If you think that decision making is a straight process in an unstraight world, you’ll fail more often than you’ll succeed.
Many years ago I sold into a well know manufacturer of mobile phones, pagers and walkie-talkies. One of the major projects I remember my customer undertaking was the outsourcing of their entire logistics function to a third party vendor.
Late one evening I was chatting to Philip, their head of Supply Chain & Logistics who confided in me that he had chosen a vendor to outsource his logistics to. The particular vendor wasn’t well known in this part of the world, but was the market leader in the Far East.
As I was going to have to work with this vendor to supply my products, Philip spent some time assuring me why this vendor was the best for his company and mine. Before parting he asked me to keep the information confidential as they were still in negotiations with several vendors. The fact that he had made his decision before the official decision made been made wasn’t lost on me. But what happened next astounded me.
A few days later I received a call from Philip telling me that there was a change of plan and they were no longer going with the Far Eastern company. Instead they were going to work with FedEx.
When I enquired what was behind the change of heart, Philip confided that when he told his Managing Director of his decision, his MD asked him if he wasn’t making a career limiting decision.
“What do you mean? Philip asked his MD.
“Well”, responded his MD, “when something goes wrong and some important product that we need goes missing, as it inevitably will, and emotions are running high, someone will ask “who lost it?”, “who the hell are they?”, “what the hell are we doing using a company no one has ever heard of…. Are they reputable… why were they chosen? ‘Why didn’t you select a vendor we know?’ and the next question will be ‘who the hell selected them anyway?’
So, Philip informed me, we’re going with FedEx. Everybody knows who FedEx are. I won’t have to justify them to the organisation. Nobody can tell me that FedEx aren’t a professional outfit.
“But”, I protested, “I thought the ‘Far Eastern’ company was the best fit for your particular needs?”
“Life’s not that simple”, Philip retorted. “I’m not going to take the hit to make someone else’s life easier”
‘Wow’, I thought to myself as I walked to the car park, ‘so much of selling has nothing to do with products or solutions’
Fast forward to late 2010. It was reported recently that Ireland’s Health Service Executive (HSE) awarded a multi million Euro contract for legal services to legal firm Arthur Cox.
So what? you may ask. Well, the under bidder, a consortium of medium-sized solicitor firms, are deeply upset.
The consortium - Wallace, Kelleher, Tobin & Lee – claim that their pitch was queered by the presence of one of Arthur Cox’s senior partner’s (Eugene McCague) on the board of the HSE.
Despite the consortium being ahead “by a distance” on the only objective criteria – price. When the subjective criteria were taken into account Arthur Cox beat off the challengers by scoring 680 points to the consortiums 675 (a 0.5% winning margin).
On the subject of the potential conflict of interest, a spokesman for the HSE said “that if any contracts with as much potential for conflict of interest ever came to the board, Mr McCague would withdraw from the room and take no part in the decision”
Any claim that the potential for a conflict of interest is removed because Chinese walls’ exist or a ‘conflicted’ party ‘leaves the room’ when a decision is being formally taken is disingenuous at best.
Given the choice between the familiar and the unfamiliar most people will favour familiar. This is obvious, when you think about it. It’s the devil you know is better than the devil you don’t know syndrome. We all gravitate towards certainty. Familiarity is just a signpost on the road to certainty. Thus, in the case of the consortia, they were naive to think that they even stood a chance if they could not tackle significant conerns not addressed by Arthur Cox.
In a previous article If you can't even speak about money, don't expect to see any in sales process I made the point that sales effectiveness is not just about your ability to ask questions or make great presentations, similarly, your ability to read the political and decision making landscape is also critically important to your success.
There are several lessons for sellers in the Cox/HSE situation.
Lesson 1: If you expect the decision making of any organisation to be fair, straight or logical then you’re going to lose more that you win. To expect otherwise is naïve.
Lesson 2: The sales process almost always favours the incumbent. This is especially true when selling to an organisation that is risk adverse.
Lesson 3: Given the choice between a lower price (especially when the money is not their own personal funds) and a perceived lower risk, risk adverse people will always go for lower risk. To many people, a cheaper price may be even interpreted as an additional risk fact.
As for Philip, FedEx, and the logistics company in the Far East? Philips Company pulled out of Ireland several years ago. Philip is now CEO of another multi national corporation. Both FedEx and the firm from the Far East are all doing just fine.
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