Monday, 27 February 2012

The hardest words to say in business

Certain companies (not I’m glad to say my present one) find it impossible to walk away from any business opportunity, however tenuous.

Imagine a company selling systems to cook and serve breakfast. It has built many of the modules it needs: to squeeze and pour orange juice, to fry and serve bacon, to toast and butter bread. But it has never got round to a module for boiling an egg.

Now a tender comes in for a an egg-boiling system. Strangely, this is the second such opportunity in a matter of weeks. The last one had demanded the use of wooden egg cups. The company bid for the contract despite not having a system, relying on its general reputation for breakfast-related applications and its commitment to develop egg-boiling functions.

If we can do scrambled and fried,
 said the Chief Executive, just how hard can it be to do boiled?

The order eventually went to a competitor whose trademark was its wooden egg cups.

Now here's the new tender, and it has a peculiarity: bidders have only ten days to prepare and submit offers. The company directors meet to discuss their response.

‘This is a great opportunity,’ says the Chief Executive. ‘I mean, it’ll mean we develop our boiled-egg module — and be paid for it. Win-win.’

‘Exactly,’ says the Sales Director, ‘and this client belongs to a chain. Imagine the follow=up orders that could flow in. Think of the revenue!’

‘Yeees,’ says the Marketing Director, chilling the atmosphere with his obvious scepticism. ‘Problem is the tender asks for a supplier who has successfully delivered a system to two other customers. And we haven’t.’

‘Come on, come on. We’ve delivered lots of systems,’ says the Sales Director.

‘True, but none of them for boiled eggs. And did you notice? The tender asks for wooden egg cups. That’s a bit worrying.’

‘Why? asks the Chief Executive,   ‘theres nothing to stop us offering wooden egg cups too.
Well, it suggests a stitch-up for the same supplier that won the last order. And that would explain the punishing timescale for this tender: they’re discouraging bidders because they’ve already made up their mind.’

A proud trademark...
but a 'keep off' sign too?

‘Oh, come on! That would be practically illegal.’

‘Grey rather than illegal. It would be bloody hard to prove. And did you notice who wrote the tender?’

Their blank looks are answer enough. ‘The author recorded in the document properties. It’s the same as on the last tender.’


‘This lot are basically re-using the same tender. They want the same supplier.’

But he can’t persuade them. The decision is taken to go ahead anyway. He and three other staff spend the next four days preparing a bid document.

The Chief Executive comes up with a brainwave.

‘George makes systems for boiling water. Henry makes system for handling eggs. We already have functions to serve a dish. We’ll put together a collaborative partnership so that we can have a prototype to show the client.

‘How much will all that cost?’ asks the Marketing Director aghast.

‘They’ll do it for free. At risk. For the opportunity.’

‘No — I mean how much will we have to charge the client to cover all those costs?’

‘Don’t worry — we’ll shave everything down to the minimum.’

For the whole of the next day the Chief Executive sits in his office crouched over his computer, building Excel functions, a VLOOKUP here, a NET PRESENT VALUE there. Eventually he emerges exuding the confidence that only a full day without contact with reality can give you.

‘We can keep the price down to £5,000,’ he announces triumphantly. His expression shows that he's been mentally spending the money the order will raise.

Even the Sales Director looks sceptical.

‘The competition are bidding £750.’

The Chief Executive’s draw drops. ‘How can anyone possibly make money at that level?’

The Marketing Director rather too obviously avoids saying ‘I told you so.’

The Chief Executive goes back into his office for another extended Excel session. Next day he comes up with a new figure: £2200. That’s the price that they finally submit.

The prototype isn’t quite ready for the demonstration, but they make a good fist of it all the same. It’s just a pity about the egg that got broken.

‘Overall,’ says the Chief Executive, ‘I thought that went well. I was sat at the back of the room and people were ticking lots of boxes on their evaluation forms. And the Finance Director distinctly smiled at me.’

A few days later they learn they haven't made it to the shortlist. Their offer price was too high and the system demonstrated didn’t seem fully developed yet.

The Marketing Director barely notices, preoccupied as he is with catching up on the work he didn’t do while preparing the bid. But it comes as no surprise to hear later on that the contract eventually went to same supplier as before, with the wooden egg cups.

Soon after he’s fired, nominally as part of a redundancy package, but everyone knows it
s really for being a smartarse.

Making him the latest victim of the sad truth that the hardest words for many businesses are ‘no bid’.

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