The competitors don’t know how to run the contract
After years of delivering the existing contract your team will indeed know how to run it in detail. But what should be a big advantage can become a disadvantage if approached without care. There are a number of potential pitfalls:
Underestimating the competitors
It’s true, your competitors might not know the detail of this contract. But they probably run similar contracts themselves, or deliver a lot of the services your contract comprises. They might know your customer too, especially if they run other contracts for them.
Add to that the whole point of a procurement process is to enable the customer to give everyone enough understanding of the contract and their needs to enable a fair and effective competition. Plus of course the fact that before you took over the contract, you ‘didn’t know how to run it’ (on the basis that you hadn’t actually delivered it) either – yet you still won and have managed to deliver it to now.
Your competitors also probably run bid processes reasonably similar to your own.
They may have a well developed capture process and capability. They may have been talking to your customer’s decision makers about the opportunity for months, getting an understanding of the customer’s needs, building relationships and credibility, influencing the new procurement. Especially if you do something similar for your new opportunities, assuming the competiton don’t would be complacent.
The competition are also likely to have bid / no bid decision gates. If your competitors didn’t think they had any chance of winning, they would no bid the opportunity and spend their time, money and effort on something else more attractive and winnable. If they are bidding, it’s probably because they believe they can win.
Underestimating your competitors can have a number of impacts on your rebid effort. It might mean you feel you don’t need to work as hard at the rebid. Or that you can put in a higher price than for a contract where you felt less secure. Both can lead to losing.
Focusing on the existing contract
The assumption that the competitors don’t know how to run the contract can be allied to other assumptions. Often these mean it’s the detail of the existing contract, and how it’s delivered that is important in the minds of your team. This can lead to too much focus on delivering ‘more of the same’ rather than looking properly at potential changes you could make in your new solution.
Ignoring the specification and customer’s new needs
Assuming the competition don’t know how to run the contract can be a short step from also believing you even know the details of the contract better than the customer.
In some cases that can be true. But it presents a real danger in your rebid. It can mean you potentially ignore aspects of the specification the customer has published because you ‘know better’ what’s ‘really’ needed to deliver.
That can lose you marks in the evaluation – which is marked against the specification. You could even be deemed as non-compliant and disqualified (there are a number of examples of where this has happened).
It can also mean you include costs in your pricing that cover things you ‘know’ need to be done to deliver effectively. But which the competitors, working to the specification, don’t add. Putting you in real danger of losing on price.
When incumbents lose to competitors, the assertion that ‘they don’t know how to run the contract’ often turns into a cry of ‘they’ll never be able to deliver (for that price)’.
Again, sometimes that’s true.
But more often the competitors have found a solution, or way of cutting the price the incumbent hadn’t thought of. Or ignored, because they were too wedded to the existing solution or felt too secure to need to put forward in their submission.
The competitor and customer then go on to build their own positive relationship based on a well delivered contract.
Even if the competitor does fail to deliver fully, or even makes a loss, the incumbent has still lost the contract. That loss usually outweighs any benefit gained from the competitor’s losses on the contract. And it’s rare for customers to cancel a contract won by a competitor and come back to the market so the incumbent can win it back early.
How to avoid the problem
Avoiding complacency about competitors is a combination of process and approach.
Processes
Different businesses have different processes for building a picture of what the competition’s solutions are likely to be. Some have specific meetings or ‘hats’ (e.g. the Black Hat in Shipley terminology) where each competitor is reviewed and their likely strategy for the competition and their solution, win themes and pricing are worked through.
Others run projects within the team where those who’ve worked for the competition, or others who have some experience, put themselves in the role of the competitor and put together their ‘own’ solution, including how they would attack the incumbent (i.e. you). These solutions are then tested against the internal solution to find where there might be weaknesses – or good ideas which could be taken up.
Whichever process you decide to use to understand and react to the likely competitor threat, make sure you’re taking onto account what your competitors are likely to do. And ensure your solution is well placed to offer a better set of benefits to the customer (even if that means including some of the benefits your competitors will offer).
Approach
The approach aspect is to ensure you and your team take the threat of your competitors seriously.
Keep reminding the team of wins the competition have had over your own business (assuming there have been some). And, if there are examples, of where new market entrants have won over the more established companies. You might also use examples of where your company has unseated incumbents.
The aim isn’t to demoralise the team – but to ensure there’s no sense that the competitors aren’t capable, or don’t pose a threat that will need the best possible effort and solution to overcome.
We’ve even heard of one organisation who put their incumbent team into a meeting before the start of the bid, handed out a made up rejection letter from the customer saying a competitor had won the rebid – and got the team working out why that might be something which came true.
By ‘pretending’ the competitor had won the rebid, it got the team working through the competitor’s strengths rather than ignoring them or assuming they’d be inadequate to win. It overcame any arrogance in their approach, and helped the team work through how they’d avoid the competitor actually winning.
But perhaps some of the best advice came from respondents to our survey of procurers where we asked them for their experiences and expectations of incumbents:
“Don’t make assumptions. A decision has been made to change something within the service; just because you provided the old service does not mean you will automatically win the next one”
“Approach the bid as if it was a new client whom you really wanted to work for, because you have true value to add to the client’s operation”
“Show that they are still hungry to have the contract. Show they have kept innovating and they know they are competitive”
If you can engender an approach where you and the team aren’t expecting an easy win, but are focused on delivering the best possible solution as you would for a key target new customer, then you’ll have overcome any sign of complacency.
And should be well on your way to a win.
