The Curse Of Doing Nothing
To all the ambitious, aspiring, yet frustrated salespeople: have you ever wondered why you can’t close the deal — after doing EVERYTHING humanly possible to articulate the superb value proposition of your products or services?
Well, don’t despair. Instead, read the following sentences. If I only had a dollar for each time an aspiring entrepreneur tells me:
“We put ourselves into our customers’ shoes and understood their problems very well. We then designed a solution that solves their problem — and still, the customer sits on a fence. We can’t close the deal, no matter how hard we try. What’s wrong with what we’re doing?”
In all such cases, my advice is as follows: IT’S NOT YOUR FAULT… Stop being so hard on yourself. Understanding your customer’s problem and proposing a great solution is a testament to your entrepreneurial prowls. That’s what good entrepreneurs do — they solve problems…
Unfortunately, you are dealing with extremely powerful hold-ups and obstacles that are well documented in behavioral economics. It’s the so-called “DO NOTHING” decision and the gravitational pull of the “STATUS QUO”.
For years, the Nobel Prize winner, Daniel Kahneman (DK), offered several theories describing cognitive biases that are hard to overcome. It includes: The Endowment Effect, Loss Aversion, and Status Quo Biases. And all thoroughly explain why we are often faced with inaction that is hard to stomach.
DK says: “Without addressing risk aversion, no matter how good your story is — it will still face much stronger headwinds than it deserves. Logic is huge, but it’s always trumpeted by emotions… We’re all TWICE AS SENSITIVE TO LOSES than we are gratified with our wins”
Granted, not all executives are affected by such a bias — but many are. In some cases, the use of data under the null hypothesis proved to be effective to overcome the “status quo” bias. But even after explaining the consequences of doing nothing and proposing specific actions to avoid negative outcomes — the deals often don’t close, and the sales don’t materialize… Why?
Turning Costs Into Profit Centers (TCIP)
In “My 1001 Entrepreneurial Tales: Keyword Spotting & The Magic Of Closing The Deal” I talked about one such case and introduced a brand new concept of turning costs into profit centers. The operative word here is… COSTS. And I said:
“Even the best technologies and the best solutions — still do not guarantee to close the deal. Offering lower costs at a higher value is necessary but often not sufficient. I learned it while selling to corporate clients — such as Verizon…
Obsessive COST reduction doesn’t bring radical PROFITABILITY. Turning COST into PROFIT center — does. The real MAGIC occurs when you can clearly articulate such a TCIP strategy — no ifs, or buts… Communicate it wisely, and you will pull the rabbit out of a hat, too…”
And ever since publishing my post, I looked at and analyzed my entrepreneurial past through TCIP glasses — asking a single question: would TCIP help close the deals when everything else failed?
The common denominator in all the past closing failures was my obsessive focus on reducing the clients’ costs and saving them money. But the clients still needed to spend the money upfront to realize future benefits. And this is a hard sell to people preferring that things stay as they are…
Influenced by the status quo bias, my prospective clients often showed strong resistance to change — regardless of the amount of savings. But what if there was no upfront cost at all? What if instead of costs, we would offer just a stream of new revenues?
At the first glance, the above questions seem unrealistic. But when I started to dig deeper and investigate possible similarities to my Verizon story — I found several “outside-the-box” options to replace the “spend now, save later” narratives…
Energy Efficiency Retrofits — LED Lights
For many years, Canada Green ESCO offered low-cost financing for light retrofits in commercial buildings. We would send the entire crew to property management companies and count each light bulb in their buildings.
Moreover, we would contact local utilities and enroll the above properties in the appropriate energy retrofit programs. The incentives were quite significant and brought tens of thousands of dollars to building owners. All they had to do is to replace the existing lights with energy-efficient LEDs.
Our detailed financial models demonstrated operational savings of 30% — year after year, into the future. And since real estate constructions last for many years, we would demonstrate an IRR boost over 10, 20, or even 30 years. Moreover, the retrofits’ CapEx was also reduced by another 20% — using the already approved incentive grants.
We even created an elaborate data room and included all the technical specs and price lists for due diligence. And yet, in some cases, the “let us think about it” reply was the only answer we ever got…
Energy Efficiency — Hollow-Core Concrete
In similarity to the above LED example, I had the privilege to assist an ambitious startup selling the most ingenious solution aimed at the construction industry. For years, many builders around the world were often preoccupied with CAPEX economics — to the point that lowering construction costs takes precedence over long-term savings offered to tenants and building occupants.
Although BOMA estimates the costs of maintenance over 25 years to be 3X higher than the construction costs — many builders were just as happy to pass higher maintenance costs to tenants — instead of investing in state-of-the-art energy efficiency solutions.
But what if they could do BOTH? As mentioned in my post: ”Are We All Barking Up The Wrong Trees?” — this particular entrepreneur realized that it is possible to use dormant real estate assets such as concrete floors — as a low-cost, rechargeable thermal energy battery.
Using Building as a Battery (BAAB)™ reduces HVAC costs and complexity, and offers multiple streams of social, economic, and environmental benefits — without adding cost to construct. Both: builders and occupants win!
However, lower CAPEX is just one side of the story. By the time builders can shrink the duct-work and use less insulation — livable space grows with it.
Perhaps it’s not such a big deal if you’re building a two-story house in a suburb. But it’s a different value proposition if your 52-story condo has gained 4 extra Floors!
Paying less for smaller HVAC systems and saving on maintenance is a no-brainer. Especially, when you consider the limited life cycle of HVAC equipment and replacement costs after 8–10 years.
And if at no extra cost, your offerings also end up improving air quality in the building and raising occupants’ comfort level by offering inexpensive radiant heating and cooling — the sale should be easy. Right?
Admittedly, some of the largest real estate companies were genuinely intrigued by our offering. That is… until the status quo bias kicked in…
Nowadays, I am convinced that the only way to successfully overcome the Endowment Effect, Loss Aversion, and Status Quo biases is to utilize my TCIP framework. And it became the backbone of my thesis — described in LeanCVC™ and Reinventing XYZ posts.
And as the fight against Climate Change intensifies, the new arrows are added to the Cleantech quivers — daily. Yet I still see too many companies focused on pushing their product out the door — while losing ~70% of untapped revenue streams. Such include:
- Energy Efficiency Incentive Programs
- ROFR revenues collected from supply chain participants
- Sale Commissions from supply chain participants
- Advertising revenues from supply chain marketplace
- Long-term energy storage revenues
- Revenue streams from energy price arbitrage & curtailment avoidance
- VPP fees to be collected through the provision of ancillary services and frequency/voltage regulation, etc.
For More Information
Please see my additional posts on Linkedin, Twitter, Medium, and CGE’s website.
You can also find additional info in my book on amazon: “AI Boogeyman — Dispelling Fake News About Job Losses”, and on our YouTube Studio channel… Thank you.
“BODs Serve Investors, Advisory Boards Are CEOs’ Best Friends”
- Imitation works best in karaoke bars, not in business. To escape the competition, businesses need to constantly reinvent. So, I join Advisory Boards and “unlock” Radical Innovation.
- Helping the CEOs to escape the competitive floods — is what I do. If product descriptions qualified as IP, Business Development (BD) would have been easy. The problem is that all the competitors can use the same narratives.
- No amount of branding, marketing, and wordsmithery is going to suffice w/o utilizing BusinessAI™ — the strategies I specifically designed to achieve BD excellence.
- As a 30-yr BusinessAI™ veteran, I offer unmatched BD investment advice to VCs, PEs, and their portfolio companies. In many cases, I also Propose, Design, Structure, Finance, and Deploy state-of-the-art Joint Ventures to bring RAPID REVENUES — just as I did w/ Verizon already 20-yrs ago…
- As a founder of Canada Green ESCO Inc. (CGE), I used BusinessAI™ strategies in CleanTech and focused on fighting Climate Change and Environmental Risks — dealing with stranded assets at the largest utilities. In total, CGE raised $1B+ in project finance linked to solar (utility-scale and distributed), wind, geothermal, Waste-To-Energy (WTE), energy efficiency, and more.
- My pattern recognition abilities allow me to see what is still missing & how to maximize business offerings & profitability. And as a coach & mentor, I bring unparalleled business savvy to separate the wheat from the chaff…
- What I learned over the years is that it is not just technology innovation that makes all the difference. Business Model Innovation is as disruptive as Technology Innovation and yet I see too many companies focused on pushing their product out the door — while losing ~70% of untapped revenue streams.
- So, you can call me: “The Midas of Business Development (BD) Innovation™” as my advice is “worth its weight in gold” — at least to some open-minded CEOs…