Pipeline Accelerator Insight #51: Regulation Trumps Payback When it Comes to New Product Value
In my Customer Value Lens framework, we find that few innovation leaders start by considering payback math. Implementing customer payback economics into your opportunity assessment and pricing is a huge improvement. Still, you also have to know when to look beyond it in cases of regulatory product value. While a 12 to 24-month payback usually drives the switch to a new product, that standard logic can actually kill your best ideas if you apply it blindly across your entire pipeline.
The Regulatory Driver: Staying in Compliance
There is a specific scenario where the typical short-term payback requirement fails: when a regulatory driver or government mandate is involved. In these cases, the rules for regulatory product value change instantly. Your customers aren’t just looking for a quick profit; they are looking for a way to comply so they can stay in business. Consequently, customers can accept payback periods that stretch much longer—sometimes a decade or more—because without the product, they can’t operate and remain in compliance.
Why does the math shift so drastically? Because the alternative to adopting your product isn’t “business as usual.” The alternative is facing massive fines, losing the right to operate, or dealing with devastating media shaming. You aren’t just selling a feature; you’re selling the ability to stay in the game. In a regulated landscape, you provide the only viable path forward, which is the ultimate regulatory product value.
Specifically, look at alternative energy. Many utilities invested in solar or wind technologies with 10-year paybacks that might even outlast the equipment. They didn’t doing this because the ROI is better than traditional sources; they did it because the law mandated it. The regulatory product value is found in the necessity of the mandate, not the speed of the payback.
If you want to accelerate your pipeline, start by using payback math, but don’t let it blind you to regulatory mandates. Identify where upcoming regulations will force your customers’ hands. When you align your discovery strategy with these mandates, you create “must-have” products with massive regulatory product value that win even with long-term paybacks.
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