Cleantech challenges, sales and marketing
As the climate continues to change, clean technology, or cleantech, is becoming a critical aspect of how countries and economies continue to develop. While governments and societies work to mitigate the negative impacts of climate change by adopting policies and practices that reduce emissions, companies must also become responsible contributors to the cause.
Cleantech, as a growing industry, is leading that cause in a very real way. The sector focuses on developing technologies that reduce emissions and increase efficiency in already-established processes.
Cleantech for “climate un-change”
The cleantech industry stands on the legs of a philosophical maxim that we owe future generations a habitable environment. In that sense, cleantech offers a beacon of hope. When it comes to how we make important adjustments to the way the world works, particularly in the next two very crucial decades as we transition to a warmer world, the sector can have a real impact.
One would think that growth in this vertical is skyrocketing and, in some ways, it is. But in many other ways, the vertical comes with its own set of challenges and hurdles to overcome. One of the main overarching challenges comes from the space itself and the way that technology and innovation play into it.
“Cleantech” is a broad term made up of both software and hardware components and sales in the sector are usually focused on business-to-business (B2B) customers. Successful cleantech companies are solving a pain point through the technology they’ve developed or built upon. However, unlike other “-tech” verticals, cleantech operates heavily inside existing infrastructures and closed systems that are very difficult and/or expensive to change. Food production and transport, water movement and treatment, the creation and storage of different sources of energy – all of these problems result in multi-million or -billion dollar projects that require a massive amount of planning. Together, these factors make the cleantech industry an interesting one as room for innovation exists, but implementing that innovation can often become complicated.
We sat down with Devesh Bharadwaj, CEO of Pani Energy, to learn more about some of the difficulties in operating a business in the cleantech space. While Pani Energy works primarily in the water and energy fields, the growing pains and lessons they’ve learned along the way can be applied to the wider realm of cleantech as a whole.
Working with established infrastructure
Cleantech operates within a complex system of established infrastructure. This is one of the main challenges because innovation, while it can be relatively quick to develop, often requires a lot of time, effort, and costs to implement. Even if the infrastructure is brand new and fully operational, redefining the scope of a long-term, high-cost project’s plan is difficult to do on the fly.
Since the infrastructure in question usually delivers essential services, pausing it, turning it off, or slowing it down, even for a brief period of time, to test out a different solution becomes difficult. Add in a long and bureaucratic sales process, particularly when talking about selling to governments (which comes with its own set of challenges), and the hurdles become even more seemingly insurmountable.
When faced with tremendous penalties if critical infrastructures go down, it’s easy to see why governments would be hesitant to disrupt a project that’s been decades in the making in order to test a one-year pilot project that offers potential innovation. In cases where it does happen, the disruption is either low risk or requires low(er) operational costs to implement. The risk versus reward equation needs to make a lot of sense in this sector in particular.
This means that cleantech companies must prove the value of their solution upfront. Without the right combination of perseverance and luck, even those that have the ideal solution are often too late to the party, having to wait years, if not decades, to get a chance to sell their technology to the institutions that it would benefit most. And, even if the opportunity to sell is there, it’s usually difficult for companies to prove that their technology will make a real difference. A pilot project that runs for a year or two can’t show proven results over the next twenty to forty years, which is the typical lifespan of one of these projects.
“Whenever there’s a disruption to existing infrastructure or the existing way of operating with additional risk involved, and only incremental benefit, that’s when sales cycles can be slow, especially with critical infrastructures” -Devesh Bharadwaj
Building new infrastructure is a long, hard, and expensive process. Although it changes with market timing and the industry segment, most potential customers will shy away from taking on an ambitious project, especially one in which the benefits are yet to be truly tried and tested. This means that companies in the space either need to focus on working within existing structural and systemic limitations or they need to find ways to fill in the uncertain blanks of a project with evidence-based knowledge.
Filling in the knowledge gaps
In this industry, research and development takes a long time, especially when compared with other tech verticals. Disruptive hardware innovations usually require large capital investments and add turbulence to the value-chain. Although some system design technologies can build upon off-the-shelf components, the majority of hardware innovations are new and novelty usually requires very particular specifications. These specifications, in turn, contribute to large expenditures and can be barriers to scalability. Software, on the other hand, can utilize the significant existing open source code as a starting point, making the process much faster and reducing the time (and possible costs) it takes to reach the end goal or end product. Building or amending the existing value-chain is faster and cheaper by magnitudes, with cloud infrastructures being able to be deployed within days. This combination results in innovation, incremental or disruptive.
“If you want to break the market, you need to have a disruptive impact, but also offer non-disruptive adoption.” -Devesh Bharadwaj
Because innovation is often slow and incremental and project plans are highly specific to their location, there is a gap in the data available for research and development. Using short-term pilot projects that last several months to make projections with the help of various digital tools can fill the gaps in knowledge, which is another area in which software plays a role in cleantech innovation.
“What the internet did for all services – for everything – I think intelligent digital technologies in the water space will do for cleantech technologies.” -Devesh Bharadwaj
Innovation in hardware and software can help gather relevant data as well. By looking closely at system designs, connectivity, how data is collected, and how that data is used, companies in the sector can develop a good understanding of how each piece fits into the bigger picture. This provides them with a capability to see where risk can be reduced and reward can be increased, particularly from a customer’s perspective.
When starting out, industry experience is the most expensive thing to get as it requires a lot of global travelling and access to the right people and organizations. Devesh recommends spending time talking to people that have already spent years working in the market to glean some of their knowledge, while also broadening the network of contacts and potential customers. Their practical experience will be invaluable when it comes to creating a good long-term development strategy. And sometimes, luck plays a big factor in success as well. Attending the right conference and having the right conversation can go a long way in this influential, yet still emerging sector.
Strategic sales and methodical marketing
The cleantech industry is a typically slow one to experience rapid growth in. Incremental growth is much more likely so maintaining financing and spending operational costs wisely is critical, especially before the company, technology, or product has a proven track record.
Since the cleantech space deals with B2B customers primarily, the average consumer isn’t aware of many of the benefits provided by companies operating in the space. By improving established processes and making them more efficient, the trickle-down effects are felt by society overall, even if individuals in that society aren’t actively aware of them.
With the Internet of Things (IoT), Smart Metres, and other tech-related tools becoming more prevalent, this is slowly changing as the average end consumer becomes exposed to the industry. Nonetheless, marketing in the space is challenging because it requires a strategy that reaches relevant B2B customers. This makes for a complex customer sales cycle that needs longer-than-average time and resources to close.
Customers are likely to be in other countries, meaning the potential market for this space really is global. Having a presence in relevant areas becomes another challenge for companies, especially if they’re still in the startup stage when resources and financing are still limited. And being able to access (as well as execute) in an area of operation is critical, meaning that navigating through local regulations is key too.
Devesh recommends focusing on finding a few customers at first to really showcase what the cleantech company or technology has to offer. By carefully selecting the right customer in the right market segment and looking for a good fit for the product or service on offer, sales and marketing collateral will be much easier to develop.
“Your business is validated by proving that there is a large market that has the ‘problem’ and then strategically choosing beachhead customers to show that you can solve the problem – don’t focus on getting hundreds or tens of customers at first, but getting one or two of the most miserable customers and validating the value proposition.” -Devesh Bharadwaj
By seeking out customers with the right technical fit and geographical diversity upfront, a cleantech company can validate their innovation and set themselves up for further growth. Showing that their technology is viable in areas around the world and using pilot projects to make educated projections into what the results of the innovation will look like in five, ten, or twenty years’ time is a crucial aspect of selling in the cleantech space. Pilots in diverse geographies validate a company’s capability to reach different markets and close deals, allowing the company to project global revenues using proper distribution structures. If a company can do these things well, sales will grow organically. Then, ramping up efforts via the usual marketing channels will further accelerate that growth.
Devesh explains it succinctly when he asks: “Do you solve your customer’s problem?” If the answer is “no,” consider adapting the solution or pivoting the business until the answer is “yes.” If the answer is “yes” already, then make sure you and your team are able to articulate why and how it’s a “yes” to attract more relevant customers.
“In early stages of the technology’s development and commercialization, remember to be fixated with the problem, not the solution.” -Devesh Bharadwaj
Assembling a great team behind cleantech that works
By proving the value proposition at a relevant scale and in an appropriate market segment and then distributing the technology effectively at that scale and in that market, a cleantech company can really transform an industry. Part of that success hinges on the product or service and part of it hinges on the team behind it.
Just like with customers, selecting a good team of employees, advisors, and investors will contribute to a company’s long-term success. This team will help build, support, and continue developing innovations that have the potential for widespread impact. Having a team of great employees and investors backing the company can help attract government interest and additional sources of financing, like project-based financing, partnering opportunities, non-equity funding, and more. It can also increase exposure as good public relations create more opportunities for the company and product.
By developing the product well, selecting customers carefully, proving the technology works on a smaller scale initially, and then using that data to project long-term impacts, the team can increase sales and marketing efforts easily. When a product works in cleantech, it really sells itself. The key to success is in disrupting the processes behind mass adoption.
How to succeed in cleantech
Cleantech is an incredibly interesting sector for a number of reasons. It offers room for innovation in both software and hardware and has the potential to make a real, critical impact on climate change and how society is affected by it in the long run. It is also one of the more challenging spaces to operate in due to costs, established infrastructures, slow-moving bureaucratic processes and systems in place, and a gap in data.
The reality of operating in the cleantech space is that a company must take all of these factors into consideration, while also implementing their solution without creating more emissions and further exacerbating the problem. At the local level, how can we provide clean air, water, and soil using better, more efficient systems? At the global level, how do we do that without increasing overall emissions?
If you’re looking to enter the cleantech space, Devesh recommends surveying existing technologies and improving upon them, unless your idea is able to make a quantifiably significant (i.e. 10x) change to how we utilize resources in a reasonable amount of time. If your solution is truly disruptive in impact and make, it is still crucial to survey parallel solutions involved in your design and value-chain. To bring your solution to a commercial scale in terms of price and performance, you’ll need to understand the amount of innovation, resources, and time needed for those parallel technologies.
Focusing on how to improve, upgrade, or maintain aging infrastructure is another key area to consider. The best direction, however, might be to focus on developing or building upon technologies that improve efficiencies in existing infrastructure. This is one of the most achievable goals in terms of effort, cost, and potential for adoption, while allowing us to “un-change” the climate which is an extremely time-sensitive issue.
Cleantech is not an easy sector because it’s a very operational, project-based area that demands real results. However, cleantech usually represents large market opportunities and if your technology offers provable value to customers in this sector, it has the potential to really transform the industry and have ripple effects throughout the world.
Find more information about our Cleantech Scale-Up Program here. Get in touch with us if you and your cleantech company are doing great things & looking for ways to grow.