Whilst channel hopping the other night I caught a few minutes of the 1981 Oscar winning film 'Chariots of Fire'. It was during the point that Harold had just been beaten.
Harold M. Abrahams: I don't run to be beaten. If I can't win, I won't run!
Sybil Gordon: If you don't run, you can't win.
The difference between Silver and Gold in the 100m sprint is often just a few hundredths of a second. But as with Harold, silver medallists have only one thought: "if only…." In business there are no silver medals. You either win or you lose.
But Sybil makes a very good point. If you don't participate, you can't win.
As a management consultant (who specialises in the integration of bid and project methods) I'm often asked what is a good win ratio. The answer is, "it depends". And the reason lies with Sybil's point.
If you are a recognised player operating within a mature industry with relatively few (well known) competiors then your bid preparation should provide enough intelligence to assess your ability to win at a reasonable price with acceptable risks. I would expect in such scenarios a win ratio around 80% or more. In this market you want to be Harold. Don't bid to be beaten.
If, however, you are trying to break into a new market where you have little credibility or presence then you need to accept that the cost of entry will include many dissapointments. In this market you need to be like Sybil. You have to start somewhere (like training runs and low profile competitions) in order to be ready to compete in the blue-ribband events.
You can gain a lot of value from bidding.
better market knowledge wider and deeper customer relationships competior knowledge better understanding of your capabilities identification of new services/products new relationships with partners and 3rd parties
In short, even if you lose, you should ensure that you gain an understanding of what you need to do next time in order to win. How well you learn your lessons will be evident in a ratio that is always improving!
Another aspect to consider when reviewing your bid management performance is what the market average is. For example, whilst at a Government procurement conference last year, I was told by the Head of Procurement for a Government department that the average number of responses they gain from OJEC notices is 20+ at RFI stage and 6 to 8 at RFP stage. If we just take the latter, it would be reasonble to think that the market average is to win 1 in 7. However, further analysis shows that the pareto principle applies. That is that 80% of tenders are won by 20% of the players. Therefore the winners are not in the middle of a uniform bell-curve, but in a right hand skew (i.e. there is a difference between the modal and the mean).
What does this mean?
The headline is that if you are breaking into new markets then expect to operate well below the market average. But in the long term your competiors will out-profit you if you don't move well above market average since your cost of bidding will be much higher.
On a final point, if your win ratio is tending towards 100% it means you're probably turning business down. It's time to take some more risks, otherwise your organisation might stop learning new lessons.....
Andy Murray is a PRINCE2 Registered Consultant and a director of Outperform UK Ltd. Andy holds a Diploma in Company Direction from the Institute of Directors (IOD) the final step to becoming a Chartered Director. Andy has been consulting in bid and project management for the last 15 years helping organisations across the globe win and then deliver profitable contracts. Andy's mission is to help organisations win deals that remain profitable beyond to point of contract! Outperform UK Ltd is an Accredited Consulting Organisation (ACO) licensed to consult in the OGC's best practice products. Outperform is a corporate member of the Association for Project Management (APM), a corporate member of the Best Practice User Group and is ISO9001 certified. |
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