The juice isn’t worth the squeeze

Sir Dave Brailsford, the infamous sports performance coach best known for being the architect of British Cycling and professional Sky team successes, once coined the term “marginal gains”. Or at least he was among the first to put that phrase in the public’s vernacular. He proved that a collection of slight, minute improvements in different areas of a performance package can add up to a much larger gain overall. It’s a fascinating strategy and, using the innovation foundation of trialling individual things without upsetting the whole, has been demonstrated to bring success.

However, in the the slower-moving corporate sector, where success is measured, often deliberately, in years, and stability is the order of play, it can be a different story. The innovation trial that demonstrates benefit and evidence of success is the easy bit; convincing the business that it’s worth the leap forward isn’t always possible.

A few years ago, I met a startup to discuss their sensor-based solution that used AI to make forecasts from its data. It was impressive, and they had lots of evidence of where their customers had saved money using insights produced by their kit. An important step in the innovation process is building advocacy, so after the call, I talked through their capability with colleagues from a business unit that we were supporting. They fed back that while the solution was more advanced that what we currently had access to, it wasn’t sufficiently advanced enough, nor brought about any significant new benefits, that they felt was worth trialling – and certainly when the current capability was virtually cost-free to their business.

This got me thinking of similar cases where a best-in-class solution only improves what we do today by a margin too small to justify investment. Where the delta between “good” and “excellent” is just too narrow. An analogy might be that you own and drive a modest, family hatchback but fancy a premium, German-made model instead. The cost-to-change and the new running costs will doubtlessly invade your bank account; but what’s your tolerance for return on investment? Is the badge all-or-nothing? You’ll still get from A to B. One may have prestige and more toys to play with; the other might do the journey at a lower cost.

The best innovations I’ve encountered nearly always have at least two major disruptive benefits to them. For instance, they might save money by reducing opex and time for a colleague to operate it. Or reduce costs while improving customer experience. Or delete an existing process entirely while speeding up another. A combination that’s powerful enough to justify a step away from what we’ve always done, and then, however better the incumbent solution is or can get, it can’t ever reach the heights of the new solution. A situation where a business would always be worse off without it.

Startups need to better understand this conundrum with their customers. Corporations are not going to rush to buy your product if there are only modest gains in performance. The unseen costs of developing the business case, contracting in and onboarding a new vendor, and then completing the change programme – beyond your shiny pricing model to tempt them – means the outlay is unlikely ever to be recouped. The juice isn’t worth the squeeze, as a former sales and marketing colleague once said to me.