Making Better Bid Decisions

How to make better deal decisions? What frameworks and strategies can we use to make winnable decisions? An industry expert's view.

Anecdote-1:

Manager: I’m just coming from a meeting with this government agency and they have been talking about a super important project of national importance. Why are we not on it? How come I have never heard it from you?

Me: We looked at the RFP in detail when it was released. The deal is very large and great. But when we analyzed it deeper, we realized that currently we do not have the capability, stack, and subject matter expertise to be able to win it.

Manager: Are you saying you don’t have the gal to take up a challenging project? Do you realize the impact it will have for us? There is no way we can not be a part of this!

Me: But ..

Manager: This is once in a decade opportunity and we should go at it, at any cost.

Well with those marching orders from the seniors we went back to the drawing board, put up a team and had a go at it. We were shortlisted in the first round. We made the solution/POC presentation in the next but that is where our campaign ended. Needless to day we gave in to the senior management’s euphoric decision-making approach and wasted countless organizational resources.

There are similar such examples where we make deal decisions on factors such as customer’s wrath, limited pipeline, poor account knowledge or just plain FOMO. Rather than looking at facts and data.

Anecdote-2:

Sales person: Look we need to go aggressive on our pricing if we have win this.

Finance: What do you mean aggressive?

Sales person: 85% discount should be given.

Finance: Given the nature of the deal, we will hardly make any money.

Sales person: If we don’t win, we will lose an opportunity to increase our presence in the account significantly. Plus, once we are entrenched, we can always make-up in the future projects.

The deal was approved and won at a steep discount but the project ran into red, and the promised account expansion did not materialize.

More bizzare reasons have been stated in the justification coloumns of bid approvals – must-win opportunity, top-3 spender, super-competitive opportunity, competitive take-over, win-back, and such.

From a deal perspective therefore, it is critical that we structure the decision making with inputs and processes. This will take the emotions and help us take better deal decisions.

The first gate should be a process to validate and qualify the opportunity for winnability. Most organizations have an opportunity review or account review template. That is a good starting point, but we need to include brutal questions about the opportunity while assessing its fitment for our organization. Some must-have parameters include – winnability, financial viability, and deliverability. The last one being super critical as you don’t want the excitement of a deal to harm your reputation because you struggled to deliver.

And then we should quantify the evaluation – each parameter can be broken down into questions and the choice of answers will automatically compute the parameter score. Parameters can be given weightages and the calculation of all the parameters can throw the final score. The final score can be categorized to reflect the win probability as – High, Medium, or Low.

Define thresholds, involve the relevant stakeholders, table all client details – decision tree, POC requirement, decision criterion, budget, competition, etc. Pre-schedule decision/ discussion slots for timely approvals.

If the decision is aligned to the score, it takes out the subjectivity and helps the organization take proper, realistic decisions.

One can call this the “Deal Desk”.

Now if the deal desk gate has been cleared, it means we are going to war. We now need to make more crucial decisions – is our solution meeting client requirements, are our estimations in line. Are we over or under sizing? What is going to be our pricing strategy?

The starting point in the development of the solution always is – similar earlier bids. And that again is a good opening. One can overlay it with scope, size and industry to determine the fitment with the new opportunity. A Review mechanism can ensure senior management oversight and risk assessment.

The last piece in the decision making of course is – what price to bid. Most of the time we have seen companies taking a cost+ approach. Meaning X is the cost to deliver, our planned margin for the FY is Y, and therefore the selling price should be Z. And thus, we see the scenarios like anecdote-2, where the sales team wants to lower the price and the management wants to protect the margins. A better approach would be one driven by the market.

Develop the discipline to capture the deal info about your competitors – when you have won, lost or even not participated. In as much grain as possible. Slightly difficult in private sector but not entirely un-doable. Competitor price for deals involving similar scope, practices, solution components, TCO, industry, and geography. Compare it to the bids you have submitted. This information has to have some structure and depth so that you can start deriving meaningful analysis out of it. As more deals flow in this repository, it will grow and become the bedrock for you to take market-driven commercial deal decisions.

Better still, run your entire bid process - development, review, and approval - on an integrated system. Running it on disparate spreadsheets, document editors, and emails will further hurt your ability to analyze this info for decision making.

Once can call this the “Bid Management & Analysis” system.

In both the above cases the "gut" factor will also come into play. It should not be thrown out of the window. But should be evaluated based on account dynamics. Should we bring in this innovative partner or go with the more proven one. Will our relationship with the consultant be good enough to overcome the objections of the 2 nay-sayers? Can the entry of a new decision maker be the x-factor for us? Many such subjective points may come-up. They need to be taken into account before taking the final call as decision making is both – science and art.

Put together - the deal desk and the bid management & analysis system, should be your framework for taking proper bid decisions. No bravado, no ego. Just practical, winnable decisions.

The above blog has been authored by our guest expert Mr Manoj Chugh. Manoj has over 38 years of experience having bid and won multi-millions dollar deals. During this tenure he has worked with marquee organizations such as Wipro, Cisco, EMC, TechM, etc. He is currently – President, Group Public Affairs, Member Group Executive Board, Mahindra & Mahindra.

Comments and observations welcome at hello@pricebid.co.