When you visit the Tri-City Electric webpage–http://www.tricityelectric.com/–it is impossible to miss the trademarked slogan Confidence Delivered that is boldly featured in the middle of the page. It is also hard to miss the following statement.

“When you choose an electrical contractor in Iowa or Illinois, you want confidence they’ll get the job done right. At Tri-City Electric Co., that’s exactly what you’ll get. Every person, every process and every effort at Tri-City Electric Co. is focused on giving you the most important thing of all: CONFIDENCE DELIVERED.”

As should be obvious by now, Tri-City Electric, an electrical contractor based in Davenport, Iowa, is all about delivering confidence; about doing the job right, satisfying the customer, and earning the customer’s trust and confidence.

What most visitors to the Tri-City webpage will not likely realize is the remarkable entrepreneurial saga behind the company (which explains how it has come to deliver confidence so extraordinarily well). This saga was the topic of Midwest Entrepreneurs class yesterday. It was told to us by the company’s CEO, Mr. Dan Palmer.

Tri-City Electric was founded by the Palmer family in 1895 and experienced moderate early growth on the tails of the “electrical revolution” spawned by the invention and commercialization of the light bulb. The company remained relatively small—on purpose—until Dan Palmer bought it from his father in 1985 (after serving as company President since 1979). At that time, the company had annual sales of about $3.5 million and employed 25 persons; 20 electricians and five office workers.

Today, Tri-City Electric has annual sales of around $80 million and employs over 500 persons; 450 electricians and 70 office workers. Under Dan Palmer’s guidance, the company has done work in 42 states and 5 countries outside the United States and is one of the top 100 electrical contractors in the nation. Roughly 99% of the company’s business is in the B2B marketplace (i.e., designing, installing and maintaining electrical systems for other businesses [as opposed to residential work, which accounts for the other 1%]).

Most exemplary of the extent to which Tri-City Electric “delivers confidence” is the fact that its work outside the region—particularly in foreign nations—is done on behalf of major customers such as Caterpillar, John Deere, Archer Daniels Midland (ADM) and Family Dollar. These corporations hire Tri-City to work on major electrical and cabling projects not only across the U.S. but all over the world (e.g., Brazil and China). These firms could easily hire local electricians in these areas and get the work done for a much lower price. But they choose to hire Davenport-based Tri-City because they want the jobs done absolutely right and they have utmost trust and confidence in Tri-City to do just that.

So, we now know both the humble beginnings of Tri-City Electric and what is has become under the direction of Dan Palmer. But how did it get there?

As Mr. Palmer told the class yesterday, his initial strategy was to essentially professionalize the firm in a variety of key ways which, in turn, facilitated profitable growth.

The first thing he did after buying the company in 1985 was to replace the existing bookkeeper—an external service provider—with an in-house Certified Public Accountant (CPA). This move allowed Palmer to accurately understand the exact costs involved in performing its various often intricate and complex services. This is of critical importance because if costs are not accurately understood, pricing becomes very difficult (and it becomes surprisingly easy to set your prices below your costs, which, as you can guess, is not sound business practice).

For the same essential purpose, the second major strategic action that Dan Palmer undertook after taking the reins of Tri-City Electric was to hire additional estimators. These are the people who estimate the costs of jobs that the company is to quote or bid on. As Palmer informed Midwest Entrepreneurs students yesterday, estimators look at a job and literally count every light, electrical outlet, cable, and other electronic component that is required, estimate the amount of hours it will take electricians to do the work, and then arrive at a total for the bid. This work must be exact; if it is not, it is almost impossible for services firms bidding on jobs to be both competitive and profitable.

At about this time, Tri-City began to bid on—and win—larger and larger contracts/jobs. To support this growth, Palmer’s third major strategic action was to hire more purchasing agents (to order the components for the jobs).

Also around this time, and absolutely key to the company’s sustained growth and success, Palmer hired what he described as a “full marketing team” to manage Tri-City Electric’s image and otherwise manage the emergent—and by then more professional and “big-time”—Tri-City brand. The marketing team’s major specific contribution was to formulate and implement what we marketing academicians call an integrated marketing communications (IMC) plan. The idea behind IMC is that it is far more beneficial to—and cost-effective for—the marketer to integrate and coordinate all of its various communications with customers and other stakeholders so that a consistent message is being sent out (as opposed to disorganized and piecemeal communications). IMC for Tri-City has involved promotion and display of the company’s redesigned logo and the aforementioned Confidence Delivered slogan via various sponsorships (e.g., the John Deere Classic golf tournament), advertising, and, importantly, the company’s highly visible trucks and semi-trailers.

While these specific strategic actions were highly instrumental in the growth of Tri-City Electric, Dan Palmer discussed several broader keys to his success. First and foremost among these was “surrounding yourself with good people in the field (i.e., electricians) who can be trusted.” As Palmer told the class that “these people represent the company” and essentially ARE the company in the eyes of customers. I asked Mr. Palmer about turnover at this point—a key issue/cost for service firms such as Tri-City—and he quickly responded that there is “very little” turnover among electricians at Tri-City and that, in fact, “people want to work for us.” This is critical: If electricians are the face of the company to customers, you want to keep the face consistent. Tri-City does this by hiring and working hard to retain the most qualified and competent electricians in the business. Palmer also discussed in this context the importance of Tri-City’s receptionist, who he referred to as the company’s “director of first impressions.”

Another “broader issue” addressed in yesterday’s Midwest Entrepreneurs class involves the market niche that Tri-City has come to occupy. Dan Palmer explained here that “our niche is anything competitors are not doing well.” He went on to explain that this has meant, in practice, that Tri-City has established itself as being able to effectively and efficiently handle the “big jobs” that most of its regional competitors cannot (e.g., the new Business and Science building on the Monmouth College campus as well as the new Iowa State Penitentiary being built in Fort Madison, IA). Tri-City’s competitive advantage here is facilitated by the previously discussed growth-minded strategic initiatives spearheaded by Dan Palmer after buying the company in 1985.

Mr. Palmer also mentioned the challenge of working with labor unions; something that is of major importance to few if any of our other guest speakers this semester. The challenge for Tri-City Electric manifests itself mainly in the contexts of “having to negotiate everything” and in additional costs incurred. Palmer shared with the class the example of the cost of doing business in the Chicago area. While heavier unionization is but one of the factors driving up the cost of doing business in Chicago, Palmer stated that his total cost to employ an electrician is typically around $54 per hour while it is roughly $105 per hour in Chicago.

Finally, Dan Palmer discussed what has motivated him to be so successful. His discussion here centered around several people from his past who essentially told him that he would be anything but successful. Palmer, like several other entrepreneurs speaking to the class this semester, responded to this doubt and criticism by saying, “Just watch me.” He was motivated to show his doubters—including the mother of a former girlfriend and a former (now defunct) competitor—wrong and he has done just that at the helm of his family’s thriving business.

Dan Palmer left us yesterday with a discussion of Tri-City’s future. He explained that he has come to realize that the company is no longer a traditional electrical contractor. Instead, he used the term electrical integrator to exemplify the fact that more and more of the firm’s projects involve—and will increasingly involve—as he put, “pulling all of the electrical systems of our clients together.” He cited here examples of doing more security and data cabling work.

Clearly, Dan Palmer is not stuck in the past (on continuing to do only what has made the company a success). He realizes that adaptation is always necessary for growth and that, as several of our other guest speakers have emphasized this semester, you have to be ready for opportunity when it comes your way.

Dan Palmer has been phenomenally successful in growing the company to what it is today; one of the top 100 electrical contractors in the United States. I suspect that he is destined to be highly successful in making Tri-City Electric one of the top 50 electrical integrators in the country in the next 5 or so years.

Thank you Mr. Palmer for visiting the Midwest Entrepreneurs class! It was yet another great learning experience for the students (and me).   

As those of you in the class know, Mr. Palmer was our last guest speaker of the semester. Look for a “wrap-up/review” blog entry from me in the coming days.

Regards,

Prof. Gabel