The top ten proposal mistakes

I frequently read Proposals from existing and potential suppliers as their response to Requests for Proposals or Prices – RFP from my client companies.

These RFP are deliberately drafted to be as straightforward and uncomplicated as possible. So, they should represent a simple golden opportunity for suppliers to present their company and its products or services in the best possible light to an interested audience.

This is an invitation to sell, which should be any company’s dream. Many respond to the invitation very well, and present a compelling business case for their offering. There are more who respond in a way which makes their sales message difficult to understand, and a struggle to decipher. So what are the top ten most common mistakes that suppliers make when responding to an invitation to prepare a proposal? I’ve listed here the ones I see most often.

 1. Not reading the invitation or brief

This one is so obvious; but it’s still a constant surprise when I see proposals which clearly show the author has not read the brief fully. I even know of one supplier who told me they had submitted a very low price without even opening the invitation.

2. Not answering specific questions in the brief.

If the brief contains particular questions, such as: “What is your annual widget manufacturing capacity?” the answer is clearly something we’d be like to know. So, without answers to those sorts of questions, it’s hard to assess what the supplier is offering. It also suggests the supplier is not interested in the customer’s needs.

3. Wordiness

Before contacting a group of particular suppliers, we will have done our research. We’ll already know a fair amount about the supplier company, so that’s why we usually say that any standard presentations may be of interest, but are unlikely to be specific enough to answer what we’d like to know. Despite that, some suppliers still insist on providing twenty pages of standard corporate PowerPoint containing information we already knew.

4. Tradition

This can be a challenging one for some to overcome. It’s the “We’ve always done it this way” approach to proposals and presentations. That may be a good approach in some circumstances, but these circumstances are ones of change, so it’s important to be flexible and think of new ways of presenting as well as new ways of engaging customers in business. If there are ten proposals to choose from, you need to stand out, so try a break with tradition.

5. Leaving it to the night before

I’ve found that business people tend to fall into two groups: those who use a to-do list, prioritise their tasks, and allow the right amount of time for important tasks (such as selling to a potential new customer); and those who leave everything to the last possible minute. The latter group usually lose more proposals than they win.

6. Leaving the last client’s name or logo on the proposal

We all have templates or formats we’ve used in the past, and it makes sense to re-use something which has time and effort invested in it. But when I see proposals which still contain logos or references to the last customer the template was used for, it simply says that the supplier has not taken enough time and care over the proposal.

7. Thinking about the proposal from your own perspective only

Most proposals I see concentrate heavily on the view of the author and their company. They begin with long explanations of what they do, how they organise their business, and what process they will apply in providing their xyz service to us. That’s important and relevant, but not as important as how the customer views the world, and what they think they should receive. It’s much better to read a proposal which begins with a well-researched and presented summary of the customer and their needs. Which brings me on to….

8. Not thinking about the customer

If you’re writing a proposal for a C-Level (Chief-anything) Executive at a potential new customer, the Chief has presented to you a business opportunity and a courtesy. The RFP will contain a description of the customer’s business and their needs. But that should simply be a starter for you to write your own research-based summary of the customer’s industry, business, needs, and fit with what you offer. Beginning your proposal by simply writing about what your company does is unlikely to be as persuasive as demonstrating your understanding of someone else’s business.

9. Forgetting the basics

There are some things which seem so obvious, we can often take them for granted, and expect them as a given in any potentially valuable proposal or sales presentation. These are the simple aspects which everyone writing proposals should get right, but it’s very surprising how many don’t. I group them into two straightforward categories: form and content.  The content describes what you’re offering, and needs to be clear, simple and short, but with references to separate detail if needed. The form is how your proposal is written and presented, and must have correct grammar, spelling and punctuation, and be set out in a presentation style which is easy to follow. The simple courtesy of thanking the Chief for the opportunity is also something to be encouraged.

10. Not going the innovative mile

In any RFP there will be some standard requirements, questions, and formats. The document will include all of the usual needs for the product or service the customer would like to buy. But, we also always encourage suppliers to suggest new ideas or approaches to a product, a service, or account management which we may not have thought of. Demonstrating that a supplier has spent time and effort thinking about how they can help improve a customer’s business is always a great way to stand out.

The elders set the tone

I’m fortunate to live in a city, but also have a four mile stretch of protected woodland and open country in a greenbelt beginning at the bottom of my garden. This provides me with an ideal and free alternative to the exercise once provided by an expensive gym subscription. It also provides a fascinating opportunity to observe the different ways in which people interact with strangers, or those with whom they have a nodding acquaintance, by virtue of meeting them at the same point at the same time in a coincidence of separate daily exercise routines. There are many types of reaction: the cheerful nod, the breathless wave, the blank stare, or a fascination with the ground.

This spectrum of reactions reminds me of the many ways in which apparently similar businesses can display widely differing styles and characteristics, and how many have a collective culture which can endure for years, despite the apparent diversity of the people and characters who work in them.  Having an authentic and consistent company style or character is important for a business, because if handled well, it provides customers, employees and others with a reassuring confidence in the predictability, reliability and dependability of a business. This style must be authentic, consistent and relevant to a business and its markets over a long time period – jarring styles or sudden changes of approach will unsettle those with an interest in the business. Having the easy-going consistent friendliness of a Starbucks suddenly transforming into a formal, rigid business would be a shock to the customers, and to the bottom line.

But what if the approach to dealing with people is not right for the market a company operates in? Well in the long-term, the business will lose customers, employees, money, and probably its existence. So how is this tone, the ease with which a business deals with its customers, set, and maintained? I think it’s very simple. It’s not established by any imposed changes which are not authentic, relevant or based on business common-sense. It’s about the style and tone the elders or leaders of the business set, which they learned from their elders when they were starting in their own business careers. The way a leader deals with those working in a business, and those supplying , buying from or visiting it is behaviour which will be acquired and repeated by others – particularly those in the early stages of their careers.  So, if the leader treats his senior team well, motivates and guides them, you’ll usually find that behaviour permeates the entire business, and at the moment of truth – the contact with the customer, the customer will be treated well, and is much more likely to be a loyal returning customer. But, the converse is also true. A dysfunctional business with hostile environments, in which the leader is detached from what is actually happening in the moments of truth, or leads by table-thumping, is much more likely to display collective disinterest, inattentiveness or even hostility towards its customers and employees. As with most successes or failures in business, the root cause is at the top – the way the leader handles people.

Should Microsoft’s business be exciting, or profitable?

In all the analysis and debate about Microsoft’s recent quarterly earnings and its acquisition of Skype, there seems to be a common but often unexpressed view that Microsoft should be a business which is exciting for consumers. Why?

Since mid-2010 it’s looked quite likely that Apple’s quarterly profit could exceed that of Microsoft for the first time in twenty years, and this month it did. Commentators rushed to announce the writing was on the wall for Microsoft, and that it had no chance of ever recovering the lead it had lost to the more interesting, exciting and glamorous Apple.

It’s true that Apple is an exciting business, but Apple manufactures computers and consumer devices, which are very well designed, have great functionality, and many millions of enthusiastic users. In contrast, Microsoft’s software powers 92% of all computers and the products of its Server and Office divisions dominate the use of IT in business, accounting for 80% of Microsoft’s profit. So, the two companies operate in and excel in completely different markets and a comparison of their products and profitability is not a very meaningful one. The debate about consumer interest, excitement and PR style is an entirely different theme.

With the current generation of Server and Office products, Microsoft has developed some great software, and in planning for its future growth strategy, it has laid some outstanding technical foundations with its Azure platform, designed to take the Server products into the realm of cloud computing, in the same way that Office365 will take its Office products into the cloud. Realising the business potential of these changes for Microsoft it still some way off, but the foundations for next generation growth of business products are there.

Much of the debate about Microsoft has really been about the perceptions of growth prospects and leadership. Steve Ballmer has received a lot of criticism since the departure of Bill Gates, but that’s hardly surprising: who would have been able to follow Bill Gates and not be criticised by comparison? Any business needs to be in a state of constant change and growth in order to survive, and not having clarity and focus about that growth and change is what has unsettled Microsoft investors.

Microsoft’s great success has been in the business market, not the consumer market. Over the past few years, Microsoft has developed several products intended for use by consumers. With the exception of Xbox, most of them failed. But even Xbox represents only a tiny proportion of 4% of Microsoft profits. Skype, and the opportunity for Windows Phone 7 to grow through the Nokia alliance, are clearly opportunities for consumer products. Skype will sit alongside Microsoft’s existing messaging products, and may have a future as part of Windows 8. But it’s not yet a mainstream business tool, and to spend 8 billion dollars on a product outside your core business seems odd. If it was a defensive move, to keep the technology out of the hands of competitors, the price tag is even crazier.

Let’s hope Microsoft continues to stick to the business, back-office, unexciting but profitable focus it is so good at, and stops dabbling in the more exciting consumer products arena it is not so good at.

The quickest way to increase profits

Reducing costs wisely is the quickest way to increase profits.

I’ve found through experience of leading businesses and cost reduction projects that lowering costs without weakening your business can lead to dramatic improvements in short term results, and in long term prospects.

But, a project to reduce costs will not necessarily lead to long term profitability if it is not properly designed for your business. So, what are the key ingredients for project success:  how can you reduce costs without sacrificing the strengths your business already has? The answer is in basic economics and business reality: competition, management and skill, together with some software tools.

Business costs arise in three main areas: people, processes and procurement.  Reducing the number of people (let’s always remember, they are people, not a headcount) in your business is one way to reduce costs, but is too often viewed as the first option. Business strengths could be preserved by looking at other areas first, possibly re-designing processes, and then considering whether all of the jobs you offer can be better used in those processes.

That leaves procurement, and the difference between procurement cost cutting which could weaken a business and one which strengthens it depends on the overall approach, character and style of the project, and how it is designed and managed.

The nature and feel of cost reduction projects tend to fall into two main areas. Firstly, the slash-and-burn approach, a project with a single, narrow remit in which all areas are subject to a relentless questioning, and need for justification. Secondly, there are those projects with a clear objective, and a rigorous proven method, a business-wide CEO’s perspective, and some specialised tools and experience.

So what’s wrong with the first approach, which can reduce costs quickly? Fear, demoralisation, instability and supply chain weakening are some of the main disadvantages. Obviously, those are pretty fundamental, so most of the advantages of this approach really pale into insignificance.

What about the second approach to rapid cost reduction? This whole-business approach takes a balanced view, focussing on the need to develop the business in the long term by setting the right cost and supply base in the short term. This approach is one which emphasises fair competition, transparent collaboration and negotiation, not table-thumping. It’s also one which seeks out the strengths of suppliers and tries to play to them, whatever their size or niche.

Getting the best out of existing or available suppliers is all about a question of balance – their costs have to be competitive, but that does not always mean the lowest. In my company’s methodology, cost is only one of a range of measures in a balanced scorecard designed to identify suppliers with the best overall set of attributes. Cost is of great importance, but the cheapest supplier will not always be the best one if low cost is at the expense of poor quality or unreliable service. The best suppliers are those who pay attention to all aspects of their competitive offering – and play to their own strengths.



Is the big new idea overrated?

Many new business ventures are sparked into life by the belief of the founder that they have seen a highly inventive big new idea. These new ideas may have been formed in a flash of inspiration, or as a result of lengthy research. However the ideas are created, the social energy and attractiveness of this type of business in its early stage can be overwhelming, and can easily obscure the judgment of the founder and others in the fledgling business. This is a condition sceptical funders are very well aware of.

The early stage founder with the big new idea is often obsessed with secrecy, patent protection, confidentially clauses and other signs of a belief that their idea has huge commercial potential, which is almost within reach. But how valuable is the big idea?

It’s true that we need a constant flow of new inventions and ideas to keep our societies and economies vibrant, and to have economic value, inventions need to be well-implemented. But, the ability to implement and manage the day to day operations of a trading business is not always the strongest skill of an invention-led founder.

Even with a rounded founder, or one with the common sense to complement their own skill set with a team which provides what’s necessary to innovate rather than invent, the gap between the idea and a sustainable business can be too great for anyone to fund, or work with.

There’s been a great deal of emphasis in business in recent years on the importance of invention, the next big thing, or the big new idea. But, none of these are as important as the skill of innovation – taking existing ideas, or ideas which may be very old and implementing them, or operating them every day in a way which is cheaper, better, faster or easier than anyone else.

The importance of innovation to profitability is much greater than the importance of new ideas in themselves. But there’s an added edge to innovation – it has to be a constant process, continually seeking to innovate and improve without any fixed goal such as the filing of a patent. Constant innovation is what sets apart prosperous, expanding businesses from those which are static or declining, and led by tradition.

There are some very successful and high profile examples of businesses which started not with a brilliant flash of inspiration about a big new idea, but rather as improved, innovative implementations of existing ideas or long-established industry models. They include Microsoft, Ford and Apple. If you thought Apple invented the iPod, they didn’t. They innovated an existing patent which an English inventor called Kane Kramer could not afford the patent renewal fee for.

So, if you’re searching for the next big thing to make the cornerstone of your new business, don’t search too hard. You’d probably be better off by studying what existing businesses in your chosen sector get wrong, avoiding their mistakes, and implementing a proven idea in a way which is simply better.