Even though Sun Tzu lived over 2000 years ago, his work The Art of War is still referred to in military circles. More recently, books dedicated to translating his thinking and quotes to the business arena have related his thinking to the competition between businesses and managers.
So, we thought for a bit of fun we’d look at whether Sun Tzu has anything useful to remind us about The Art of Rebidding.
It turns out (with perhaps a bit of a stretch in places) he might.
Here‘s our interpretation of some of Sun Tzu quotes and how they apply to incumbents and their rebids.
On the importance of rebids
Sun Tzu said: “It is best to keep one’s own state intact; to crush the enemy’s state is only second best.”
Rebids sometimes seem to take second place in the minds of businesses. Attention, rewards, and resources are focused on winning new opportunities from competitors (crushing the enemy’s state) and the growth they bring.
But retaining your existing business creates the foundation for that growth.
If you’re losing existing contracts at rebid, that business needs replacing, just to keep a steady state. And with win rates on new bids typically lower than for rebids, you might need to spend money and effort on two or three new bids just to replace one contract lost at rebid. And only then will you be bidding to grow.
By spending extra effort on rebids to keep your existing business (your own state) intact means more of the new contracts you win contribute to growth, not replacing what you’ve lost.
Sun Tzu said: “He who wishes to fight must first count the cost.”
The cost of losing a rebid can be more than a dent in your growth. The cost of exit, and of course the cost of losing future revenue can easily be counted. But some of the other costs can be more subtle – though just as damaging;
- Investors or owners may start to worry that you’ll lose future rebids, perhaps impacting your share price, or ability to raise new funding.
- Staff morale might fall – especially in contracts coming up for future rebids.
- If the lost contract was supported by internal staff or departments, how will these overheads be funded now?
- You’ll no longer be on the ‘inside’ with your customer. Someone else will have all the advantages of incumbency. Not only for the lost contract, but for any further contracts the customer might be letting.
- If the lost contract was a major part of your sector presence, or of a particular type of service delivery, you might lose critical mass in that sector or service, impacting on your ability to grow in those areas.
- Your competitors could gain confidence. If previously they saw your contracts as well defended, they might not have put effort into attacking them at rebid. Now they might see other contracts as vulnerable and attack them. Sun Tzu said: “Convince your enemy that he will gain very little by attacking you; this will diminish his enthusiasm”
When you’re allocating resources, time and focus to put into your rebid, think about the cost of losing. It might mean you decide to put more effort into winning.
On planning for rebids
Sun Tzu said:” The art of war is of vital importance to the State. It is a matter of life and death, a road either to safety or to ruin. Hence it is a subject of inquiry which can on no account be neglected”
Look at your past, current and future rebids and ask your self how much you really know about your success, your rebid processes and plans for the future:
- How do you plan for your rebids?
- Do you know your contract retention rate? What are you doing to improve it?
- How many of your contracts, and what proportion of your turnover is up for rebid in the next 3 years?
- At your present retention rate, how much of your current and planned revenue and profit are you likely to lose in the next 3 years?
- Do you have a strategy for your overall portfolio and contract retention you’re confident will improve your long-term performance? Or do you just address each rebid as it arrives?
- Why are you really losing your rebids (88% of procurers in our rebid survey said contract performance has an impact on their rebid decision)?
- Do you have a clear process for preparing for rebids and running them; what about staff who are experienced and trained in rebidding – or do you just use whoever’s available that normally runs new bids?
Most businesses analyse, review, and have corporate plans for improving most aspects of their performance. Do you have this level of inquiry for your contract retention and rebids?
Sun Tzu said: “Every battle is won before it is ever fought.”
In a recent survey 88% of procurers said that contract performance has some impact on their decision about whether the incumbent wins the rebid. 18% said it was the most important factor in their decision. Having the customer on your side before the rebid arrives can have a hugely positive impact.
What are you doing during your contract to make sure the customer positively wants you to be their provider for the next contract period before the rebid even starts?
Sun Tzu said: “The victorious strategist only seeks battle after the victory is won”
The other area often missed is the period when you are preparing yourself for the rebid. When do you start your preparations? And what strategy do you have in place to ensure, by the time the rebid documentation comes out, you have already put yourself in the best position to win?
The customer will be preparing for months prior to the ‘official’ start of the rebid. They’ll be making decisions about whether to rebid; whether to extend the contract; what their aims for the next contract are; what the scope and breadth of the next contract will be; what the specification will look like; what procurement format they will use; how(and by whom) the rebid will be evaluated.
If you’ve put in the right team and implemented a plan to ensure you get early knowledge of (and if possible, influence on) these decisions, you’ll already have secured yourself a lot of the elements that will help you win – before the rebid even starts.
On your approach to rebids
Sun Tzu said: “Whether in an advantageous position or a disadvantageous one, the opposite state should be always present to your mind.”
As the incumbent you should be in an advantageous position for your rebid. But perhaps the most common complaint from procurers, is that they see incumbents as complacent (or arrogant) in how they approach their rebids, assuming they will win and not putting the effort in.
The advice we give is to approach your rebid as you would an opportunity that you’re bidding for the first time. Have the mindset you’re not the favourite to win, and need to put in maximum effort to achieve victory.
That will come through in:
- How you prepare,
- Who you put in charge of your rebid and what resources and attention they get from senior management,
- How you approach your solution (is it the absolute best solution and price you would give to an important ‘must win’ new client?)
- And how you write the rebid.
Assuming your advantages as the incumbent mean your victory will be easy is one of the most common sources of lost rebids.
Sun Tzu also said: “Danger has a bracing effect.”
Make sure your teams approach their rebid with a sense the contract is in real danger of being lost – it will make a big difference to how they approach the task.
On competitors
Sun Tzu said: “The art of war teaches us to rely not on the likelihood of the enemy’s not coming, but on our own readiness to receive him; not on the chance of his not attacking, but rather on the fact that we have made our position unassailable.”
You will face competitors in your rebid. Assuming your position is unassailable just because you are the incumbent, or that competitors can’t possibly submit an attractive proposition to your customer, is asking for defeat.
Take the competition seriously. Prepare properly. Make sure your position is actually the best it can be, and be ready for your competitors to attack with their own strong offerings.
Sun Tzu said: “The enemies spies who have come to spy on us must be sought out, tempted with bribes, led away and comfortably housed.”
We don’t advocate taking this literally!
However, the competition will be using as many ways as possible to find out how they can win. They will be looking for areas where the incumbent isn’t delivering as well as they could be – so they can offer improvements in their own bids.
They may be talking to ex or existing incumbent contract staff to find out how the present contract is structured, what the solution looks like and what the plans for the rebid might be.
Don’t assume competitors aren’t talking to your customer – they will be. And they’ll be finding ways to influence the customer to prefer their methods of working and their solutions.
Sun Tzu said: “The clever combatant imposes his will on the enemy but does not allow the enemy’s will to be imposed on him.”
Keep your own plans secure within your team. Spend time talking to your customer and making suggestions for the new contract which could mean the new contract is focused on areas only you can deliver or know are coming. And find out what the competition are doing, and advocating, so you can ‘ghost’ their arguments and solutions.
Sun Tzu said: “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
As well as knowing the competition and their likely approaches, you should also understand yourself – what are your strengths and weaknesses; how have you performed on the contract and what from that performance can you use in the rebid to best effect.
If there have been issues on the contract your rebid team need to understand them: What caused them; what impact did they have on the customer; how did you resolve them; can you use the learning from the issues and resolutions to inform your new solution?
And can you turn the problem around to show that by quickly resolving the issue you’ve shown a proactive and flexible approach and have insight into risks and mitigations your competitors may not?
On strategy and tactics
Sun Tzu said: “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
Having a clear strategy for the rebids across your portfolio of contracts and for each rebid is as vital as for any other important part of your organisation.
- Do you have a clear strategy for contract retention across all your contract portfolio?
- Do you have a clear strategy for each rebid?
- What does your customer want and need for the next contract and how will you best meet these needs?
- What is your Capture (or as we call it for rebids Recapture) strategy and plan?
- How do you know you are progressing towards victory and testing this progress and all the actions needed to get there?
Especially throughout the rebid preparation period, you need to be regularly reviewing progress and your position. If you don’t you could find you reach the rebid unprepared, having wasted the precious time and opportunity to exploit your advantages as incumbent and failed to put yourself in the best position to win.
Finally
There are many more quotes from Sun Tzu, Some we could have used instead of those above. Others we’re not so sure about their relevance. But we will finish with one that we do agree with:
Sun Tzu said: “the general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand. It is by attention to this point that I can foresee who is likely to win or lose”
Many incumbents approach their rebid confident of winning. But some do so based mainly on their sense that the customer is very unlikely to take the risk of changing, and so they’ve done little to really prepare effectively for the rebid.
Others we talk to are (often more quietly) confident because they have done the work beforehand. They have delivered a great contract. They have a clear strategy for rebids in general and this rebid in particular. They’ve prepared for their rebid effectively. They’ve put together a fresh innovative solution and price for the new contract that they have real evidence will best meet the customer’s future needs and beat the competition.
It rarely takes long to work out which is which. Or whose confidence is more likely to be well founded.
This article is based on the advice we give to, and help put in place for, our customers. For more articles on how to win your rebids click here or contact us to schedule a call.
