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Solar Photovoltaics: A High Tech Commodity

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A short while ago we interviewed about 20 utility- and commercial-scale solar developers and integrators in the U.S. and Europe and found little relationship between developers’ willingness to consider modules and the manufacturer’s home country. In fact, Suntech, a Chinese company, was #1 in consideration rate. Interviewees also generally saw solar panels as commodities, and we found that the distribution of returns in this industry is similar to commodity industries.

While there may be a few ways firms can differentiate themselves, these are likely to make a marginal difference and are best suited to firms with a particular (narrow) niche. Therefore, we conclude that driving down cost is the most important predictor of success.

Download our findings and recommendations here.

Playing Last Year’s Game: Why Companies Fail to Change

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In our work as management consultants, we help clients improve their businesses by working with them on strategy, operations, and financial matters.  Unfortunately, we’ve also seen things go horribly wrong.

One enterprise-threatening pitfall we’ve seen companies make is failing to act when the competitive game is changing.  Companies in this situation are playing last year’s game when they should be focused on the future.  This situation is distressingly common—Motorola, Schwinn, and Polaroid are three well-known examples—but also avoidable.  In this paper we discuss why some companies fail to respond effectively to changes in their business environment and what other companies can do to avoid the same fate.

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Success in a Rapidly Changing TV Market

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Given all the hype about internet TV, we thought it would be useful to take a look at the underlying drivers of uncertainty to see why the ultimate outcome hasn’t been totally obvious. We developed four scenarios for the outcome and conclude that unless internet TV properties such as Hulu and Google TV are able to offer ad rates significantly higher than is the norm on conventional TV, much content is likely to stay behind pay walls at large traditional video distributors such as Comcast, Verizon, and DirecTV.

See our four scenarios here.

Again, Higher Returns for Less Integrated Wind Turbine Manufacturers

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In a follow up to our earlier on wind turbine manufacturers, we found that there has been a reversal of the previous trend toward vertical integration in turbine manufacturing.  We also found two of the least vertically integrated players—Goldwind and REPower—have the highest returns on capital.

During this work we also had the opportunity to identify best-in-class manufacturing practices among wind turbine manufacturers, and determined that fewer than half of them do best-in-class supply chain management activities comprehensively:

  • Lean and six sigma up the supply chain
  • Hands-on supplier quality management
  • Evaluate total cost (including cost of quality, working capital), not just landed cost or ex-works unit cost
  • Optimize collaboration with strategic suppliers
  • Use comprehensive IT tools for supplier evaluation and management

Download a detailed set of findings here.