Disruptive firms face challenges building confidence in their solutions

While innovative companies typically sell creative solutions to known problems, disruptive companies often find themselves explaining why the status quo is a problem before they even talk about a solution.

Attendees at TheBusinessDesk.com’s Disruptors round table in Harrogate last week, sponsored by Clarion, BHP and Brown Shipley, said this posed challenges not only in building credibility and awareness, but even in pricing and selling solutions, and in attracting financial backing. In some cases, regulators may also need convincing.

Julian Graham-Rack is chief executive of digital transformation firm PrinSIX, which has developed a platform enabling lenders and other risk businesses to onboard new customers smoothly while ensuring regulatory compliance.

“I thought that if I spoke to other lenders they’d understand the problem and bite our hands off for the solution,” he said. “But I spent so much time explaining to them what the problem they had was. And so the sales cycle, which I thought might be six months, is typically 18 months. Our challenge from day one has been educating people that there’s a better way they can trust and that they can adopt.”

Rich Kenny, group sustainability director at Techbuyer and managing director at Interact, said, “In traditional sales, you’ve got that ‘Solve the problem, provide a solution’.  The disruptor moves past a traditional sales cycle and goes, ‘Here’s a solution you didn’t know was possible.’ You’re solving a problem they didn’t know they had, which is incredibly powerful. But the problem is that you’re doing something that hasn’t been done before, so there’s a credibility issue.”

With Interact, a tech for good consultancy specialising in decarbonisation and energy efficiency, Kenny has built credibility by releasing data and processes as open source and writing academic articles. Last year he was made a visiting research fellow at London South Bank University’s school of engineering.

Dr Casey Woodward, founder of Agrisound, has developed remote pollinator monitors which accurately assess the number of bees, moths and other pollinating insects in a given area. Although the advantages of such a system may seem obvious in agriculture, Woodward has also found it necessary to explain why it’s needed.

“What we’re up against is a bloke with a clipboard. Everybody realises that it’s labour intensive and it’s slow, but it’s the ‘if it’s not broken, don’t fix it’ type of mentality.”

A further challenge, Woodward added, was the complex and long-term nature of ROIs in agriculture, often affected by subsidies.

“We focus on bigger retailers or, outside agriculture, bigger corporates, who typically have more skilled personnel – they have a sustainability director or they’ll have an in-depth technical team who come in and take the time to understand the solution we provide and see the benefit of that.”

Mike Pyke, chief operating officer of Chameleon Technology, which designs and makes smart energy solutions, including smart meter displays. said they had also found larger firms more receptive to disruption. The firm recently launched a new vehicle charger using solar energy and heat pumps as well as domestic energy.

“We thought our natural place in B2B sales would be small fleets – 15, 20, 25 cars. In fact, the conversations we’re moving closer to the close are huge fleets, tens of thousands. It’s quite surprising to us, but it seems those organisations are now putting in place people who might listen to another solution, who have time to listen.

“We’re struggling to have those conversations with someone for 50 cars – they’re just too busy, or they’ll talk to us but don’t see the problem.”

Graham-Rack said he found smaller firms made purchase decisions faster, but less structured in tech capabilities, making delivery harder, whereas larger firms took longer to make decisions but their structured tech made deliver easier.

Pricing solutions

Alongside the critical need to educate customers, several attendees said they struggled with pricing their products and services.

“The biggest problem for us is pricing what I think is a fair value for our product, and I’ve been told that it’s embarrassingly cheap,” said Kenny.

Leaders said pricing also impacted credibility, with solutions priced too cheaply being perceived as untrustworthy. But with novel products and services, they were no existing examples to help develop a price potential customers would consider reasonable.

Woodward agreed. “We tried to do a one size fits all, costs plus margin. We know it should really be a percentage of the value of regeneration, but it’s quite difficult to do that. We’re looking at it at the moment.”

Ambasat, which makes microsatellites and remote sensors, had a complex pricing structure with lower prices for educational institutions and students than for commercial customers.

“Everyone knows there’s very little money in education,” said operations director Khurram Hussain. “On the commercial side it’s a totally different pricing model because at that point we’re working with a business that doesn’t quite know what they want. So we have to hold their hand a bit more, it’s more bespoke.”

Regulations

While regulations are often considered a necessary evil, our disruptors found opportunities within them.

Alex Ryan, director at TritonTrak, which develops digital tracking solutions for businesses, including vehicle tracking and job logging, said an upcoming requirement for HGV drivers to take a breathalyser test before driving generated an idea for a Bluetooth breathalyser to connect to the firm’s digital tablets and to the fleet manager.

“Regulations actually help us create products for our customers,” he said.

Pyke said energy regulation was generally good for Chameleon, and he wanted to see smart meters mandated by government. “They’re hoping that replacement of older meters by smart meters will longtail it out for the rest of the industry. But there’s no doubt that some people just won’t have a smart meter. It’s really polarising debate to try to get positive traction in the consumer space.”

Kenny said disruptors should play an active role in shaping regulations, which were usually based on current conditions rather than future trends.

But Hamish Morrison, joint managing director of BHP, warned, “Investors like regulation as it generally protects the status quo of large corporates. They can get more people in to lobby, who can drive the legislation to protect their business model and stop disruptors coming in.”

Encouraging disruption

Attendees were unanimous that formal education must adapt to encourage greater uptake and development of disruption.

“Howe do you bring on that first talent, bring people in and educate them to think differently?” Phil Harris, executive director of Brown Shipley, asked. “Education is traditionally built around historic methods, and by the time you’ve finished your learning it’s out of date.”

Hussain called for better funding in STEM education. “We have a huge shortage of people going into STEM industries. That shortage means less innovation is happening, and that means we are not progressing as fast as we could be.”

Jonathan Simms, partner at Clarion, wanted to see better access to business knowledge. “Knowledge is power. You can’t get away from that. You’ve got as great idea but how are you going to monetize it, and monetize it well? I don’t think people get and education around that, and I don’t think it comes very easily.”

The Disruptors Harrogate round table is the second of three round table discussions looking at disruptive companies. The series is sponsored by Clarion, BHP and Brown Shipley.