In industrial automation there can never be any Steve Jobs-style, all-out, go-for-broke bets to generate significant new growth. This is because the major suppliers have fragmented conglomerations of products and services—only lumped together do they form sizeable businesses.
Automation business grows slowly and is dominated by just a handful of large, global corporations that have the resources to ride out recessions. These businesses are driven by structured management, with budgets based on established ratios. There’s little real innovation and minimal agility. Growth is generated mainly through incremental tweaks based on tabulations of customer needs. And the customers are mostly large and conservative.
How does an individual get paid in this stolid management environment? At senior levels, salaries are respectable but raises and promotions are few and far between. Bonuses are awarded mostly to high-level managers, based on meeting quarterly and annual growth and profit targets. In most companies, bonuses are a percentage of salary, but rarely amount to more than about 5 percent, or up to 20 percent in good times.
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Some companies award stock options which can generate value only if the company is growing fast and profitably. The values of most automation companies have declined in the past decade or have grown minimally at best. In most large companies, stock options are primarily for senior managers, though they are sometimes doled out a couple of levels below the top.
One gets to be a senior manager in a large company by getting consistent results as judged by the chain of superiors. The process is mostly bureaucratic; few can really advance by more than a few levels.
The usual path to personal advancement is to switch jobs—moving to higher management levels in competitors and perhaps finally achieving a VP-level position. But, beyond the titles and salary increments, it’s seldom worth the effort.
Start your company
At established automation companies, the usual strategy is to acquire companies that have generated some success, thus adding to in-house complementary product lines and providing resources for additional growth. So, if you want to be on the fast track, my advice is to take the entrepreneurial approach—start your own company, or become part of a founding group with significant equity participation.
In automation, that means developing new products or services with growth potential in a niche business. Go talk with customers—there are lots of new markets waiting to be served. Sell your products or services with good gross margins and cash flow, develop steady growth, and once you hit the inevitable plateau get acquired by a large company.
Many successful automation companies were bootstrapped with minimal investment beyond the founders’ personal funds. Their products were innovative and typically developed for niche applications. The target customers were usually local end users who provided the opportunity to test new ideas, usually because of specific unmet needs.
The founders should be intelligent, passionate and motivated by shared ownership. They should maximize their shared equity through reduced expenses with shoestring budgets. The frills can be added when growth and success is attained. The primary aim is to find growing customer needs and satisfy them profitably. With a little bit of luck and a lot of hard work, the company will be acquired and the founders will become millionaires. No big company can match that.
In the automation business, the best path to personal growth and success is to break out of the box and be your own boss. Hey, if you fail, you can always retire to the safety of a cubicle in a large corporation.
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