It goes as follows:

The Sunk Cost Fallacy. The Misconception: You make rational decisions based on the future value of objects, investments and experiences. The Truth: Your decisions are tainted by the emotional investments you accumulate, and the more you invest in something the harder it becomes to abandon it.

To this, I have come to ask: Am I committed to lighting because I’ve been in the business for so long that I am irrationally emotionally committed to it? Am I a victim of the Sunk Cost Fallacy? Is the future value of my contributions and potential profit realization realistic, founded on past investment and experience?

Quit lighting? No. Redress how I have approached it for thirty years? Absolutely.

In reflection, I have pursued lighting in three basic ways. As a lighting consultant I served hundreds of design customers with designs they enjoy in their spaces. As a designer I served employers and consulting customers with product designs that have resulted in their realizing over $32MM in combined annual sales (through 3 manufacturers as an employee, and others as product consultant) over the last 27 years – more than $864MM total (translating to approximately $80MM in net income to company owners), while facilitating additional sales success through marketing contribution over that (and the value of branding over that), while obtaining 14 patents for those I have been employed by (without royalties). Finally, as consultant I have assisted numerous others realize their goals in developing solid-state products, helped transform companies to meet the needs of the lighting market, provided technical support that enabled manufactures to succeed with a unique blend of product and service tailored to their needs. In all of this, I have not demanded residual benefits, royalties, or bonus payments beyond what was asked in salary or fees, to make my living from the effort. Not only do these companies capture value from contributions made, they do so under agreement that I not divulge my involvement with them, to protect their privacy and image as innovators.

From a business perspective, I have not been ruthless at all. I served as a consultant and employee as I was asked, for fair compensation. In retrospect, it may seem a naive approach. A more ruthless approach would have been to demand compensation commiserate with the ongoing value realization by those I was involved with over that time. I am sure that there were opportunities to apply this strategy that I missed. Certainly, in the market as it stands today, there are a few who have become wealthy by being more diligent in negotiating a longer term payoff from their contribution.

There is another dynamic to my past effort in the sharing of ideas. There are many dozens of instances where I have created, then developed, concepts presented for new products and product strategies, that have become the property of customers and employers.  These ideas are then tied to those entities, their property, whether or not they act on them. I am not allowed to share them, pursue them personally, or take them any further. Over the years, this has resulted in a significant inventory of shelved concepts that have since been realized by other entities (without my participation.) Ideas rarely originate from a single point, so if it comes to me, it will have come to others. The difference between who has good ideas and who profits from them is frequently based on who finds a path to market first, over who comes up with the idea first. It is truly frustrating to have ideas first, only to see them lay fallow, as others put them into the market. While patent protection could have prevented this dis-association, when a customer or manufacturer sets aside a concept due to other priorities, time constraints or budget, investing in patent protection to capture that concept for future application is just not on the agenda.

In addition to the authoring of product ideas that were lost, there is an overly altruistic sharing of information, technical discovery, and observation through this site, my web site, and magazine editorial content. While I was pounding the keyboards, or making presentations, other more ruthless players were equally committed to keeping their secrets, protecting them through patenting or royalty contract. Over-sharing is not a path to profitability.

I have always believed it was impossible for manufacturers to share too much information for decision makers to base decisions on. I also believed that making presentations and sharing information was the responsibility of everyone in the market, to give back to the industry that serves us with profit to make our living. In the last decade, I have come to see this has been naive. If anything can be gleaned from the teachings of our new partners in this industry, it is that factual information is susceptible to two factors. The first is need relative to realizing maximum profitability. The second is on conditional ethics.

Conditional ethics are often described as Hume’s Gillotine. The philosopher David Hume proposed that ethics does not rely on fact, that a value judgment must be made at some point, which is essentially arbitrary. The concept is that facts do not directly relate to ethics or vice versa. Facts alone are not sufficient to to define what is bad. The concept is also known as the ‘Is-Ought Problem’, as there is no way to infer what ‘ought-to-be’ from ‘what-is’ (the source of this and a more complete description can be found here.)

In other words, once an idea is presented to the market as fact (even if it a complete fiction), it becomes fair game to pursue as real, even by those who know it isn’t. In other words, once an idea becomes a what-is, there is no ethical requirement of profiteers to revisit what ought-to-be. This is expedient, as it allows a falsehood that is widely accepted as intuitive, or supported by biased anecdote, to prosper – regardless of its merit. As each marketing entity picks up on this, and forwards this as a foundation for their efforts to profit from the sentiment attained, there becomes no ethical prerequisite to redress the falsehood, and every reason to forward it to profit from the momentum gained as others pile on and the market is moved. An example of this is the current concept that because humans have evolved for millions of years under daylight, which has warm sunlight in the morning and evening, and bright cool light in mid day, that lighting that mimics this behavior is good for human health. There are no facts, no objective studies, and zero objective evidence this is true, but it is widely accepted. Thus, there are no ethical limits to any marketer to look any further when forwarding this concept as a foundation for claims their product promotes improvements to human health. This is also more obviously employed in a similar ethically challenged market space – the homeopathic products market, which has virtually no scientific foundation for 90% of its claims to cure ED, growth in the size of ones manhood, grow hair, remove wrinkles, or any number of maladies promised to be resolved by consumption of any blend of herbs or garbage in capsule form one can imagine.

Conditional ethics allow those who would otherwise not consider lying for personal gain, to lie to the market when selling products. Conditional ethics forgive those who insist on being provided objective fact to base decisions on at home and exhibit fair treatment to family and friends, to conceal facts, and treat those that purchase their products unfairly. Conditional ethics support marketers in applying anecdotal information based on biased and unqualified “facts” to promote products. With no requirement to reveal the lack of scientific credibility and integrity, it is fair and acceptable to forward any idea that might sound right in promoting a product. Facts are irrelevant, sales are. This is what we get in markets controlled by Masters Degree Administrators and PhD’s. There becomes a level of academic rationalization of short cutting fact, to avoid having to invest in forwarding sophistication of the market as a whole, to realize profits in the shortest period of time. It is far easier to make a market believe an idea that sounds right, than it is to increase understanding of the market. There is more money to be made from an ignorant compliant market, than an informed, insistent factually driven market. Thus, it is ethical to pursue the expedient capitalization of a deluded market, even if it is understood that the market is acting out of ignorance.

This leads to the conclusion that the only option is to accept what the market is and ignore what it ought to be, in order to feel comfortable with it going forward. Certainly, those invested in conditional ethics, who profit from this approach, would suggest this. There is no profit in fighting the status quo, and there is little hope the market can ever be transformed. I agree. The mass market, as a generality, will continue to make decisions based on anecdote, marketing promises (no matter how false) and subjective opinion without factual backing. I get that. However, I won’t participate in it, nor do I believe that conditional ethics is an acceptable foundation.  Further, I reserve the right to expose where the industry is being fooled by those employing conditional ethics.

Quit Lighting? No way. I’m just getting started.

With the epiphany that I have been reticent in pursuing maximum value capture in support of others, I will be more aggressive in future business models. Making money for customers, or providing them a value in product that improves their work or life, is an ethical pursuit. I should be compensated for this in proportion to the value of that contribution. Even in a market surrounded by those who are short cutting ethics to realize easy profit, there is no reason that I cannot succeed by offering solutions built as much on fact as possible, over anecdote and populist opinion forwarded by ruthless marketers.

I also reserve the right in editorial production, here and in publication, to call out the falsehoods, half-truths, and fake science being employed in the market. It’s time to be more ruthless in exposing the falsehoods too many marketers are relying on. For many, this will be meaningless, they will continue as lemmings do, taking short cuts to decision-making for their own reasons. For others, there is value in attempting to push for what ought to be, regardless of what is.  This is a not-for-profit pursuit in the interest of giving back to a market that has provided me a livelihood for more than three decades, and a way for me to strike back against those I believe are damaging it.

Quit Lighting? Well…. I have certainly thought about it. It is in every professional’s best interest to consider options in and out of this industry, that’s rational. If I find a path that leads to greater reward for invested effort, it would be irresponsible to ignore it. It is my duty to set aside the Sunk Cost Fallacy, and recognize that years invested in this industry may need to be abandoned, no matter how hard that might be. I have no delusion of being a martyr to the cause of a better, more ethical lighting industry. My existence would barely be missed if I disappeared overnight. A few out there might like to see that happen, as we’ve culturally become enamored with the failure of others. There are also parallel paths to the mainstream lighting market that are more profitable, less fraught with ethical conflicts, with fewer encumbrances than the general illumination market has built for itself in its confused state. I wish it were different, but it is what it is. I would be an idiot to expose more here. With no ethical boundaries to protect anyone from ruthless attack for competitive fun and profit, sharing too much publicly about strategies and next steps is no longer a responsible activity. Let’s just say that my customers will know where I am and what value I intend to deliver. That’s a fact.

 

 

 

 

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