Competitive Advantage
Mistake #1 - Pursuing unsuitable opportunities
If you don't have a competitive advantage then by definition you have a competitive
disadvantage and are destined to lose. Some bidders are totally unrealistic and
over optimistic when it comes to selecting which contracts to pursue and they
have very little chance of winning. For example, if you were a customer would
you:
- Place an order that would double that company's annual turnover?
- Put your faith in organizations that have all of their resources concentrated
in a base that is remote from the project?
- Take a risk with a supplier that has a weak balance sheet?
- Select a company that has absolutely no track record for the type of work
to be undertaken?
I know you have got to start somewhere if you are trying to break into a new
segment of the market. But every end-user customer I have worked for doesn't want
to take a gamble when appointing contractors, consultants and suppliers and is
looking to eliminate as much risk as possible. It is evident when some companies
are being unrealistic or too ambitious and hence have zero chance of success.
As an old boss of mine used to say, "You would be better off doing the crossword!"
I have advised my own clients not to bid for certain contracts because I just
know that they will be wasting their valuable time and money, even though some
of that money would have been spent on my fee! Time and money are scarce commodities
and should be spent wisely on bids where you know you've got a competitive advantage
which gives you at least a 33% chance of success.
If you have done your homework then the minimum requirements and selection
criteria should not come as a surprise when the Pre-Qualification Questionnaire
(PQQ), Invitation to Tender (ITT) or Request for Proposal (RFP) arrives. You should
already be able to evaluate your chances of success. A good "bid-no bid" policy
will guide you in making the right decisions. If you don't have one then contact
me and I will send you an example for you to adapt and use.
Don't be too greedy! Sometimes, contracts and in particular framework agreements
are broken down into lots, usually by geographical area but sometimes by size
of contract. As a procurement consultant who evaluates PQQs and bids, it is quite
refreshing when a bidder says that they wish to concentrate on only one or two
lots. And then explain they do not wish to dilute their efforts across too wide
an area or take on projects that are inappropriate to their resources, skills
and experience.
But far too often, bidders put themselves forward for everything in the misconception
that customers want a one-stop shop every time. All companies are better off concentrating
on bidding for work where they are strong. It makes sense, but we live in a world
where many want to take a punt at everything in the hope that they get a lucky
break. It just doesn't work out that way.
Take steps to address weaknesses, particularly with financial stability. Customers
want to select companies who will remain financially secure over the lifetime
of the project or framework contract and they are looking for reassurance from
bidders. In fact, financial stability is a pre-requisite at pre-qualification
stage for every contract advertised in OJEU and is usually a "gateway" that has
strict pass or fail criteria. If you fail to fulfill the criteria then you are
eliminated and will not pass through the gateway to qualify for the next round.
Most pre-qualification questionnaires ask for the last three published accounts.
The customer's procurement evaluators are looking at liquidity and solvency mainly
but also take into account turnover (as a measure of capacity), profitability,
and value added per employee, debtor and creditor days. The trouble with published
financial accounts is that they are an historic snap shot and you can't do anything
about them once they have been published. Some clients will just reject the application
if the supplier's financial accounts are weak. Others may seek further clarification
of the company's latest financial position and may request written support from
their bank.
Perhaps your financial stability and capacity have improved since the publication
of your last set of accounts. This may be through the collection of debts, an
upswing in profitability or the injection of new shareholders funds. If so, then
it pays to provide this information in your pre-qualification questionnaire. If
necessary, create an addendum to the PQQ, or submit this information with a covering
letter.
Mistake #2 - Lack of innovation and creativity
Many bidders are too pre-occupied with being the lowest price technically acceptable
compliant bid. You may be thinking what's wrong with that? Isn't that the best
position to be in? Many customers go to great lengths to instruct bidders to submit
bids that are compliant with their requirements and they state that you may be
risking disqualification if you don't follow these instructions. However, the
successful bidders nearly always offer additional alternative solutions that are
technically acceptable and represent even better value for money. These alternatives
are often at a lower price.
If you are not being creative and producing innovative alternative solutions
then you are putting yourselves at a serious competitive disadvantage. Then you
are probably scratching your head trying to work out how you lost the contract
and how on earth a competitor could be so cheap. Well, the answer is you are not
comparing like with like, and although their price is much lower, so too are their
costs and they probably also have a better margin built into their bid than yours!
Most tender and proposal submissions that I have evaluated lack any sort of
innovation and creativity and are virtually identical to their competitors. In
this economy the same old solutions just don't cut it anymore and you need to
be more creative. Elite Bidders offer the customer alternative ways of achieving
their objectives with faster, cheaper, better solutions. This requires a few things:
- A deep understanding of: the customer, the project opportunity and if possible
your competitors' likely solutions. Note that it is nearly always too late to
obtain this crucial intelligence when the PQQ, ITT or RFP is already issued -
so start early!
- Processes that encourage innovation and creativity and lead to the development
of win strategies and themes that are relevant, beneficial and attractive to customers.
- An organizational culture that embraces transformational change and focuses
on continuous performance improvement to develop solutions which are faster, cheaper,
better and less risky than your competitors and gives you a competitive advantage.
Remember in today's economy everyone wants more for less!
When evaluating PQQs, customers are looking for the easiest and quickest way
to eliminate applicants so that they can reduce the long list of potential bidders
down to a short list. The emphasis is on looking for anything that may present
a future risk to the success of the project. However, when it comes to the next
stage, the winning bidder is normally the one that can demonstrate more value
added than the other bidders. It is a switch of emphasis and requires creativity
not just in developing the solutions but also in the content, writing and presentation
of the tender or proposal.
If you want to differentiate your bid and add more value then you have to be
creative and you need to innovate. This is even more important for framework agreements
that run over a number of years where the customer is relying on the successful
bidder to constantly improve and deliver more value. They are under pressure to
deliver better value for money and in this economy you can't stand still for too
long.
Some companies need help but if you are one of those then you will be pleased
to know that there are proven techniques that work and that can be learned.
Mistake #3 - Failing to differentiate your solutions
When I first talk to potential clients who want to pre-qualify or bid for contracts,
I ask them where they think they have a competitive advantage. The majority either
doesn't know because they have never really given it much thought before, or they
say that they are pretty much the same as everyone else but hope that they are
a little bit better. It will comes as no surprise then that they have only one
win strategy in mind when bidding for contracts: to be the lowest price compliant
bid. There is no real attempt to differentiate themselves and their solutions.
When I start probing I find that every company has a few gems that they take
for granted. Being too modest is a very British characteristic but it doesn't
help you win contracts. Achievements are played down and in most cases companies
have simply not bothered to measure and capture all of the benefits delivered
to their clients. Yet this is a rich source of material to use in marketing, business
development and bid management.
One unique source of differentiation is your people. They are totally unique
with a very specific set of personal attributes, values, beliefs, skills, knowledge
and experience. No one can copy your people and your team. One of the biggest
mistakes that bidders make is a failure to make the skills, knowledge and experience
of their people a central theme in differentiating their tender from everyone
else.
Customers want to know with whom they are going to be working. Yet you would
be amazed at how difficult it is to establish exactly the names and track record
of the front line team who would run the contract if successful. When I see an
organization chart with only the directors on it and a set of CVs for only head
office staff then it makes me think that they don't have the right people available
for the contract. Needless to say, these companies pick up few marks for a section
that should be "low hanging fruit" for most.
The best companies stand out a mile and actually create a unique selling point
out of the strengths of their team, particularly their front line customer facing
staff. They provide not just names but pictures, testimonials from delighted customers
and CVs tailored to highlight the relevance of their skills, knowledge and experience
for the type of work required by the customer. Senior management and specialist
staff are also included on the organization charts but they are demonstrably there
to support the front line staff with resources, advice, information and decisions.
2. If you
are struggling to think of where you can differentiate your company and its services,
products and solutions then you may be interested in my free guide titled 100
Sources of Competitive Advantage published in May 2013.
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