Home : Innovation : Environmental Technologies : Case Studies of Successful Environmental Technology Companies in Western Canada
Case Study #3
Carmanah Technologies Inc.
Victoria, BC
Phone: 1-877-722-8877
Website: www.carmanah.com
CEO: Art Aylesworth
Company facts:
Year founded: 1998
Employees: 85
Revenue growth: approximately 75% annually since 1998 ($9.2 million in 2003)
After selling his company, David Green set off on a sailing trip with his family. However, he soon ran into a problem: constant use of his anchor lights was draining his sailboat battery. Determined to develop a more efficient form of lighting for marine navigation, he set course back to Victoria and began his next company – Carmanah Technologies.
Carmanah designs and manufactures solar-powered light emitting diode (LED) lighting solutions for the marine, roadway and railway markets worldwide. In the past, lighting in marking channels and waterways, on moored vessels, and hazard lighting on roads, highways, and railways required regular maintenance by staff and a power source. Carmanah Lights use a self-contained energy source and LED technology for improved energy efficiency, higher light output, a wider colour range, and maintenance-free life of up to five years.
In the Right Place at the Right Time
Since the 1970s, light emitting diode (LED) technology has advanced considerably. The efficient devices can save up to 90% of the energy required to power an incandescent light. LED light sources are quickly replacing conventional lighting in the $12 billion global illumination market. David Green saw LED lights as a natural partner for solar-powered energy. Since introducing the first solar powered LED light for marine navigation in 1998, Carmanah Technologies has carved out a niche of technical expertise in self-contained micro-lighting. "David anticipated the trend correctly. The LED technology is a bit quirky and he had a head start in uncovering the technology," explains Art Aylesworth, Carmanah's CEO. The company partnered with the University of Victoria and the British Columbia Institute of Technology to develop the early technology. "We now have 20 to 30 techniques that we use to make very small solar-powered LED lights more efficient," explains Art Aylesworth. For example, the small solar panels are domed to increasing the amount of solar energy collected at all angles; LED lights pulse rather than remaining on constantly; and, sophisticated software manages inconsistent solar energy input. Carmanah has patented many of these techniques. "This company definitely has all of their technical ducks in a row," says Rob Wylie, the latest in a series of IRAP advisors who have helped the company develop their technology.
A Niche Market with Seemingly Endless Applications
Looking back, David Green may have wished his family vacation had been by bus rather than boat. The company's first product was a self-contained marine light designed for the Coast Guards to use on navigation buoys. "We were presenting a disruptive technology and asking people to think differently. They did not even have specifications for LED lighting used in marine navigation," recalls Art Aylesworth. The business case convinced the Coast Guard to consider the new technology; with smaller equipment and virtually no maintenance, the cost of servicing a single navigational marker could be reduced from $50,000 per year to zero for the five-year life of the product. After four years of experimentation and certification in the highly regulated field, Carmanah's marine lights were in place. The next application came more easily. When the transit agency in London spotted the Carmanah logo on a marine light in a channel, they called the local distributor. The group thought that the product might be perfect for new transit shelter lighting, for which the Heritage Committee has specified size restrictions. Unfortunately, the competitors had had months to develop a solution and Carmanah was coming in late in the game with only six weeks to the deadline. This is where four years of perfecting their craft paid off. The firm not only delivered the prototype on time but also won the contract and opened a new market opportunity. The range of possible markets continues to grow. "The company is now faced with opportunities that are simply too large to turn down," explains Rob Wylie. Carmanah now manufactures self-contained LED micro-lighting for marine, roadway, railway, transit, and airport markets.
Formalized Management Practices
Formalized management practices were identified as an early priority by the founder. "We received ISO certification with only 12 engineers," recalls Art Aylesworth. As the number of customers and product lines expand, the company is pressured to develop a more sophisticated system to deal with the multiple streams of activity. An Enterprise Resource Planning (ERP) system helps to integrate the management of financial, manufacturing, customer services, and sales activities. After a few failed product ideas resulted from overzealous sales leads, the company implemented a Product Steering Group. Every new product improvement or market opportunity is vetted through this group of technical, sales, and business representatives. The Steering Group develops a business case for each idea to ensure it is strong from both a technical and market perspective.
Reconnecting With the Customer
Like many small companies with a limited sales force, Carmanah successfully partnered with a distributor to bring products to global markets. In 2000, David Green decided the company would need a new strategy to reach the next level of growth. He brought Art Aylesworth on board as CEO, a self-professed salesperson and team builder to complement David Green's technical expertise. Under the new sales focus, the company reintroduced a direct sales team and started an award winning e-commerce strategy. The firm has developed a micro-website for each of its industry verticals to increase tracking capabilities and present products in a market-specific context. The e-commerce sales channel now generates 20% of total sales, reduces sales processing time, and provides credibility and support for the direct sales team. "The website provides a good barometer for where people are interested in using our products. When we see a potential new application surfacing, we will put a business development person on the case to investigate the potential," explains Art Aylesworth.
The Results
Over 90,000 Carmanah lights are now installed in over 110 countries. The company employs 65 people in their Victoria, BC head office and another 25 people in their Calgary-based subsidiary. It generated revenue of $9.2 million in 2003 and has enjoyed an annual revenue growth rate of approximately 75% since 1998.
Analysis of Company Success Factors
- The company's technology-driven model paired with intellectual property protection creates a barrier to entry for competitors.
- The company followed a niche strategy that has enabled it to achieve technical leadership before competitors, some of which are large companies with substantial research and development capabilities.
- The company took advantage of the evolution of both LED and solar power technology to facilitate its success.
- Customers adopted the company's disruptive technology because it presented a radical improvement to business operations.
- The company's core technology is applicable to multiple industries expanding growth potential.
- Once the core technology was developed, the company embraced a sales focus to accelerate growth.