Breaking the mould - How big corporates can select top tier partners

Most execs know the effect Customer Experience (CX) has on their business’ performance. As Rory Sutherland recently put it ‘A business focussed on customers will delight its shareholders much more than a business focussed on shareholders will delight its customers’.

The value of quality

Delivering standout customer experience often requires the impact only an independent, premium digital consultancy brings. Less well appreciated is how digital is a special case of software development. Experienced digital leaders know it is not the same as implementing back office computing (such as ERP, CRM, core banking, warehousing etc.) But it is also surprisingly different from developing apps from specifications. 

World-leading digital native companies (such as Airbnb, Spotify, Uber et al.) respect the distinction. They obsess over their customer engagement and pursue high production values in the same way Apple does over their design, Christopher Nolan does on film, and Nike does for elite sportswear.

The problem with buying quality

This dependency on quality clashes with the traditional way software is procured - either buying features via licence agreements from software vendors, or building them using contract technologists from an IT supplier.

For corporations, treating digital the same as traditional IT is a procurement category error that leads to delays, disappointing outcomes, and overspend. How to build great digital experiences, even inside enterprises, is covered extensively elsewhere (as outlined by Eric Ries' book, The StartupWay; Marty Cagan's fantastic book, "TRANSFORMED: Moving to the Product Operating Model", and McKinsey's "Mastering the digital advantage in transforming customer experience" post). And similarly, there are a number of explanations as to why digital transformations fail (see: this from the Harvard Business Review, Tony Saldanha's, "Why Digital Transformations Fail", or this from CIO.com).

Even when business leaders recognise the advantages, why is introducing new, quality suppliers for mission-critical customer propositions still so hard?

Value comparisons are hard to make between different consultancies who all look similar on their cover.

No one in the business knows them - they are not on a preferred supplier list, they have not been used before and stakeholders do not recognise their brand.

There are active barriers to their selection - they don’t fit in a supplier category, there’s no existing legal agreement (MSA), and their approach may deviate from standard.

The odds are stacked against pioneer consultancies as there are so many stakeholder challenges to answer:

-- Why don’t we do it ourselves?
-- Can’t we use our existing supplier(s)?
-- Shouldn't we use a large, recognised vendor?
-- How do we minimise the risk of new suppliers?
-- We have to run a formal ITT/RFP process...
-- How will we guarantee the work?
-- We have already set a budget
-- Will their approach work for us?
-- We want the best day rates for this list of skills (i.e. we are only interested in commodity comparison)...

When quality digital is a critical requirement for customer experience at scale, what’s the best way to build internal momentum and alignment for a more progressive approach?

How to find the right partner and secure best value

Four approaches that can help selection, while fitting within a formal procurement process:

   Run open engagements with a curated shortlist of potential partners

Where an ITT/RFP process must be followed, exploring a market often starts with a Request for Information (RFI). Rather than investing the time, effort and resources in structuring and reviewing these, instead shape a long list by seeking referrals to potential consultancies among your employee and peer networks. Offer an open invitation to engage by taking a lightweight brief to a few candidate consultancies and ask for their feedback.

Look for suppliers with compelling experience and capability and invite them to work with your team to understand your intent. Explore your current state, desired outcomes, constraints and opportunities with them. Do this work ‘out in the open’ with your major stakeholders and encourage suppliers to bring their own perspectives. In most cases, everyone enjoys and benefits from these engagements, learning more than they imagine.

 Co-develop an approach or solution before exploring the commercials 

When developing new customer experiences/propositions, continuous discovery and customer testing is more valuable than detailed upfront specification. Focus attention on customer, technical, and business aspects with these potential partners. This will crystallise your brief, inform the most appropriate selection criteria, and develop your understanding of effective ways of working together, all while testing for chemistry between your teams.

Remain focused on continuously improving the proposed approach and solution. Co-create plans with multiple suppliers and take advantage of the ecosystem each consultancy brings. A small investment budget in discovery may be needed at this point, although some suppliers will offset this against future fees.

As the nature and scale of the work becomes clearer, remain flexible and open to value creation ideas. Consider a range of commercial approaches once a solution forms. Commonly, at-scale digital falls between two procurement categories: digital marketing and software development. Moving to a formal selection process too early can dramatically impact value as neither of these categories select well for excellent digital design and build capabilities.

   Set selection criteria based on fit, value and outcomes

Value for money should remain the primary intent. Rather than following the simplistic approach of buying a menu of technical capabilities or a software features list, develop a robust but nuanced scoring criteria focused on the relationship and outcomes you seek.

By engaging fully with potential partners, you will experience first hand the aspects that impact success. Enterprise procurement functions will seek a robust scoring framework to compare suppliers (in addition to demonstrating the business requirement for a new, boutique consultancy). The experience and outcomes arising from steps 1 and 2 should align stakeholders and build appreciation for the category of supplier sought and the best measures for effectively comparing suppliers will emerge.

   Actively seek suppliers who offer non-compliant bids

This is counter intuitive but offers a powerful ‘tell’ for certain types of consultancies. Where a formal tendering process is mandated, those that respond by carefully considering the value they offer and either withdraw from the process or offer non-compliant bids should not be automatically discounted.

Some of these consultancies may have spent time and effort deeply researching and considering your circumstances and stated needs. In some cases they will present an alternative approach or offer of engagement that brings a deeper level of value. They will rarely be transactional, bid-on-everything suppliers who operate on a 10% success rate, but are more likely to be boutique specialists seeking high value partnerships with clients.

They are demonstrating the courage of their conviction through showcasing where their value lies. Boutiques do not sell commodity services and are unlikely to fund internal bidding teams, but they are willing to invest in exploring corporate fit and prove their value to potential clients.

Start today with these steps...

 Value comparisons become easy as familiarity with services, approach, capabilities and quality develops through early engagements with consultancies. Briefs become honed as what’s needed is clarified.

 Stakeholders get to know teams and alignment builds prior to a project kickoff. The momentum gets carried into the project and this pre-work will garner buy-in and understanding across your business. 

 Proactively dissolve the barriers to selection and onboarding as familiarity builds, relationships develop and ways of working successfully emerge. This enables accurate capture of well considered and mutually agreed expectations.  

 Dramatic risk reduction occurs from avoiding the costs of missteps, preempting the most important factors and aligning around an approach with confidence. 

Start with step 1 to explore the current state (across: customer, business and technical) and your desired future state. Consultancies will invest their talent, effort and time in exploration with prospects that are open and engaged.

Aim to get around the same side of the table and look at the problem/opportunity in partnership with potential suppliers. This will shape more realistic approaches, with clearer thinking before making mission critical selection decisions.

If what you need to achieve is complicated, and if quality and experience really matters, give Red Badger a call to explore creating value, together.