WINNING growth projects
Apr 1, 1999 12:00 PM, Alan Kruglak
Whenever I think about a historical event or remember something memorable,I usually associate it with a one-liner. One of my favorites is from arecent Star Trek movie called First Contact. It is at the end of the moviewhen Data (the android) tells the head of the Borg (an alien race),"Resistance is futile." I like that one-liner because it brings out everyraw emotion of victory. It describes my feelings about face-to-face combatwith my competitors on the sales battlefield.
Although all the aforementioned one-liner may be nice to know, there isreally only one that counts when it comes to systems sales for low-voltagecontractors, "Failure is not an option." Of course, by now, you are readingthis line and thinking that this is a no-brainer. What else is new?Everyone wants to win in sales, right?
Unfortunately, most systems integrators who read this line do not reallyunderstand its power. This one-liner is not addressed to the line-levelsales personnel; it is targeted directly at management. Futher, the failureto truly understand its power can have severe ramifications on yourprofitability.
An important exampleLet me explain what I mean when I talk about the power of "failure is notan option." Several years ago, my company submitted a bid on a complicatedintegrated system at one of the local airports, competing against sevencompanies. In examining our costs, we decided that we would lower ourmargins a little to be more aggressive. Of course, throughout the pre-bidprocess, the client continued to bang his hand on the table, stating in anassured tone that "we want quality, and will pay for quality."
When all of the bids were submitted, we were in for the shock of our lives.Six of the bids, including ours, were clustered around the $1 millionthreshold. However, there was one that was at the $500,000 mark. Our brainturned sideways. Our costs were higher than that. How could anyone bid thatlow? Besides, the client wanted quality, right?
The low-bid competitor took exception to almost every condition in thespecification, reducing his costs and, in turn, winning the project.Despite the client's insistence on quality, price became the overridingfactor. My first mistake was believing that price would not be the primaryissue. The second mistake I made was misjudging my competitor. I thoughttheir low price meant that they were incompetent and were going to go pawsup. Unfortunately, that is not what happened.
The pain and lessons learned from this loss become deeper. All of thechange orders over the next five years, which totaled more than $4 million,went directly to our competitor. Although our intelligence indicated thatour competitor's service performance was below average, the client refusedto allow us to bid on changes or take over the service work. This continuedfor five years, until a new operations manager came to the airport, anddecided to replace low-performing service providers.
Why failure is not an optionThere are many reasons why it was difficult for our company to penetratethe account. First, how could the airport trust our word that we were thebest thing since sliced bread and could solve their problems? Maybe wewould be worse than the current contractor. Then, there were concerns aboutvoiding existing warrantees and transition trauma that would upset thedaily operations of the airport. There was simply too much risk to allowanother company to become involved with the airport's system.
Of course, it really does not matter why it took five years for the airportto open up the competitive doors. What really matters is the power of thatone-liner, "failure is not an option." Winning is extremely important. Ifyou fail to win the initial phase of a long-term growth project, chancesare that you will be excluded from bidding on any additional work. Thewinner of the original project will perform the work and be there foreverunless that company self-destructs by providing poor service. Even then, itoften takes a good amount of time before the patience ofthe owner wearsthin.
Long-term growth: who and how?If you believe in the power of my one-liner, then the next question is toidentify which prospects fall into this category. For most corporateprospects, the answer is probably all of them. Most corporationscontinually grow and expand, representing fertile ground for this approach.
As a manager or owner of a systems integrator, if I recognize that "failureis not an option," how do I ensure that we never lose? There is no way toensure that. The best approach, however, is through the strategic use ofaggressive pricing on those projects that offer the highest long-termgrowth. Once you have captured your account, you become the winner, and alladditions and changes can be accommodated at your standard margins.
The "failure is not an option" one-liner is a challenge to management. Itrequires a vision of the future, and an understanding of the long-termdynamic relationship between sales growth and existing clients. So, for allof the owners and managers that are reading this article, I will quoteanother line from Star Trek that will change the future course of yourprofitability. It always comes from Captain Picard, when he commands anensign to plot a course to a new galaxy: "Make it so."