Most customers are pretty smart. They have to be or they don’t get to stay customers for very long. They go out of business. Ever since the first business transaction occurred where a customer gave a vendor gold (or its fiat representative, money) and in return received something they either wanted or needed, customers have been asking the eternal question:
Did I get a good deal?
The answer is invariably, maybe.
If the customer received a product or service that met their expectations and fulfilled their needs, and parted with an amount of money that still enabled them to continue operations, then they are probably not unhappy. Notice I didn’t say happy. A customer will always find room in their heart to spend less money on something. If you gave a customer their desired product for free, they would probably wonder if they should have asked for you to throw in the installation of the product for free as well.
Here in lies the rub. How does a customer get a vendor to part with their highly desirable product or service for less money? Vendors want to raise their prices. Higher prices mean better margins, better profitability, higher stock prices and eventually a larger yacht for the CEO. Keeping the CEO happy seems to be the driving force behind most business decisions these days.
The answer as to how the various customer – vendor balances are achieved lies in the market’s dynamics. If there are many people chasing or wanting the good, and relatively few suppliers, then the balance swings in the vendors favor. A good example of this phenomenon can be seen in plethora of collector car auctions that are popping up on the various television channels.
These auctions are events where we can all vicariously watch a number of rather wealthy people throw incredible amounts of money at old cars. Why are they doing that? I don’t know. I only know that when I am watching them run the price of some vintage 1960’s AC Cobra up close to seven figures, I too want that car. I don’t want to drive that car. Who would risk an accident driving a car valued at a million dollars? I would like to have that car so I could sell it for a million dollars.
Perhaps the wealthy bidders on the televised auction have already obtained their larger yachts and need another type of good to serve as the latest trophy for their success.
The point here is that there seems to be more wealthy people throwing money at old cars than there are old cars for them to throw money at. Why is that? I think it is because they are not making any more old cars, only new ones, hence there is a limited supply of old cars. But here too the economic laws of supply and demand indicate that if there are more people that want a good than there are goods (old cars) available, the price of the good will go up. This is how you get million dollar AC Cobras.
On the other side of this spectrum is the situation where there is an industry dominated by a very few customers and relatively numerous vendors contending to be one of the chosen suppliers of a good or service to them. Examples of this market structure can be seen in the automobile manufacturing or communications provider markets. These are other examples of markets that are dominated by a few very large players with many vendors contending to be suppliers to them, but these are two that we should all be familiar with.
When these customers decide that they want to buy goods or services, they also hold an auction of sorts. They hold a silent auction, with one of the prime differences being it is not the buyer who bids the highest price that wins; it is the vendor that bids the lowest price that wins. This type of scenario is called a Request For Proposal (RFP), and the really fun part of this process is that again unlike the auto auction, no one gets to know how low the others involved in the process are bidding. It’s good to be the customer in an RFP process, just as the film director Mel Brooks once said “It’s good to be King” in his movie The History of the World.
Can you imagine how much more fun it would be if car manufacturers had to go through a process like this every time you wanted to buy a car? Think about what it would be like to have car manufacturers coming to you and disclosing to you the lowest price at which they would sell you a car, without knowing what the other manufacturers are bidding. We would all probably buy more cars just for the shear pageantry and enjoyment of the process.
A customer’s RFP process is designed to do one of two things: create a process that justifies the selection of the vendor, and product that they wanted in the first place, or to reduce the vendor decision process to the lowest common denominator – price, and then choose the cheapest provider.
The RFP process enables a customer to create a specification for the good or service that they wish to obtain, and have multiple vendors submit their lowest possible price for their good or service that meets the specification. A customer can favor one vendor over other vendors in this selection process by including terms or requirements in the RFP specification that may be more advantageous to one vendor’s capabilities, or conversely have requirements that are disadvantageous to the other vendors’ capabilities.
In either event, it is the responsibility of the sales team to have previously created the relationship with the customer that will enable this sort of influence of the buying process. If you are trying to answer an RFP that does not accentuate your company’s or products advantages, your sales team has not done their job. You can usually tell this is the case by how loudly the sales team is screaming for a lower price to be included in the RFP response. You are also probably answering an RFP that does accentuate your competitions capabilities, and their sales team has done their job.
On the other end of this RFP decision process, it may be possible that the customer has in fact created their own RFP with no input from any vendors. This is a rare occurrence. If this is the case you are now in the midst of what is known as a “Price War”. This is a situation where the vendor with the lowest cost basis, or the vendor willing to take the lowest profitability margin will win the opportunity to sell their good or service to the customer.
Unless you know that you are the lowest cost supplier of the desired good or service, this is also known as a waste of time. Trying to win a price war RFP process is not usually a profitable endeavor.
The only thing worse that some unprofitable business is a lot of unprofitable business. The idea of economy of scale does not hold when it comes to unprofitable business and large RFPs.
I believe that everybody in business at one time or another has responded to an RFP. Some of us have even won them and become the selected vendor. I think that most of the times that I have been successful have been because of the influencing work that was done prior to the RFP being issued. I also think that most of the time we have all been sorry for the RFP competitions that we have won purely on price.
This probably holds true for the customers as well. If they are not willing to enable the vendor to provide their incremental or differentiate value, but only their price, then they will probably not get any incremental value in return either.
I find it even more interesting that even after all of this customer – vendor type of interaction associated with the RFP and purchase process, all the hoops that customers will create and that the vendors must leap through, and all the price discounts that will be demanded, weaseled and cajoled, the buyer will almost always refer to the selected vendor as their “Partner’.
People who know me know that it is only on the very rare occasion that I may get just the teensiest bit sarcastic when people, places, things, etc, strike me as being silly. I enjoy humor. I seem to find it everywhere, even when I am not especially looking for it. I guess a more correct phrasing would be that the humor and silliness of the business world just seems to find me. Occasionally my approach and public comments regarding what I find funny aggravate my wife, and now she reminds all of our friends not to encourage me when the silliness finds me and my sarcastic twin emerges and starts commenting. Fortunately she is not around right now, and yet another source of silliness in the business world has found me, so please bear this in mind.
I guess I am lost as to what has occurred within the business world that has enabled people to bestow upon themselves, or upon others the latest collection of self aggrandizing job titles that appear to be proliferating on both resumes and the online networking sites that everyone in business now seems to be members of. If I didn’t know better I would say that it looks as though there is a tacit competition amongst the various business players to see who can come up with the most grandiose job title for themselves. If that is indeed the case we seem to have quite a lot of “winners” out there.
I have to believe that the current “Title Wave” started with the many comedians of the past and their stand-up comedy routine monologue searches for laughter. I think the great George Carlin was one of the first to refer to garbage men as “sanitation engineers” as a way of uplifting their roles in society, and Rosanne Barr refused to refer to herself as a house wife and opted for the more resume friendly “domestic goddess”. Who would have thought that from these humble and humorous beginnings business people would now generate an entire new lexicon of job titles, with the only difference being that today’s purveyors of new age job titles are not trying to elicit even the smallest chuckle from the audiences reading their resumes.
In looking at some of the various job and occupational titles that are now being crafted with such care, they appear at least to me, to fall into three general categories:
• Eastern Philosophers
• People born in or lost in the 1980’s
I am sure that there must be others, and possibly even potential sub categories of the ones I have named, but for me they seem to all fit into these three. It is interesting how that works out. With everyone striving to differentiate themselves from everyone else, they have succeeded in all looking relatively if not inanely the same. I suppose it is the same phenomenon that causes all teenagers to grow their hair long so that they can look and be different. If they all have long hair, how can you tell which one is different? But I digress.
In this case “Chiefs” are not the professional football team from Kansas City. There used to be a politically incorrect saying that when a business was deemed to be too management heavy it was said to have “too many chiefs and not enough Indians”. This however no longer seems to be the case based on the ongoing proliferation of “chief” titles. In the past there were essentially two “Chief” titles: the Chief Executive Officer (CEO) and the Chief Operations Officer (COO) as the primary chief titles in an organization. Now we must include a few of the more recent ones that I have witnessed:
• Chief Visionary Officer – okay, you got me here. Some people are visionary and some are not. How do you get to be the Chief visionary? Business keratotomy?
• Chief Creative Officer – Same as above. Some are creative and some aren’t. I guess the person that came up with this one first gets to claim the prize.
• Chief Thought Provoker – While I am always in favor of more thinking in business, I don’t think I would hire this person to make sure we do it.
• Chief Inspiration Officer – Now I’m really starting to get lost, or inspired. I’m not really sure which.
• Chief Elation Officer – I think we have officially made it into the silly realm.
• Chief Instigation Officer – I would like to see this job description. How would you do succession planning for this one?
• Chief People Herder – Despite the title, I can see a need for this function. I think most of us refer to this role as a “Project Manager”.
I could not make these up. While I like to think of myself as being somewhat visionary and creative, I know I am not that visionary or creative.
The next general set of new age titles that are appearing seem to be associated in one way or another with Eastern philosophies. I am not sure why. Perhaps the owners of the following titles watched the movie “Teenage Mutant Ninja Turtles” one time too many (which in itself would be an oxymoron as watching it one time could be construed as one time too many) in their more formative years. A few of these new titles are:
• Marketing (or insert any other business discipline here) Ninja – I can stretch to see the skill level association, but the rest of the silent killer / warrior connotation is lost on me.
• Marketing (or insert any other business discipline here) Guru – Same as above I guess, but probably not as warrior like. Marketing seems to attract these types of titles. The last group that I am aware of that had a “Guru” was the Beatles in the 1960’s.
• Marketing (or insert any other business discipline here) Sensei – Staying with our bad movie theme, this how the bad guys in the original Karate Kid movie referred to their teacher. True martial artists refer to their instructor as “Mister – insert last name” (as in Mr. Miyagi in the afore mentioned Karate Kid) as a sign of respect.
Eastern philosophy has always had a role in business. I have extolled the virtues of Sun Tzu, and the twenty fifth century B.C. Chinese general’s “Art of War” several times in the past from a strategy point of view. Despite my appreciation of the book, I don’t think I would try to title myself as a “Business General”. On the other hand, maybe I should.
The final group of new position titles seems to me to be best associated with the 1980’s. Just like “Teenage Mutant Ninja Turtles” and “The Karate Kid” may have engendered the Eastern philosophy bent of new business titles, it seems that other 1980s movies and cultural phenomenon may be responsible for other titles. Here are a few of the more entertaining examples:
• (Insert a business discipline here) Evangelist – Weren’t Jim and Tammy Faye Baker television Evangelists? Just asking.
• (Insert a business discipline here) Magician / Wizard – I get the feeling some people played Dungeons and Dragons (a lot) in their formative years.
• (Insert a business discipline here) Jedi – Yet another movie (Star Wars) reference. Just because you call yourself one, does not mean the Force will be with you.
• (Insert a business discipline here) Warrior / Overlord / Badass / Demigod – These were lame descriptors back in the 1980s. They don’t work now in business either.
I understand the desire for people to set themselves apart from others when it comes to who they are or what they do, but have we allowed ourselves to propeller off into a relatively strange place for business when we use and proliferate such titles. These are actual titles – if you don’t believe me, go out on Linkedin, the business networking site, and do a search on any one of them. I suspect you will get several hits on each one.
I know it sounds boring, but I think most businesses are interested in what talents people have, what they can do and what value they can bring to the organization. If the targeted organization is responsible for creating new job titles, then we probably have some over achievers identified here. If the organization is interested in getti
ng on, and ahead with the business disciplines and functions that drive a business, then they will probably be looking for those that can find a better way to demonstrate their business prowess and skills.
On the other hand, maybe I should just start auditioning for the newly created position of Chief Sarcasm and Silliness Ninja Evangelist.
Some time ago I went out to a dinner party / birthday party for a friend of mine. This in itself is something of an anomaly in that I am not renowned for my witty conversational capabilities and hence do not get invited out to many parties. I suspect they actually wanted my wife to attend and couldn’t figure out a way to get her to come that didn’t involve inviting me, so they went ahead and just invited me but made sure to tell me that they wanted me to bring my wife.
I had met this friend many years ago when we were in a dads and daughters organization that was designed to get dads to spend time and develop relationships with their daughters. We started when our daughters were in kindergarten, and it was one of the best organizations I have ever been involved in. I would tell you the name of it but it has since been declared to not be a “politically correct” name, and they have changed it. I liked the politically incorrect name and won’t relate the new “corrected” name here. I will say that the old name had something to do with Native Americans and princesses, and I think my daughter and I had a great time together in this organization.
The point of that somewhat lengthy introduction was to bring up the point that there were several people at this birthday party that I had never met before. I suspected that these unknown people were friends of my friend’s lady friend. I hope you followed that. I suspected that this had to be the case since my friend was not friendly enough to have that many friends. As you might guess, it was a friendly get together with many of his friends and several of her friends.
Another interesting point that I noticed was that due to apparent comfort levels and familiarity his friends tended to sit together on one side of the large table and her friends tended to sit together on the other side. This generated two sets of conversations but with little to no interaction between the groups. It reminded me of several customer meetings I had attended in the past where the customers sat on one side of the table and talked amongst themselves and the vendor sat on the other side of the table and talked amongst themselves until the actual meeting got started.
The actual party had not really gotten started yet either, so there seemed to be only one thing to do, and I did it. I stood up, now with all eyes upon me, and walked over to the other side of the table and started introducing myself to each individual that I didn’t know on that side of the table. I introduced myself to everybody. Men, women, friends, everybody got an introduction and a handshake. I don’t think the waiter really cared who I was, and his hand was still damp from wiping off the table but that didn’t stop me from introducing myself to him either. The only thing missing was the exchange of business cards, but who brings business cards to a friend’s birthday party?
That being done, everybody else joined in and started to introduce themselves, and like the customer meeting where everyone does their own introductions, the energy level of the party started to rise.
Of course it could also have been the abundance of wine, but for purposes of this discussion I am going to go with the increased human interaction as the primary catalyst for getting things moving. I have witnessed this same phenomenon at the aforementioned customer meetings, the vast majority of which did not serve wine.
The fact is that given the opportunity, people will interact. They will interact even better if they know who they are interacting with. The best way for them to know who they are interacting with is to take the first step and introduce yourself.
As I think more about it, I find it interesting that my daughter (now in college) has also recognized my view of introductions to the point where she now instructs her various boyfriends to walk up to me, introduce themselves, shake my hand and look me in the eye, if they truly wish to receive a passing grade from me. I can’t possibly be as fierce as she has made me out to be, but I find I do like the ones that do provide an introduction without being asked. On the other hand, those that have shown up at our house and honked the horn out by the curb in order to get her to come out in anticipation of avoiding this friendly contact have been known to wait for a significant amount of time, and then eventually having to come to the door and go through the face to face introduction anyway, before they are allowed to escort my daughter out on their planned activities.
I have since started to apply this self introduction process in several instances other than customer meetings and parties. While working in a large company it is not uncommon to see or pass by other people in the hallways. In the past it seemed it was proper protocol to just nod or smile at these people in order to acknowledge their existence, and not much more. I now stop and introduce myself. I start the conversation. I ask them what they do and where they are located in the building, and provide them the same information.
In doing this I have met several interesting people in the organization and have gotten a better idea of who has which responsibilities. I have also found that it is in fact possible to engage Co-Ops, new hires and other members of the so called “millennial” generation in at least basic conversations. In the past I had just assumed that there was something more interesting occurring on their smart phone than in the interpersonal surrounding of the office environment.
It seems that subconsciously we all understand and accept the premise that if we are really going to work together, we are going to have to know and understand each other. It was interesting to me that it truly became a conscious approach to this topic for me as a result of my friend’s social event. I assume I had been only partially aware of it at any of the previous business events that I had been party to. Perhaps this was due to the fact that as a matter of course there is usually a formal introductory portion of any business meeting agenda. It can be handled by the leader of the meeting or each individual may be allotted the opportunity introduce themselves to the group. We all get the opportunity to inform each other of who we are and what we do before we get started, right?
But it is not the same.
Standing up and being introduced, or introducing yourself to the crowd is not the same as walking over and introducing yourself personally to an individual and shaking their hand. It doesn’t carry the same interpersonal value. It doesn’t show the same amount of care and effort to make that connection. It is about as impersonal way to meet people as is possible. As I noted before, it is just a protocol for a meeting.
As we continue to become more of a virtualized society, where more and more of our communications are conducted electronically, we seem to be losing the ability to make that face to face interpersonal connection. It is interesting that as I continue to push myself back into this realm with the people I meet and those whom I used to just pass by in the office hallway, it seems to be both unexpected and well received.
It is a small step, but I think we all need to get back into the habit of introducing ourselves and making that interpersonal connection with those people we meet, and those people we work with, and especially those people who want to date my daughter. I know I think better of those boyfriends of hers that make the initial introductory effort, and I think the same applies for those of us that make the same introductory effort in our professional environments as well.
It’s hard to say what will get me started on a topic. It may be something I see or notice. It might be some offhand comment that I hear. Something clicks and off I go. I recently visited a customer friend of mine and went through the usual security screening before entering the building. I presented a photo ID, filled out the form on who I was seeing, passed through the Magnetic Resonance Imaging device similar to what we now go through at the airport, provided a blood sample for disease testing and had the inside of my mouth swabbed for DNA testing. I was then issued a day pass security badge and allowed to enter the building. I then took the 14 minute elevator ride to the top floor where I got off and waited. Yes, waited for someone else, with an entirely different and more special access badge to come and let me into the Executive Suite of offices to see my friend.
I guess it is time for me to address one of the last bastions of corporate elitism in business, the executive suite. Sometimes called the “ivory tower”, sometimes called “mahogany row”, the executive suit has been a source of wonder for me, for years.
The executive suite is that part of the organization’s building or campus that for whatever reason is off limits to everyone, including the mere mortals that work there. It is the part of the building where the access door is locked, and even in the age of high security magnetic badge access for entry into the building, those that are not chosen cannot enter the executive suite. I understand the concept of security for the staff and the building, but exactly who are the executives in mahogany row protecting themselves from with this incremental access denial point, inside a building which is populated by their own employees? If you are going to be allowed in the building, surely you should be cleared to access all floors and regions of that building, right?
I have mentioned many times that I am old school when it comes to business. That does not mean that I particularly ascribe to the way things were done. It just means that I am aware of the way things were. The executive suite to me is a part of the way things were. It has even entered our lexicon of corporate terms in that “getting a key to the executive washroom” is the sign of an executive’s success. I don’t know why executives would need a special bathroom, but then I don’t understand why they are locking the access to their offices from their own employees and staffs. It is also probably a vestige of the hierarchical business world that has run its course and worn out its usefulness. In the age of political correctness, egalitarianism and immediate access, having senior management working behind an extra set of locked doors seems to me to be both an anachronism and the wrong message to send to the rest of the corporate team.
I have worked in and visited several locations where the executive suite was a cherished and protected aspect of the corporate culture. You longed to feel the extra padding and more plush carpet under your feet. You got to appreciate the upgraded office art and inspirational images that adorned the walls. To be called in there was to walk on hallowed ground. After being in an executive suite, walking around on the industrial strength, geometrically patterned, low wear, indoor – outdoor carpet that the rest of the building walks on just won’t do.
Most of the time the executive area is cloistered away from the prying eyes of the uninitiated, behind a solid wooden door. Occasionally, and perhaps a little perniciously, there is sometimes a glass door as the access point to mahogany row. That way the general business population can walk by, and see how the executives live, much like the children that walk by the window of a candy store only to gaze upon that which they cannot have. I could also assume that the reason for a glass door would be so that the casual observer could per chance walk by and gaze upon an executive in the midst of his work day and marvel at his or her work ethic.
However it has been my experience that executives upon entering the pearly gates of the executive suite immediately go into their offices and close the door so that they have yet another barrier separating them from the masses. With the door closed and being fully sequestered from the herd it is hard to guess what they are doing.
The locked door to the executive suite seems to be a vestige of a bygone era. I once had the opportunity to work in an environment where the only access to the executive suite was by a very small, cramped elevator. The various stairwells were locked from the inside to keep people from gaining entry to the hallowed ground (or in this case floor).
I finally worked up the gumption to ask the residents why the limited access and the small elevator. I was told that the facility was actually built in the 1950’s, and back then there was a genuine concern that if the labor resources on the manufacturing floor became so disenchanted with the management team that they decided to charge them, they wanted the elevator to be so small as to limit the number of them that could access the executive area at one time. This is a true story.
I then noted that the 1950’s were more than half a century ago and that it might be time to change the facility’s configuration. I was looked at as though I was from another planet. I actually seem to get that look a lot. Still it was interesting to me how this segmentation of the executives from in this case the waged manufacturing staff had far outlived its usefulness (if it was really ever useful at all), but that there was no desire to change it, even fifty plus years later. In fact there seemed to be subtle and tacit resistance to any mention of changing it.
I think this is in part due to the idea that so many people passed by the outside of that special door on their way up that when they actually get to have an office on the secured side of it, they want to continue perpetuating the segregation. It seems to be that if they went through the wondering of what was going on in there and the pining to be a part of it, then everybody else will have to go through the same wondering.
I have tried to think of other organizations that have retained this same idea of general access for the standard population, but segregation of a specific group away from the rest. It took a while, but I actually came up with a couple of institutions that initially started out with this organizational configuration and have maintained it, quite successfully for literally hundreds of years.
These institutions are prisons and zoos. It seems to me that the only potential difference is that the executive suite door locks are on the inside and the prisons and zoos have the door locks on the outside. This would logically lead to the question: Did the Executive Suite get it wrong when the put the lock to the door on the inside?
The answer to that question seems to fully depend on which side of the door to the executive suit that you are currently working.
I try to avoid starting off by asking a question, but sometimes I just can’t help myself. Is it just me or does it truly seem that in many instances it is possible for business egos to get in the way of business IQs as the size of the business opportunity increases? This big deal blindness is a phenomenon that I have encountered several times in the past. As the magnitude of the numbers being considered for whatever purpose (sales, costs, scope, merger, etc.) increase, there seems to have been some instances in the business past where the momentum of the deal takes over and the basic principles of business analysis and management appear to be forgotten.
This type of behavior does not seem to be confined to any one company or industry, but rather emerges unexpectedly for a while in one place and then just as quickly goes dormant again. But not until after some sort of a business millstone has been placed around the corporate neck. It then takes all of the business’s senior leadership to formulate the path back to recovery. Meanwhile the general process is that those responsible for “the deal” have already declared victory, taken their bows and then very quickly exited stage left.
I am not specifically talking about Mergers and Acquisitions here (M&A) when I talk about things such as the magnitude of the deal, but rather more along the line of basic internal business conduct. However, I think some of the lessons that have been learned by some of these humongous M&A failures of the past can equally be applied to business situations that are more related directly to the operation of the business.
Here are a few lessons for business deals that leaders ought to take into account, at least in my opinion, before they start looking at the next big opportunity, at least in my opinion:
• Unlike the Bob Dylan song (Times They are a Changing), the times are not changing. The same basic rules apply to big epic opportunities as they do to the smaller ones. Profitability still matters. Core competencies still matter. The magnitude of the deal disproportionately increases the risk of the deal if the probability of success is based on a significant change or transformation away from what has been the business’ norm is associated with the deal.
The success of the deal is usually associated with doing something that you already know how to do, to a great extent. Growth and expansion by necessity mean that you need to take on some new aspects and scope with each deal, but unless you are relying at least in large part on your known core competencies, the big deal that is supposed to be a game changer or entry into a new market is usually an even bigger risk.
• In too many instances it seems that management may have felt the need to make a big, bold, landscape shifting, game changing sort of deal. This may be as a result of a desire to get into a new market or in response to some sort of internal or external business pressure. The idea appears to be to make a dramatic market statement or splash in order to signal some sort of new direction.
Few businesses do the new, big and splashy right the first time. Unfortunately if the deal is big enough and as a result generates a situation that is bad enough, there may not be the second opportunity to do it right. Change associated with business core competencies or structure takes time. It can’t be forced as a result of a big deal. A certain amount of ego is essential for leadership. Too much ego results in deals where the mouth has written a check that the brain can’t cash.
Deal success usually comes about as the result of doing the basics well. This capability evolves from doing similar types of deals on a regular basis, understanding what your deal or market sweet spot is, and maintaining a stable business approach. If you have been successful doing smaller deals in one area, the chances of having issues with a larger magnitude deal outside of your knowledge area are significantly increased.
• Sometimes deal momentum takes over and supplants common sense. When a large opportunity or deal is first noted, it begins to appear in the various business forecasts. It doesn’t matter that it may be exploratory or of initially low probability. The longer it stays visible, the more it becomes part of the expected fabric of the business. Eventually it becomes expected and sometimes even counted on as part of the business results.
It is very seldom that any amount of caution, qualification or warning can stop this progression. It eventually evolves that big deals that have been around for a while become deals that “cannot be lost”. Once this mentality has set in it leads to a set of seemingly logical steps that culminate in an illogical deal. Costs can be shaved, schedules can be condensed and onerous terms accepted all in the name of getting the game changing big deal done.
This type of deal behavior would normally result in a difficult environment for success if the opportunity was associated with a core competency of the business. When it is associated with a new market or an unproven capability the performance and results are usually not so pretty. The budgets and the schedules are usually the first items to be impacted, with the profitability and customer’s satisfaction very close behind.
Perhaps again we are seeing another business manifestation of one of C. Northcote Parkinson’s Laws, specifically Parkinson’s Law of Triviality, from his 1957 book “Parkinson’s Law”. In it amongst other topics, he examines the amount of time and attention that businesses spend on smaller (trivial) items as opposed to the larger, more complex and more important ones. In summary:
“He dramatizes this “law of triviality” with the example of a committee’s deliberations on an atomic reactor, contrasting it to deliberations on a bicycle shed. As he put it: “The time spent on any item of the agenda will be in inverse proportion to the sum [of money] involved.” A reactor is used because it is so vastly expensive and complicated that an average person cannot understand it, so one assumes that those that work on it understand it. On the other hand, everyone can visualize a cheap, simple bicycle shed, so planning one can result in endless discussions because everyone involved wants to add a touch and show personal contribution.”
Big deals are an important aspect of any business’s growth plan. They require a significant amount of discipline as businesses seem to get more anxious to close them, the closer they believe they are to closing them. (Perhaps this can now be cited as Gobeli’s Big Deal Corollary (BDC) to Parkinson’s Law if Triviality.) This phenomenon can result in final agreements that are far from the original big deal concept and far from beneficial to the business. The risk associated with the big deal increases rapidly if it is outside of the business’s normal operating area, or is associated with senior management’s plan for the transformation of the existing business or business model into something else.
Big deals are quantum events that must be given at least the same amount of deliberation if not more than that associated with the standard business conduct, regardless of the business’s desire or dependence on their closure. If you are going to try to successfully change the business, it is also probably better to not start the change, or make it dependent on a big deal.