So you thought it was tough to build your cleantech company a year ago? Today, the energy prices that supported your business model have dropped significantly. Your team says it will take longer to develop your products or ramp production. Your investors tell you to slash costs (see Sequoia's R.I.P. presentation). Your next financing is less certain. And your customers have frozen spending. Welcome to this week's episode of Survivor.
But before throwing out the strategy baby with the recessionary bathwater, consider – are the problems you need to solve now really all that different?
What to do? The conventional wisdom says in with basics, out with fluff. In with proven, out with guesswork. Great advice, but light on details.
Here are some strategy dos and don'ts that are particularly helpful for growing during this recession:
- Make Sure You Have a Strategy: The best companies have a tight focus and a solid strategy. Companies like First Solar and Nanosolar have a heavy focus on $1/watt and utility-scale installations. On the contrary, a product plus a sales team is not a strategy. I've seen many companies that can't answer basic questions -- with meat -- about their sustainable competitive advantage, who exactly will buy their product and why, why they'll merit high multiples, etc. If you haven't engaged in a hard-nosed strategy exercise, do yourself a favor and set aside some time for it. Use your advisors, boa rd members or consultants to help get an honest score card and action plan. Better to identify problems early, fire-harden your strategy and act accordingly. It will be less expensive and improve your long-term chances.
- Connect to the Big Picture: Innovation doesn't have to be boring. You are not selling widgets. The Obama Administration has made cleantech one its top priorities. Your company and products are special. They may help fight climate change, reduce carbon footprint, or save energy. Find a way to connect to a bigger picture -- both in reality, and emotionally. Tell a story that shows how you make a difference. I am not suggesting that you greenwash. But companies too often get lost in technology that does not tell their real story. And, make sure that you broadcast that message to your potential customers and partners. This is not the time to be cutting your marketing efforts, even while you make fewer dollars stretch further. For more marketing tips, see The Four Ds of Cleantech Marketing.
- Follow Your Strategy: Consistency counts. Avoid the "strategy of the month" syndrome. Make a plan and execute. If your product benefits and sales cycle are best matched to commercial accounts, don't suddenly sell to consumers because they are "low-hanging fruit." Too many companies base their sales efforts on their most recent leads. You risk dividing your development resources, confusing your sales team and customers, and spending unnecessarily. As a result, you probably won't even get your "low-hanging" sales.
- Execute With Precision: This may be one of the most important differences during a downturn. Your circumstances are less forgiving. Don't guess at product or service features – make sure there's a match between what you'll bring to market and what customers want. Don't guess at who will buy. If you're new, find the early adopters that will be true believers. You may not be able to rely on a friendly beta customer from amongst your investors' portfolio companies. Make sure your messages are on-target, clear and differentiated. Make sure you deliver compelling benefits to get to the purchase order in this environment.
- Monitor and Respond, Quickly: It's especially important to have good metrics, particularly leading indicators, since there's less room for error. Are your sales stage definitions meaningful – and indicative of future sales? Can you tighten your project tracking and estimation, so you can have better estimates of product delivery and project installations? Forewarned is forearmed. Build ways to avoid end-of-quarter or other surprises.
- Believe Your Own Hype: No matter how successful you may be at convincing the world you're great, don't get complacent. There's a difference between a hot story and a sellable product. You need both.
- Panic: Tough times don't mean you need to react by reflex. Move quickly and decisively, but take enough time to make sensible decisions.
The business strategy lessons that apply to cleantech are similar to those of other early-stage markets and technology developments. And the lessons that applied in other recessions apply to cleantech too. If you've earned your stripes through similar periods, they'll serve you well now. If not, make sure to get help from others that have been through the wars.
Steve Weiss works with cleantech companies and venture firms, including Aspen Aerogels, NewCycle Capital and Green Wireless Systems. Steve helped make Serious Materials one of the hottest cleantech companies the last three years, as its vice president, marketing. He has over 25 years of business success. Contact him at firstname.lastname@example.org, or read more here.
The above opinion piece is from an independent writer and is not connected with Greentech Media News. The views expressed here are those of the author and are not endorsed by Greentech Media.