Sounds crazy, right? How can your company grow by not bidding? Doesn’t bidding more automatically mean winning more, and therefore growing more?
Alas, this attitude commonly leads to an all-too-familiar pipeline management philosophy: “Bid everything that moves.” Many companies—small, mid-sized, and large businesses alike—take this approach. Unfortunately, chasing everything doesn’t really work.
We can start by exploding the myth that “bid more” always equals “win more” (which, in theory, means “grow more”). This myth would be true if your success rate were to remain constant regardless of how many opportunities you pursue. That’s not how things work, however.
In fact, there is a “tipping point” at which the more you bid, the less you’ll win. That’s because your bidding efficiency simply cannot remain constant as the workload increases. As you bid more, you stretch key resources—B&P dollars, personnel, time, energy, motivation—to the breaking point, or beyond. Once you pass that point, the quality of all your pursuits will suffer, and your success rate will plummet. Even the “sure things” become less certain in that scenario.
The problem, of course, is that you may not really know where that tipping point is. So you need to track your results carefully, mapping win rate against the number of bids as best you can (while controlling for other factors, if possible). You also need to understand and acknowledge the impact of your bid volume on those key resources—and be honest with yourself about it. Ignoring this impact, or assuming your people can just work harder, or longer, is counterproductive.
You could ask your personnel, for example, how their workload affects their levels of stress, as well as their productivity and quality of work. You can track their weekly timesheets to see how many extra hours they are putting in (recognizing the potential for burnout when those extra hours pile up consistently). You can track your B&P expenditures against your budget; if you’re blowing past your budget in the first third of the year, for example, that’s an indicator that you might be bidding too much. And you can simply observe, anecdotally, how well your entire organization functions as the workload continues to increase.
The impact on key resources is not the only problem with bidding too much, however. There’s also an “opportunity cost “for each bid. Bear in mind that most of those key resources are not fungible. Every hour someone spends on one bid, for example, is an hour they are not spending on any other bids in your pipeline. Every B&P dollar spent on one bid is a dollar that can’t spent on another bid. So, every bid you add to your pursuit pipeline costs you an opportunity on one or more other bids.
The main problem with the idea of “chasing everything that moves” is that it doesn’t distinguish between the bids that are truly worth pursuing and those that aren’t. And that’s the major reason this approach is not an efficient strategy to drive growth.
Clearly, the “chase everything that moves” mentality is not the best way to generate sustainable, long-term growth. What should you do instead?
Obviously, the title of this article gives you the answer: Make smarter decisions, starting with having the courage to “No Bid” to separate the wheat from the chaff and enable you to focus on the bids that truly matter.
The New Credo: “No Bid” for Growth
The first thing to understand is that pipeline decisions are—or ought to be—about more than the chances of winning or losing. As I wrote in a previous blog, “probability of winning” (PWin) is a very shaky—one might even say shady—metric, at best. So, regardless of whether the criterion for pipeline opportunities is “sure things only” (PWin approaching 100%) or “chase everything that moves” (PWin in single digits), or somewhere in between, there’s much more to these decisions than that number.
In fact, there are numerous factors that can play into decisions about which ones to pursue. The key is to have specific, defined criteria for making bid/no-bid decisions. Given the multitude of factors to consider, however, it’s best to start with just a few—and to have a clear schema for your decision making. Here are three basic, top-level questions to ask yourself as you consider which opportunities to pursue and which to drop:
- Can we do it?
- Can we win it?
- Can we make money on it?
And here’s a visual schema that enables you to understand how to think about these questions:
In the figure above, the space where these three questions overlap obviously is the “Sweet Spot.” Opportunities that fall in this area are almost always going to be
In the figure above, the space where these three questions overlap obviously is the “Sweet Spot.” Opportunities that fall in this area are almost always going to be opportunities you bid on. These are the ones you definitely should pursue, unless there is some specific and over-riding reason not to.
What about the other areas, though? There are three areas where two but not all three circles overlap:
- You can do it, and you can win it, but you can’t make money on it.
- You can do it, and you can make money on it, but you can’t win it.
- You can win it, and you can make money on it, but you can’t do it.
It should be clear that caution is called for with regard to these opportunities. That’s not to say that you should never bid on these opportunities. It does mean you should have a very specific, reasonable, well-supported reason to do so.
Most of the time, however, opportunities that fall anywhere other than in the Sweet Spot should be No-Bids. By maintaining this discipline, you’ll be able to focus your key resources—time, B&P dollars, personnel, energy, motivation—on the best opportunities. In doing so, you’ll find that your success rate will increase, and so will your growth rate.