Malcolm Gladwell, author of several New York Times bestsellers, offered a great lesson for electrical contractors in his most recent book, “David and Goliath: Underdogs, Misfits, and the Art of Battling Giants.” While he wrote it for a general audience—and certainly never mentions electrical contracting—within its pages there are plenty of takeaway lessons for the majority of electrical contractors (ECs), that enter into uphill competition that may often seem biblical in proportion. When thinking of the two legendary combatants in the book’s title, the majority of ECs would surely identify with the little guy, not the giant.
In his opening chapter, Gladwell draws readers into an enthralling page-turner as he systematically explains how we unknowingly have been judging the mythical account of this famous one-on-one contest entirely the wrong way. Contrary to everyone’s previous belief about this tale, David was not the underdog. David had the advantage. In fact, according to Gladwell’s uncanny retelling, David possessed such an advantage that the reader could be left feeling a little sorry for big, old, bumbling Goliath.
The lesson does not stop there. The book goes well beyond rewriting the story of the ancient encounter between the famous opponents. It revisits and reinvestigates the well-worn law of diminishing returns. That is how it provides a powerful model for ECs to borrow to illustrate the David-like power of service work, versus the Goliath-like nature of project construction.
Gladwell introduces the so-called “inverted-U” curve as a central theme. Whereas right-side-up U-curves depict situations in which “more” of something over time often equals “better,” inverted-U curves are metaphors for just the opposite.
Inverted-U situations have three parts, each with its own separate logic: the left side where “more” equals better, the middle where “more” begins to not matter, and the right side, where achieving “more” unhappily detracts from positive outcomes.
In new construction, an inverted-U course of events could be portrayed similar to the graph in the top figure here, with the number of projects represented on the x-axis and overall profitability on the y-axis.
Although at first we might dream that more new projects could gain us greater overall profitability; on the contrary, there is a point of diminishing returns. Taking on too many projects can add risk and complications that can quickly cause safety, quality and schedule to suffer.
On the other hand, let’s consider electrical service work. In service work, an electrical contracting firm has greater control of its destiny with respect to critical components such as safety, quality, cost and schedule. Hence, there will be better outcomes in terms of cash flow and profitability. The concept of diminishing returns does not affect service work in the way that it plagues project construction.
Accordingly, in the bottom figure here, we present the “curve” that in our view accurately represents service work. It is a straight line that will continue rising ad infinitum, because a skillfully managed service organization can continue to build its customer base, hence its overall profitability, endlessly. To boot, it does not need to grow into the kind of Goliath organization built to support a periodic swell in project activity that might at some point come crashing down like that biblical giant.
By virtue of traditional means of measurement, most ECs are Davids, not Goliaths. Large or small, the significant business opportunity in service work is available to virtually all of them. But there are many reasons to believe that this may be another scenario in which, unimpeded by weighty burdens, the little guy just might have the advantage.