Bid Smartly . . . or Walk Away

With some industries reeling in today’s economy, future revenue growth is still uncertain in certain markets. The bright exception is the "new energy" arena of renewables and sustainables. But that’s a tough market, with lots of competitors for the business and lots of opportunities to misfire and miss the boat. A key to success is bidding smartly on contract opportunities. Otherwise, don’t bid at all.

It’s no surprise that the explosion in these energy opportunities comes with an expected increase in competition. If your organization’s objective is one of revenue growth in this market, then you should focus on the concept of what our firm characterizes as "Opportunity Identification & Qualification based upon Intelligence gathering" (OI&Q)i.

For the record, we advocate and sell this approach to energy clients. We have skin in the game.

Our Opportunity Evaluation Technique

Our technique, (OI&Q)i, is not just a line item in an organization’s business development process. Whether you are an established energy firm or a newly launched entrepreneurial venture, as it becomes more challenging to gain and maintain market share or grow revenue with mounting competitive pressures, this concept may be the most critical, pre-pursuit decision point. That’s because, when you’re faced with a prospective opportunity, you need to eliminate emotional judgments to respond to bid on a request for proposals or walk away from it. The (OI&Q)i process presents a deliberate set of quantitative and qualitative questions for the business development team to use when assessing an opportunity.

• First, has your team invested the time to fully understand the opportunity and gathered critical intelligence on this project from the key decision-making people involved? Have they previously met with the customer, and by asking hard questions built a trust relationship? Does your team understand all aspects of the objectives for the project from the customer’s perspective by gathering first-person intelligence from them? Has your team invested time before any bid announcement to discuss current and future issues, and discovered some of the real challenges facing the customer?
• Second, does this opportunity match up well with your organization’s core capabilities and experience? Do you possess the necessary credentials to do the job, and do it right? If it’s not an exact match, does this opportunity represent a strategic decision to consider building a new business unit in an adjacent segment? Or does it make sense for your firm to seek an acquisition partner with the necessary capability?
• Third, does your business development team possess sufficient resources and bandwidth to "pursue it right," assuming there’s a real likelihood of winning the business? A client recently shared a point of view on this, noting the use of qualitative criteria in addition to quantitative intelligence in the decision-making process was of utmost importance. This scrutiny allowed the team to decide on the probability of winning the business in a manner that was objective and free of emotional bias.

It all comes down to the strategy of bidding smartly, that is, asking the hard questions up front and disqualifying opportunities early on as part of the business development strategy.

Just Say No

Let’s not gloss over the act of disqualifying. It figures prominently in the measurement of the business development team’s pipeline.

This brings up the question about how much emphasis management places upon not disqualifying low-probability opportunities early and, as a consequence, significantly affecting the size of a proposal pipeline and eventual probability of winning the bid. A client recently shared that, from her experience, bidding smartly is not necessarily building a fat pipeline of proposals in process. Though her proposal pipeline is not large, her win rate is high.

There are added benefits to following our process and bidding smartly. From a financial standpoint, by preventing low-probability opportunities from ever entering the proposal process, the business development team is a prudent steward of the organization’s resources. Even more critical than the financial aspects are the personnel and psychological ramifications of following this process. Bidding everything that moves has the effect of eventually burning out and demotivating the team while drastically lowering your proposal win rate.

A client recently noted that after too many losing bids, it becomes harder to get the team excited about the next pursuit, given the investment of time and talent that goes into preparing a response to an RFP.

Here’s another drawback that’s seldom factored in when low-probability opportunities don’t get disqualified early on. Although not always required in the bidding process, it’s the "orals" or presentation portion of an RFP where enthusiasm plays a big part. It’s there that true belief in an organization’s capability, or lack thereof, eventually reveals itself.

A Winning Strategy

A robust process of identifying opportunities and qualifications based on intelligence gathering is the missing link in many firms’ business development strategy. This rigorous process can set the stage for a solid pipeline, prudently invested proposal budget, high win rate, and a motivated business development team that believes they can and will win the bids for which they compete.

—Bill Scheessele is chairman and chief executive officer of MBDi, an international consulting firm offering a range of revenue generation resources designed to produce rapid and lasting growth.