At its core, Waukesha-based Generac Power Systems
is a manufacturing company. Raw materials and components come in to its plants and finished products go out.
The company is best known for making generators, but has expanded over the years to include light towers, mobile heaters and outdoor power equipment.
More recently, Generac moved into the clean energy space, acquiring companies to develop a battery storage system and help homeowners manage energy generated from solar power.
Generac’s latest acquisition, announced Monday, goes a step further. The company plans to close on the purchase of Enbala Power Networks
within 30 days. Enbala offers a software platform that helps aggregate power from distributed energy resources and sell it to the grid or utilities.
With a manufacturing company acquiring a software developer, it is easy to wonder: Is Generac straying too far from its mission?
Aaron Jagdfeld, chairman, president and chief executive officer of Generac, said the company had already moved toward software development prior to the Enbala deal. He pointed to the introduction of Internet of Things technology on Generac products, which necessitated the development of a connectivity team with around 50 software developers.
Jagdfeld said the push into the IoT world has given him a new appreciation for software development.
“What’s really going on there is they’re building something,” he said. “And in the end, there’s a user experience with that. Whether the user experience is with a physical product or an application on your phone, it’s none-the-less still a user experience.”
Whether its software or manufacturing, Jagdfeld said teams from both areas need to use project management, develop product roadmaps, perform quality testing and generally create things.
“The interesting thing about it, my realization anyway, is that really is manufacturing,” he said. “They’re just using a different skillset with their brains.”
Companies tied to a more traditional approach to what manufacturers do will struggle, especially in comparison to those embracing technology and new approaches, Jagdfeld suggested.
“I want to make sure that, as a company, Generac is secure in its future down the line, and to do that I think we've got to be a lot more open-minded about where the market is going and where we can use our strengths,” he said.
“It’s less about pivoting away from being an asset manufacturer,” Jagdfeld added, noting the key is understanding how things the company already does apply in other areas. “Whether it’s software that we’re creating or whether it’s a product that we’re creating, it’s part of the innovation cycle, what we do, and I think in the end they’re not as dis-similar as you might think.”