Challenges water technolgy manufacturing SMEs face when bringing new solutions to the market and how to overcome them

In our previous blog post, we described and discussed some of the key challenges companies operating in the renewable energy space face when developing and growing products and services. We also briefly highlighted ways to overcome such challenges. The blog post can be read here.

In this blog post, we discuss the challenges companies in the water technology sector face when developing and growing their products and services. We also discuss ways to overcome such challenges.

Companies in the water technology actively seek to improve the overall quality of life by developing innovative solutions regarding water quality, the energy transition, soil health, and critical (water) infrastructure. However, developing such solutions is one half of the puzzle. The other half, creating a solution tailored to a target market, offering it, and growing it in the desired market, is not always straightforward. In the following paragraphs, we highlight some of the key challenges these companies face, as well as how these challenges should be addressed.

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Companies operating in the water technology space often face a myriad of challenges when trying to launch and grow their solutions.

Slow adoption by traditional industries

Due to high switching costs, water utilities or agricultural customers may hesitate to adopt new technologies. Additionally, the slow adoption of new technologies is also attributed to long sales cycles. It may take anywhere between two and five years for the large-scale adoption of new technologies.

Companies innovating in the water technology space can and should take a few pre-emptive actions to minimise the risks associated with slow adoption. During the development and piloting phase, such companies can offer free trials to critical (future) customers. As part of the trials, customers can also be provided performance-based incentives to encourage them to make the switch. It creates a win-win situation for the provider and the customer, driving adoption.

Another way to drive adoption of new water technologies is by developing solutions as plug-and-play systems (to be taken into account during design and development). Plug-and-play systems enable easier integration into existing customer infrastructure and help reduce adoption risk.

A third way to help minimise adoption risk for customers, by utilising water technology solutions, is to have a digital twin of the solution available. The digital twin can be used to demonstrate to the customer how the solution integrates into their existing operations and how it impacts their bottom line, as well as to prove whether the expected return on investment (ROI) will be met.

Fragmented Market Standards

Innovators in the water technology space also face challenges in scaling their solutions due to the lack of uniform regulations or inconsistent certification requirements across EU nations. For innovators seeking cross-border business, conflicting regulations and certification requirements result in increased costs (e.g., higher costs to navigate the patchwork of national rules). As a result of such inconsistent regulations, companies in the water technology space often hesitate to invest in expanding into new markets.

To overcome these challenges, we can help these companies by ensuring that, during the design and development stages of their products or solutions, they align with existing standards (e.g., EU Green Deal standards) or join major industry alliances as partners to influence policy. At Growth Lantern, we can assist in detailing partnerships with external parties, ensuring that the company's interests and obligations are clearly defined from the outset.

For companies whose products or solutions are already on the market, we can help navigate the maze of unclear regulations by providing guidance on which regulatory bodies to choose to gain EU-wide recognition, thereby driving further growth.

Public Procurement Bureaucracy

Another challenge faced by companies trying to grow their water technology-related solutions is the complex and biased procurement system of public or government organisations (innovation in water technology often has wider public interest and benefits, hence customers are usually governments or municipalities). Frequently, these institutions favour incumbents over start-ups and are risk-averse to unproven solutions.

To overcome such challenges, we can help by selectively choosing potential launch customers. We can help by crafting partnerships with incumbents through which such companies can act as subcontractors. Alternatively, we can assist in selecting the right government bodies to launch the solution with.

Want to know more? Get in touch with us here.

Sources

• McKinsey – Circular supply chains.

• Deltares – Water tech adoption strategies.