I Get Off to the Right Start
Chapter 1—Use early start business development practices
It is enormously helpful to be in on the ground floor of a new project. These two scenarios illustrate why.
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Scenario 1. You have some new ideas that you believe will be of interest to a potential customer. Your technical2 people create a “dog and pony show” and visit the potential customer to demonstrate what you can do. You bring with you not only presentation materials but also concept sketches, a mockup or perhaps even a functional model. Your potential customer sees value in what you have done and enters into a dialog about how your ideas can best be adapted to his needs. Along the way, you get an excellent understanding of his goals and how you can best satisfy them. You give your potential customer information about likely costs and schedules so a realistic project plan can be structured and sold internally. Eventually, your potential customer issues a request for proposal (RFP). Because of policy, often others must also be invited to bid. All bidders have the same, limited number of days to submit their proposals. Your pursuit team has been working with the customer for several months. You give your proposal a final few tweaks and submit your bid.
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Scenario 2. You are one of the bidders receiving the RFP mentioned above in Scenario 1. The technology is within your capability, but until now you have not been aware of this opportunity. You send a few people to the bidder’s conference. You form a proposal team and submit your bid after 45 days of crash effort, with some members of the pursuit team working all night in the last few days. Daily, empty pizza and Chinese food takeout boxes fill the wastebaskets in the pursuit work area.
Who is most likely to win this contract? Perhaps a better question is: should the team in Scenario 2 even bother to bid?
The Scenario 2 team probably has little chance of winning. Even though they can read the same RFP that goes to the Scenario 1 team, they haven’t nearly the detailed understanding of what the customer wants and what his priorities are. They may have a poor understanding of the competitive bidding range. They may have an even poorer understanding of what their efficient competitors can offer.
Between Scenario 1 and Scenario 2 lies a continuum of other possibilities. For example, there might be a Scenario 3:
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Scenario 3. Your business development people hear rumblings that one of your customers or potential customers is getting interested in a particular idea. An internal champion may have proposed it, or a competitor may have. But there is definitely interest. As it happens, the interest is closely related to an area where your company has expertise and has been doing internally funded research and development. Your management believes this to be a growth area, and that a major project will develop and be funded in a year or so. You form a small pursuit team to go after it. The team visits the customer, learns about (and helps define) what the customer wants, and has the proposal half written when the RFP becomes available. The team has studied the competition, and has a good understanding of what it has to offer. It also has a good handle on the competitive bidding range, and is convinced it corresponds to reality.
While the Scenario 1 team has the advantage of being first, and will probably overwhelm the Scenario 2 team, it will not necessarily overwhelm the Scenario 3 team. Many examples exist of come from behind wins by aggressive and powerful competitors. But always to start from far behind is a sign of poor business development practices.
In some contracting firms, business development focuses on selling existing strengths. In this paradigm, the sales people mostly approach existing customers to squeeze out more projects based on an essentially static base of knowledge. The business development and key technical people are only loosely coupled. An organizational wall divides them. There is little or no internal research and development.
This approach will surely lead to a declining business base. Today, ten years is a long life for many products; two years is long for many others. The ones that manage to live longer are usually the ones that are frequently upgraded to meet new needs.
An excellent remedy for such a stagnant state of affairs is to extend the concept of integrated project teams to business development.3 In this approach, historical skills and achievements are merely the foundation for leveraging new ideas that may attract customers. They are not the entire business.
Exhibit 1-1 suggests a business development team and process that stresses a “full frontal attack” emphasizing new ideas and giving customers maximum exposure to your company.
The team comprises four major skills: top management, business development, contracts, and key technical innovators. The circle and arrows in the exhibit indicate that team members are in frequent communication and work closely together, even though they may “belong” to separate organizations.
The mission of the business development team (BDT) is to:
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Assist pursuit and project teams in maintaining good customer relations and close ties with key customer decision makers.4
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Work with pursuit teams to obtain from customers (and other sources) information about what customers want and what they can afford to pay.
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Analyze competitors ethically to obtain as much information as possible about what they are likely to offer, and provide that information to pursuit and project teams.
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Continuously analyze the market for current or similar products and identify opportunities for pursuit.
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Continuously innovate, leveraging from existing products into new and sustainable technologies that will interest current and new customers.
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Convey needed information to customers and potential customers to help them make better decisions about acquisitions.
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Assist in the formation of new pursuit teams.
Here are typical roles within that mission:
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Top management. A single senior executive should be appointed to the BDT. His presence gives the team cachet and access to the highest levels of the company. His network of contacts will frequently lead to opportunities to be explored. He or she can expedite the flow of information and the mustering of resources.
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Contracts. The traditional role of contracts people is to negotiate and administer projects contractually. A problem that sometimes arises is that they do this without adequate input from others. As members of the BDT, contracts people will have better insights into what drives costs and schedule, and what is important and what is not. They will be better prepared to develop a negotiating floor position and to trade off scope versus cost.
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Business Development. As members of the BDT, the sales people will be more aware of current and developing technologies, and the status of current work. They will be better able to identify the right customer people to approach with new ideas. And they will have a better understanding of where and how to look for clues as to burgeoning customer interests that have barely begun to surface.
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Key technical people. These are sometimes called “technology superheroes.” Sometimes, but not always, they are also “gray beards.” They are senior technical people who have a demonstrated capability to imagine and follow through with viable product ideas, especially those that “push the envelope.” Theirs is a central role in the BDT. They maintain awareness of the current technological capabilities of their company, their competitors, and their customers and potential customers. They acquire information about competitor products and use it to analyze product performance. They go to trade shows, attend meetings of professional societies, and otherwise stay abreast of developments in the world at large. They are either directly involved in their company’s internal research and development, or they monitor it closely. When new pursuit teams are forming, they advise on who should be involved, and may participate themselves at least for a time.
Among the key technical people should be one or more persons who are well versed in costs of the company’s products. Such a person is sometimes referred to as a cost engineer or a cost analyst. What makes this role necessary and even critical is the inevitable need to assign costs or at least cost ranges to new product ideas and to competitor’s products. Such a role is beyond the typical “pricer” who works in the finance department assembling cost estimates into a format suitable for bidding. The role requires a strong technical background, and training in statistics and cost accounting.
Chapter 1 Review Questions
1. In general, are your efforts to acquire new contracts more like Scenario 1, Scenario 2, or Scenario 3, as described in this chapter?
2. Does your organization tend to focus too long on existing strengths until it is forced to propose new ideas and approaches?
3. Does your organization routinely present new ideas to potential customers?
4. Considering your competitive situation, do you feel your organization does enough internal research and development? Is what you do truly innovative, or does it focus mostly on minor improvements to existing products?
5. Does your business development effort more closely resemble an integrated project team, or a bunch of separate companies? How could you improve its effectiveness?
6. Do your business development people attempt to convey information about likely costs and schedules to potential customers as well as technical and other information? Either way, why?
7. Do your business development balk at having engineers or other technical people go along on customer visits? (This used to be quite common, but fortunately has been changing. It can have huge advantages.)
