Improve Your Outside Options; Reduce Your Partner’s

Andy Wren, CEO of Wren Solutions, was kind enough to provide a thorough explanation of his company’s products and operations, as well as an interesting tour of his company’s Jefferson City, Missouri, facility. And some day we hope to meet him.

While Andy was enthusiastic about talking with us when we contacted him, he explained there was one important caveat. Wren’s corporate headquarters are in Jefferson City, but Andy and several parts of the operation are based in Atlanta. So our meeting consisted of the three of us sitting in a conference room in Missouri talking at a speakerphone with Andy, who sat two states away in Georgia.

“This is unusual,” Scott said as we waited alone in a beige conference room with a wood table large enough to seat the presidential cabinet.

“It’s perfect,” Mike quipped. “Now I can silently mock you when you ask a stupid question.”

When he joined our conversation, Andy explained the odd geography of the situation. “I grew up in Jeff City, went to Auburn, and majored in sports marketing. With the Olympics coming here in 1996, this seemed like the place to be. Then I decided to go to work for Dad, but there’s no baseball team in Jefferson City. I love Jeff City, but when I was twenty-three years old it didn’t seem as attractive as Atlanta from a quality-of-life perspective.”

geralt / Pixabay

Wren Solution’s main business is security systems, manufacturing housings and mounts for cameras, and developing solutions for monitoring. Wren originally focused on retail customers but has now expanded to other markets, particularly school systems.

Walmart, Wren’s biggest customer, uses their systems to watch customers from cameras mounted in the ceiling. “To frame up our industry, imagine a pyramid with three horizontal layers,” Andy explained. “The bottom of the pyramid is what we call system components. It’s very hardware-centric; it’s the plastic housings, the cameras, the monitors, and the recording platforms. That was our whole industry up through the 1990s. That segment of the market is not the bottom of the pyramid and it is essentially a commodity business. “

As technology advanced, things shifted to digital video, so software started to make an entree into the business. We’ve now got ‘point’ solutions, where we have software driving some of those cameras and recording devices. That layer is where we are as an industry right now. The top is more of a pure software play, trying to integrate all those systems. That’s where we have positioned our business moving forward.”

Further discussion with Andy revealed that negotiating with customers, as well as setting the company’s strategy in anticipation of those negotiations, is essential to the success of Wren Solutions. Their experiences highlight the value of thinking strategically about how to improve your own next-best option and how to find partners whose next-best options are not so strong.

Paul got right to the heart of the issue. “Walmart has a reputation of being very hard on their suppliers. Are there downsides to having so much of your business with them?” Mike did not silently mock this, so it must have been a decent question.

Andy explained that Wren works very hard to avoid being “just another supplier” to Walmart. “It’s less about the products sometimes and more about helping them to address issues. As a tangible example, we now do system design work for Walmart. They were having some bottlenecks and we have a CAD [computer-aided design] group, so they give us a store layout and we do the heavy lifting on designing the video surveillance system.”

FirmBee / Pixabay

“So they have a general design, but you help them figure out exactly what wire needs to go where?” Scott asked.

“Yes, we generate the bill of materials for them,” Andy replied, probably nodding, but we couldn’t really tell. “That’s not our core business, but it’s finding ways to solve problems for our key customers.”

Wren has put itself in a strong negotiating position by finding ways to limit the attractiveness of Walmart’s next-best option. In order to walk away from a negotiation with Wren, Walmart would have to find a replacement for both Wren’s hardware and Wren’s system design work. By bundling commoditized hardware with harder-to-replace expertise, Wren reduces the relative value of Walmart’s next-best option and makes it easier for Wren to capture value.

Mike asked, “Don’t you worry about making a lot of investments in terms of spending time on design for just one customer?”

Andy’s response made clear that he thinks quite hard about his own next-best option, as well as Walmart’s. “That could be a concern, but anything we do, we look at the greater market. We don’t want to just build custom solutions, so we are out talking to other customers about that same type of solution to make sure the thing is saleable elsewhere.” While Wren works closely with Walmart, it always has an eye on alternatives, including the education market.

fancycrave1 / Pixabay

The negotiating challenges are different for Wren in the education sector, and Andy described the company’s process for assessing various market segments. “We didn’t go after the biggest school districts because things there are price driven. With the big districts, it’s the lowest bid. We didn’t go after the smallest because we don’t think there’s enough return for us. But the mid-sized world was much underserved. Much of the competition was local mom-and-pop outfits, and in many cases they weren’t as current with technology. We’d rather go after the smaller sale and come in with more technical savvy, allowing us to build significant credibility by referencing our big retail customers like Walmart.”

In education, Wren has targeted specifically those customers with weaker next-best options. Other bidders pursue the large-district segment aggressively, and procurement rules mean that Wren has little opportunity to improve its bargaining position by bundling service and expertise with its products. Options available to mid-sized districts are more limited, however, and Wren can offer a product that greatly improves on the next-best options of those customers. Learn more about reducing your outside options only at the University Canada West, one of the best universities in Canada, offering various business and management related programs.

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