Let’s say you’re a smart, experienced executive. You’ve scaled the industrial-grade corporate ladder to your current heights through a combination of savvy decision-making, admirable leadership and consistently excellent execution. Plus, of course, your contagious charm and dashing good looks. I’m giving you the benefit of the doubt here. Go with it.
In other words, you’re a lot like Steve Morrisey, a freshly installed senior vice president at a hose manufacturing firm in Kansas City. I’ve only talked with Steve on the phone, so I can’t verify his handsomeness, but since he’s similar to you the law of transitive pulchritude applies.
Since Steve and you are birds-of-a-feather, when the opportunity to invest in new, expensive, and potentially transformative manufacturing technology came up last month, he posed the same question you would have asked: Does that come with fries? No, that wasn’t it. He asked: Are we sure this spend will grant us a lasting competitive advantage in the marketplace? Steve’s company is mid-size, privately owned and growing largely through acquisition. Their prior investments into gathering competitive intelligence have been modest, at best, which means their assessment of the marketplace rests largely on experience, intuition and guesswork.
With a game-changing capital purchase on the line, Steve decided a more robust look at competitors and customers was in order. Now, when you don’t have the necessary knowledge, knowhow or talent inside your organization you find yourself a whiz-bang expert to do a market research project – preferably for under $50k, right? That’s the same conclusion Steve drew and, so far, you’re on solid ground. But one more step and the two of you are at risk of walking hand-in-hand onto thin ice.
Here, almost verbatim except for identifying details, is the opening paragraph of the RFP Steve put together to find his market research vendor:
Acme Corporation is considering major investment in a new manufacturing technology for specialty hoses. While Acme understands its manufactured costs using the technology, we would like to understand whether this technology makes us the low cost manufacturer of specialty hoses amongst key competitors. Thus, we seek to engage a third party firm to complete the following tasks which we will refer to as Phase I of the project.
Phase I Deliverables:
- An industry experience curve
- An industry supply curve
That strikes you as a strong way to start an RFP, doesn’t it? Steve clearly knows what he wants and there’s no doubt that experience curves and industry supply curves are useful tools. The RFP even included a helpful illustration of an experience curve; ensuring prospective vendors would know exactly what was expected of them. Our man Steve is one smart cookie and maybe you’re thinking he would be a good hire for your own company. Well dial back the throttle, captain, because Steve actually committed a grave error. Not a “fall into the icy depths of a watery hell” magnitude error, but the degree of error that prevents uber-talented, comely folks like him and you from reaching their true business potential.
Steve’s mistake is hunting for the best vendor to deliver two pieces of information. He, like most executives, set out to purchase a deliverable. Bad decision. Imagine you and Steve stride into a local fashion boutique to have some alterations made to your sartorial finery. Steve hands his new trousers to the mustachioed tailor with explicit directions: “Please hem these to a 36-inch inseam.” Steve’s been six feet tall for 40 years and knows he needs a 36-inch inseam, so those are good instructions. Fortunately, since you are even smarter and more fashionable than Steve, you offer sage advice: “Have him mark-up the trousers while you’re wearing them. After all,” you counsel, “you’re not really after a certain length inseam; you want trousers that fit perfectly.”
Don’t contract deliverables, like a 36-inch inseam. Contract outcomes. Contract better states of being. Contract trousers that break correctly and make your derriere look exquisite. Any time you call a consultant, coach or similar firm and outline the deliverables instead of the outcomes, you are committing a disservice to your true objectives. Not only that, if a prospective supplier’s response to your requested deliverables is, “Sure, we can give you that,” then walk away. Run, in fact. Mediocre providers will agree with whatever you suggest and strive to convince you to choose them. Thought leaders – the types of firms you want to hire – will never let you dictate the deliverables. They will insist on contracting for outcomes.
Ideally, Steve’s RFP would have started with an objective that was an outcome, not a deliverable or an activity. Here’s the revised introduction he should have issued to potential research partners:
Acme Corporation is considering major investment in a new manufacturing technology for specialty hoses. While Acme understands its manufactured costs using the technology, the investment only makes sense if it makes us the low-cost producer for at least 5-10 years. Thus, we seek to engage a third party firm to help achieve the following objective:
Phase I Objective:Increase the likelihood that we are making the correct investment decision based on marketplace demand and supply dynamics.
Now, that’s an objective which, if met, would make Acme better off. Maybe the vendor would deliver an experience curve or maybe (in this case, more likely) the vendor would promote a handful of better ideas for making an informed investment decision. Then Steve would not only be smart and good looking, he’d be more successful too. Just like you.