I’ve been reflecting on Tesla’s battery deal in Australia that was well covered in the press in autumn 2017. Clean energy sources are becoming more efficient and cheaper but inevitably need storage (generally batteries) to match supply to demand. It’s not sunny during the night; the wind doesn’t always blow; tides ebb and flow.
Clean energy can genuinely change society – imagine for example, the potential for proliferation of zero carbon footprint desalinisation plants to irrigate the deserts. Unlimited water purification. Electric-powered aircraft (see the current BBC Business News “sky taxis and flying cars” article).
In the case of this story, batteries were an urgent answer to stabilise the output of the 325 MW Hornsdale wind farm near Jamestown, South Australia. Thus avoiding the catastrophic storm outages that had been experienced in recent years.
What I find remarkable about the deal was Elon Musk’s appetite for risk. His tweeted-bet in March 2017 was “we’ll build it in 100days or it’s free“. Many have been quick to put down the offer pointing out that half of batteries were already installed by the time the contract was signed at the end of September. It was still an astonishing commitment – his bet meant he would deliver it for free, not take it all away. So his liability was a very real $50m or more.
In our cloud-provided world, many services are already set-up and working so adding another customer is relatively low risk and the incremental costs are small. But there are many contracts out there that don’t fall into a cloud consumption model. They need real capital outlay.
For those of us with a sales responsibility, what if we were so convinced of our success that we would a) start to build or do something before contract signature, and b) offer it for free if we failed to meet the spec/timescales/expectations? A true outcome-based approach.
Would this work in your business?