TAKING TECHNOLOGY TO MARKET

All Environmental technologies seem to suffer from always being something for the future: “hydrogen is the fuel of the future… and always will be,” “Brazil is the superpower of the future, and always will be.”   

My thoughts are focused on the water sector for this blog and why it takes so long to get to market ?

Despite “water is the next oil,” nobody ever seems to put their money where their mouth is in the water sector.

In general terms:

• The water industry is huge, mostly public owned by entities that have little capital for the billions in upgrades needed
• The global population is growing every year
• The global population is increasing most rapidly in the driest regions.
• Water is cheap, so no one conserves it properly
• Water is even more important than energy as a “basic right,” so no government will let its population run short.

Therefore, investing in water technology (desalination, membranes, remediation, purification, metering, etc.) to create solutions to the coming problem is a good idea. But the investment community just doesn’t walk the walk when it comes to water. 

Why is that?

Some macro thoughts on why:

• Motivation. The water industry, while huge, is not widely privatised and is very fragmented. It’s not been heavily “technology” driven to date, and has proven to be even more cumbersome than the electric utility market to break new technologies into. Investor owned utilities, which are now a very large portion of the electric and gas utility market, are just a few percentage points of the water market. So very few of the potential customers for technology are big enough and profit driven enough to care.

• Maturity. The technologies these water companies use is relatively old. Membrane technology used in reverse osmosis and more efficient valves and even smart control systems are not new ideas. And a lot of potential “breakthroughs” have been beaten out of the industry already. So unless price radically changes it’s likely that the technology we’ve got is “good enough” or at least hard to beat.

• Price. Water is cheap (see above). Nobody’s bearing any real pain today in most of the industrialised world. In Scotland we’re not fully metered and pay little notice to the cost of water. In pockets of the market, this may be changing (we do read about water crises in Australia from time to time but it is really hard to get a return on R&D when your customer is measured in “pockets” as opposed to “markets.”

• Solar, ethanol and carbon. Three to four years ago, water was the buzz of the venture capital world. Money looked like it might flow. Then the solar and ethanol markets took off, carbon trading got traction and climate change grabbed the headlines and the political mindshare (including mandates, rebates, and subsidies). Water – both the problems and the solutions – fell out of vogue.

• Size and capital intensity. Like energy projects, water projects are often really big and expensive. Scaling up ALWAYS has more risk than one thinks it does. Like in energy, you don’t invest in a pilot for a new technology lightly. And just because one or two projects with a given technology are running it does not make a successful launch. When 30 or 40 are running for 5 to 10 years, then you may have broken through.

Some specific thoughts on how technology is adopted:

Lets now assume that we believe in our technology enough to launch into the water sector:

The ‘diffusion of technology’ or ‘the rate of adoption’ is not about selling to markets; its about selling to people; people that often have vested interests in other technologies or situations . These people have certain characteristics that have been academically broken down for us into five broad groups and they have a broad market share attributed to each of them (Enthusiasts 2.5%, Innovators 13.5% , Pragmatists 34%, Conservatives 34% and Skeptics 16%).

The sales process gets a little more confusing when each of these groups are expecting something different from your technology / company; the enthusiasts don’t want to pay, but feed back and develop with you; the innovators aren’t particularly price conscious but want to champion the technology in their application so they can be seen to be up to date and looking forward; the pragmatists want a good price and a more defined service; the conservatives want a whole product and service, a rock bottom price and a training programme for their own engineers; if you get as far as selling to the skeptics they will want a whole product, full training programme, full technical support and O&M manuals in several languages.

It is the role of your sales, marketing & business development people to work out the category your potential buyer fits into and persuade them to buy; this will not be a simple move from one category to the next, but a roller coaster of different presentations, levels of product or service, price point and after sales support.

Each category has a broad academic length of time to become fully adopted; remember that in some vertical markets, six projects may be all that a category has to offer. I have found that in the water sector the academic time line is multiplied by a factor of approximately 2.5. If you think about the type of industry we are talking about, conservative, cautious, risk averse; it is perhaps understandable that there is a resistance to change amongst its people.

An overview of the timeline to adopt a new technology in the water sector :(similar for energy and other environmental technologies).

MARKET SHARE %	ADOPTER CATEGORY	MKT CREATION	EARLY MKT	MAINSTREAM MKT	MAINSTREAM MKT	TOTAL ASSIMILATION
2.5	INNOVATORS
13.5	VISIONARIES
34	PRAGMATISTS
34	CONSERVATIVES
16	SKEPTICS
	YEARS TO MKT	2	5	8	12	20

If you have the right technology, the right mindset and a good team, with some early sales traction, you have a great chance of getting the finance you seek.

As you leverage your networks, gain reference sites and win early market share you are in fact running towards the chasm that exists between the early market and the mainstream market; this is where fortunes and reputations are made and lost. Rather than slipping into it and going into free fall you need to work dilligently to become the market leader in one application; there are many ways of  achieving this and I will be sharing my thoughts and observations in future blogs.

However, it remains to be seen if water is really the next big thing. And it definitely remains to be seen if investors have the patience to hang in there long enough to see the 40 plus applications operating for 5 - 10 years before new technologies are deemed to be fully ‘in market’. 

Engage Your People

It has been well documented over many years that the three main drivers of human motivation are fear, sex and money; something that the advertising industry certainly understands implicitly.

The real life 'human web' of friends family and colleagues; their own connections and advice are what will often set your career on track and in some cases land you that dream job. Once you are in post, the level of what you can and can't do to keep your job can paralyse you into inactivity and you will slowly close the door on those networks that opened the door for you in the first place.

In these austere times you could well be working in fear of crossing the line 

Fear of insider trading

Fear of nepotism

Fear of accountability

Fear of losing your job

Even face to face networking (or in other words, selling; the best form of capital raising you can get) is affected, I am sure that the following are topics on many management meeting agendas today:

1. Its too expensive to make the sales call if we don't know the outcome before we get there

2. We can't sell at that margin because we are committed to maintaining a margin of x

3. You cant accept or give hospitality in case you are placing the company in a difficult situation

When margins are squeezed and the sales cycles lengthen, many of our executive managers will start to micro manage the situation to such an extent that the brave, gregarious, motivated and committed sales team spend much of their day filling in forms and the rest of their day trying to find a new job; but their networking doors are closed; so even more fear and paralysis sets in; leading to even more pressure on the executive team and the business.

Some thoughts for both sales & executive teams:

1. Keep your networks open through social media

2. Give more importance to social and environmental drivers as they will add significant value to your bottom line. Finance alone is no longer good enough (its a triple bottom line)

3. Trust the people you have recruited, presumably they are better than you at doing their job or you wouldn't have recruited them

4. Be inclusive, making it through difficult trading times is a team effort

5. Look after and trust your people and they will look after your company and you; they will go the extra mile.

We can have as many check points, processes and systems as we like (and yes we do need them; but match them to your organisations size) but the tipping point for many customers is the personal relationship, the value's you stand for. Old fashioned, low tech, I know, but core values are what keeps relationships together once the courtship is over.

The interesting thing is that it takes an austere, faceless, virtual connection to demonstrate how we crave personal and visual contact. Facebook is here to stay; take a leaf out of their book and stay connected to your people.