Collaboration Represents Utopia

The main discussion topic with my clients and those in the bidding world in general, is how to have, firstly, rapid and solid decision-making for bid decisions and, secondly, pricing strategies in markets that have become (or are rapidly becoming) commoditised.  For the former it is whether to commit time, resource and effort for a particular pursuit (in place of another) and if it is to be pursued then what is the best approach when it comes to “make, team or buy”.  For the latter it is about how to win on price when:

• the technical offer is commoditised by what the client has specified (in detail, and without deviation) and;
• the performance criteria (e.g.: service level agreements and timeliness) have all been set.

Increasingly – thanks to the internet-of-things, the readiness of choice and the power & knowledge of the buyer’s procurement teams – the concept of value-proposition and quality-differentiation seems to be eclipsed by price, this being the single most important factor.  This means that for the seller (internally) the emphasis shifts to realising profit over the long term, rather than just signing-up revenue. This is especially true if revenue levels become insufficient to cover operational costs due to being set by the win-price so as to secure the work from a rival.

My emphasis over the last three years, and especially now, is on using the tools in place quickly and early-on (and sharing with key decision makers) to evaluate potential profit either to avoid nugatory effort or to bolster how to marry winning against the competition whilst making a ‘satisfactory’ profit.  The desire to do this is growing as more companies find themselves in commoditised markets where clients see their products as the same as other companies even when they’re not.

In this context – what is bid utopia?  And what are the barriers to being extraordinary, as individuals and as a team?

In a word: collaboration…or lack thereof.  This is the largest barrier to being extraordinary and having a joined-up approach to bid/no bid, winning against the competition, and delivering to a profit (albeit more modest than may be preferable, or mandated by a Finance department). By collaboration I mean having an open, honest, and moveable position between Sales, Operations, Finance, Bid teams and Governance.  This also involves sharing information and knowledge (and being honest where knowledge is lacking) as soon as possible.  Indeed, declaring that something is not known for a team to work on together to then ‘know’ is far more constructive than an ongoing pretence.

Sales are motivated by revenue as without that there is no money to be made – and it is the proxy for success or failure: ‘revenue comes in = success’ is the simple algorithm.  A further argument is that it is the Salesman’s job to sell and generate income, and for operations to keep costs beneath the sell price to result in a profit margin.  I do not subscribe to that ‘us’ and ‘them’ ethos as the price is the key to balancing a win with generating sufficient revenue to cover costs.  If the price is wrong (e.g. too low so as to win the work versus a competitor) then operations may never be able to keep costs low enough to generate a profit.

Operations are motivated by quality and standards.  Meeting required levels (for internal purposes or those of the client and their contract) is never cheap, and is notoriously hard to predict and cost-in to a price at the bid phase.  Of course, this is what risk management is in place to address, and the ‘art’ of estimating.

Finance are motivated by profit.  It doesn’t really matter if it is operating, net, gross, and any other accounting terms you may like to use…it matters simply that the costs are lower than the revenues, the bigger the difference the better.

Bid teams are motivated by getting the best and competitive answer out of the door, in the time allotted.  Compliancy being key.  Sitting in the middle of the win (Sales) vs delivering (Operations) vs making money (Finance) ‘triangle’, bid teams seek to balance, conclude and submit…and win.

Governance is one step removed and generally has the power to change the structure of the bid later on in the bid cycle.  Pre-ordained rules of cost targets, required margins (profit), product strategies, etc. would be on the agenda.  Of course, Governance sits in a wider context and needs to dictate what is and what is not acceptable for a bid, most notably price levels vs predicted costs and the resultant profit.  Of course, if the profit needs to go up – who should yield: should costs come down even if they’re already minimised, or should price go up but be above the competition?

And so this is where collaboration represents Utopia: an open and early dialogue, constructive debate and challenge, respect for each other’s viewpoints and, ultimately, consensus on the end results that feature in the price submission.

So, what does an extraordinary future look like?

For me this would be a universal ethos whereby those undertaking the roles of Sales, Operations, Finance, Bidding, sign-off/Governance and Pricing all have an equal standing and mutual respect – and each has the ability to influence all others to get to a common ground.  Utopia for me is where the agendas and needs of bidding, delivering, selling and making money all align, with understanding and respect.   The great news is that it does exist out there across industry, just not everywhere and not all the time.