I came across a really great article on Spend Matters this week. It is called “Cost Reduction Is Not Enough – Defining Procurement and Corporate Value” written by Peter Smith in August 2018. In the article Smith discusses the value of procurement and references another great read called “the Fatal Bias“.
The Fatal Bias is an article that was written in November of 2014 by Jules Goddard a Fellow at the London Business School and author of the book “Uncommon Sense, Common Nonsense: Why Some Organizations Consistently Outperform Others“.
Goddard writes eloquently about how a focus on cost cutting is an ill-fated strategy that cannot sustain profitability. Goddard takes his findings from an examination of the strategies of 25,000 US Companies over a 40 year period.
The article reveals how the very best companies (defined as those with superior profitability) are the ones with a focus on innovation as opposed to those focused on cutting expense. Goddard writes that the companies on a path of success “see their strategic journey as one of continuous discovery, moving from a place of “best practice” to one of “unique practice”“.
Both article are great reads and both deserve your attention.
As I read this, I was thinking about many of the Vendors that I deal with every day. In the past, I’ve written extensively on the various ways to evaluate the quality of services and have cautioned not to compromise quality for cost, but I have yet to share some of my tips to Vendors for demonstrating value.
In my line of work, I interview a lot of Vendors in all parts of the world. I have procured design and construction services in the US, the UK, Europe, China, Thailand, Malaysia, Argentina, and a few other countries, so it’s safe to say that I have just about seen it all.
Unfortunately, in doing work across all of those countries, I have observed way too much of the same trite interview responses. Contractors and Architects alike tend to rely on the same common statements when discussing how their company’s differ from their competition, so Today in light of the uncommon guidance from Goddard and Smith, I wanted to offer some tips to Vendors for how they can set themselves apart and demonstrate value to their potential Clients.
Phrases like “we listen to our Client’s needs” and “we partner with our Clients” are far too common and overused.
These stand-by phrases are said by every Vendor at almost every interview. Avoid making these statements. Instead, share what you do that is truly different than your competition. Do a little work to find out what your closest competitors are doing and tell us what you do that they don’t.
If you find that your service isn’t differentiated then make this a priority for the new year and find a way to be different.
In procurement one of the key things we look for is to make sure that all quotes are “apples to apples”. In other words, we want everyone to quote the same thing and we often narrow our Vendor’s focus to a specific scope with a specific pricing format. This is essential for us to be able to make informed decision about cost.
Unfortunately, many (on both the procurement and the vendor side) believe that this limits or precludes innovation, but this is not necessarily the case.
When you are preparing a proposal consider presenting innovative ways to solve the same problem. You should still present a response that complies with all of the parameters of the solicitation, but if you can see a faster or more affordable way to meet the same goal, present an alternate or supplement your proposal with your innovation.
Define your Process
Many Vendors fail to win business because they failed to demonstrate that they have a well-defined process. You may be very good at what you do, but unless you can show a Client that your operation is well-defined and that your employees are trained in your process, you might as well not have one.
I also caution Vendors who like to say “we can do it any way you want“. This does not differentiate you and actually makes you look desperate.
You should have a defined way of working and you should promote that way of working. If you are asked to deviate don’t just say “yes”! Offer to consider an alternative approach, but then work to educate your prospect about why you do things your way. This will demonstrate that you are thoughtful but not inflexible.
Goddard and Smith’s articles reveal that the most successful firms are those that focus on innovation not cost cutting. Similarly, I have observed that the firms that win the most contracts are the ones that offer innovation rather than discounts.
This year as you consider your Company’s approach, consider how your services are unique, innovative, and defined. Do not be afraid to have a point of view and don’t be too quick to accept anyone else’s point of view.
What about you? Have you observed common overused statements in your interviews? How do you differentiate your business? Tell me your stories.
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