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Success Means Knowing When to Fold

Texas Hold ’em is a game of skill.  Over the years, successful players like David Sklansky, have developed complex algorithms to guide their decision making when a particular hand is dealt.  This mathematical approach helps improve their win probability – but it’s not the total answer.  What does the raise from the player past the big blind position mean?  Why did the person across from me scratch her head before bumping the bet again?  What do I do now?

Winning players understand that “bankroll management” is every bit as important as being able to remember the cards that have been dealt.  No player enters a game with unlimited funds, and once the once you have are gone, it’s “game over”.  Successful players understand that folding a hand is not a sign of weakness; it merely reflects your understanding that your hand is not as strong as your opponent’s. There is no stigma attached to folding if this act lets you conserve your money for a better future hand.

It’s the same in our world – or at least it should be.  Bid and proposal funds are never unlimited, and misuse of these scarce resources offer a quick path to the unemployment line.  But capture managers HATE walking away from deals.  They believe this will be seen as a sign of weakness – and this unhelpful approach is reinforced by way too many corporate executives who don’t understand the difference between a full pipeline, and a productive pipeline.

We have two clients that compete in the same general market.  One is extremely satisfied with its 35% win rate; the other is horrified that it only wins 90% of the time.  The first company approach to bid submittal is “if his has a pulse, bid it!”.  Their capture process is undisciplined; gate reviews are opportunities to display pretty PowerPoint slides to an audience that always says “Yes!”. The second has a more organized, more disciplined approach.  The criteria for passing a gate review are clearly defined, and lack of preparedness – lack of needed information for effective decision making – guarantees that a pursuit will be ended on the spot.  Guess which organization spends less B&P dollars overall?  Guess which organization is always looking for “successful” capture managers?

Conserve your resources.  Effective Price To Win helps you identify opportunities that meet your business objectives that you truly can win.  As for the rest? Well, poker legend Stu Unger puts it this way: “Fold and live to fold again.”

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The Price/Capability Tradeoff

Fact: every capability you offer has an associated cost, and generally the more you offer, the more it costs.  So understanding what the customer needs – and what the customer wants – is crucial to defining a winning solution. In our world, an RFP defines the customer’s minimum set of requirements.  These requirements are explicit – they’re in black and white, and known to all bidders.  There’s a general term for a bidder that offers a solution that does not meet these minimal requirements: loser. On the other hand, customers typically hope for – most of us would say “demand” – solutions that go beyond these minimums. These implicit requirements will never appear in an RFP; if you think of an iceberg, these are the below-the-waterline chunks of ice.  If you know where they are, you’re safe – but if not, they will sink your bid every time. And if you go too far past, well, there be dragons. A similar situation exists with funding.  Every market, every opportunity has a maximum budget – but don’t think that this represents the highest price you can bid.  Every budget includes deductions – for program management or reserve, for example – which reduce the amount of money that’s actually available to bidders – resulting in what we call the “addressable budget”.  Beneath this number is a floor value that represents the lowest price the customer would consider reasonable. Above the maximum, below the minimum – more dragons.  It should be an obvious point, bit we see people missing it all the time: winning solutions must reflect understanding of the customer’s sources and uses of funding. Some call the space in the middle the competitive range, but I’m a bit less subtle. I call it the Win Zone, because if you can’t get your solution in it, you can’t win.  This is the ballpark that you have to find for every opportunity – and Price To Win gets you there. Texas Hold ’em is Price To Win in action.  You enter the game with strategies based on your understanding of how your opponents have played in the past.  As the game progresses, you watch for tells that show how their historical behavior may be different.  You calculate the odds of winning based on probability – and on every hand, you decide to play or fold.
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Richter & Company and The McKelvey Group Create Pricing Partnership

Frederick, MD – August 24, 2016 – Richter & Company and The McKelvey Group (TMG) today announced a strategic partnership focused on improving client win rates in today’s uber-competitive government contracting environment. Under this alliance: • Richter & Company will offer externally-focused Competitive Analysis and Price To Win services to help clients identify an opportunity’s unique price to win position – the combination of solution and price needed to achieve a win over other competitors. • TMG will offer internally-focused pricing strategy services to help clients develop and price the winning solutions that achieve the Price To Win position and enable successful execution after contract award. Together, these services provide actionable information – news both companies’ clients can effectively use to win – while assuring that client information is protected. Said Randy Richter, President of Richter & Company, “Some competitive analysis companies also do work that exposes them to their own client’s data – for example, using the same team to identify price to win targets and develop detailed costing/pricing solutions to meet them. We never cross that line. We do no work that exposes our analysts to our clients’ cost and price data or strategies. If clients ask for that type of help, we refer that business to partners whose work and ethics we trust.” “The McKelvey Group is our go-to recommendation for government pricing support”, continued Richter. “They are the pros at helping clients price aggressively yet appropriately, to help win the contract and ensure successful execution after contract award. Their excellent team offers outstanding skills and in-depth industry experience, and we look forward to offering their capabilities to our clients.” “Our team has known and worked with Richter & Company for many years.” said Matt McKelvey, President of TMG. “When it comes to Price To Win and Competitive Intelligence in today’s hyper-competitive market, they are the experts. We will continue to highly recommend them to our clients”. Service descriptions and pricing are available from either company.  
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Richter & Company Continues Race To Top through Acquisition of Aerospace Analytics LLC

Frederick, MD – August 10, 2016 – Richter & Company LLC, a leading provider of Competitive Intelligence and Price To Win support services, announced today that it has acquired the assets of market research firm Aerospace Analytics LLC. The acquisition adds three new services to Richter & Company’s existing portfolio: • Strategic Market Analysis and Consulting • Development of Syndicated U.S. and International Market Analysis Reports • Corporate-level Go-to-Market Planning and Team Development Initial offerings will focus on the worldwide defense aerospace market, reflecting the 20+ years of experience of Aerospace Analytics’ founder, Katrina Jones. “Over the years, we’ve worked with many price to win consultants. Richter & Company’s work is head and shoulders above the pack, and we’re excited to become part of their team,” said Ms. Jones. “Adding our market-focused services to Richter’s proven opportunity-focused support will help all of our clients make better decisions about the business they pursue.” Said Randy Richter, President of Richter & Company, “Winning – and performing – in today’s hyper-competitive world requires detailed knowledge of how competitors develop, cost, and price their solutions. We look forward to working with the Aerospace team to add even more value to our clients.”
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Great ‘Que Takes Planning

In barbecue contests, timing is everything. Each of your four entries (chicken, ribs, pork and brisket) have to be turned in within 5 minutes of a precisely defined time; late entries are disqualified.  To meet this schedule – and to make sure the meat you offer the judges is at its tender, juicy, and flavorful best – requires careful planning and flawless execution at the contest itself.  But it’s the preparatory work done before the contest that separates winners from losers. Losers buy their meats the day before they travel; winners order meat ahead of time so it can be properly aged (30 days or more for brisket!) and prepped. Losers wait until they arrive in the competition’s town and pick up consumer-grade charcoal from a big box store; winners buy specialized charcoal and wood to match their team’s desired flavor profile.  Losers work without a plan; winners develop and test complex checklists, schedules, and procedures so that their work onsite is efficient.  To put it simply, winning takes time, and teams that start too late are not likely to hear their name called during the awards ceremony. Effective competitive analysis and Price To Win efforts start early – well before formal solicitation requirements are known. They follow consistent processes for gathering and analyzing competitive information.  They rely on proven models for projecting solution costs and prices.  They provide actionable intelligence that you can use to shape the opportunity, moving the competition away from lowest cost. Start early, keep working until the final turn-in.
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You Can’t Enter Every Contest

From an economic standpoint, competitive barbecue makes no sense. In a Kansas City Barbecue Society event, teams turn in six individual portions of four meats: 6 (chicken, ribs, pork, and brisket).  A typical entry fee is $300; travel and transportation costs for pulling your big rig total $200 or more; charcoal, wood, ice, rubs, sauces, and incidentals add another $200. And meat – oh, the cost of meat: most teams cook 36 to 50 pounds of incredibly-expensive Wagyu brisket to turn in six perfect slices.  Meat costs can easily top $500.  When all is said and done, the cost of a typical contest easily tops $1,000.  And sad to say, prize money when (if!) you win may not cover those costs.  And we haven’t even talked about the costs of beer and other “adult beverages”… As a result, pitmasters limit the competitions they enter to those which will help them achieve their goals. In my case, I focus on competitions within driving distance of my home which have (a) decent prize money, (b) a relatively small number of competitors, (c) a high proportion of certified (vs amateur) judges, and (d) good public attendance (i.e., good marketing) potential.  I’d love to compete in a contest near my daughter’s home in Nebraska, but that wouldn’t help me increase my catering business’ name recognition in the central Maryland area I can reasonably serve. In the business world, similar constraints apply.  Winning companies pursue opportunities that will help them achieve business goals.  Notice I did not say “perform profitably.”  In today’s hyper-competitive world, businesses commonly pursue money-losing efforts because they achieve longer term objectives like improving name recognition or supporting growth into adjacent markets.  They ruthlessly discard pursuits where they have limited customer intimacy, poor knowledge of potential competitors and solutions, or have no discriminating solution. Like winning pitmasters, they pick and choose their competitions – and believe that they will win every bid they submit.
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Backyard Chefs Like to Cook; Pitmasters Like to Win

Amateur chefs tend to have a pretty short attention span.  They watch Bobby Flay toss something on a grill, say to themselves “Man, I could do that!”, then run to the store, assemble ingredients, light a fire, and make up a mess of something good.  Their goal is to recreate a recipe; their objective is to make it edible. Their measure of success is, well, nobody barfs when they taste it. Backyard chefs like to cook. Pitmasters, on the other hand, have a much longer view of their world. They have more at stake; they compete against well-prepared competitors for significant prize money, or against restaurants (and other barbecue teams) for lucrative catering gigs. As a result, winning pitmasters set larger goals (“cook an award-winning whole hog”) and develop objectives to measure their path toward achieving those goals (for example, “Buy a big pit.”  “Learn how to control temperature across the entire cooking surface.”  “Find a reliable source of high quality butchered hogs.”  “Learn how to dress and prep a raw hog.”  “Build a winning rub and injection.”).  Their measure of success is tangible: awards, prize money, and – thanks to the exposure barbecue enjoys on TV – lucrative deals for packing and selling their “secret” rubs and sauces. Pitmasters like to win. In the business world, far too many companies rely on the “mushroom theory of management.”  They perform minimal planning; they operate in an ad-hoc environment that results in scarce resources being spread across many unsuccessful pursuits.  Like backyard chefs, they are happy with a win, but shrug off losses, figuring “oh, better luck next time.” Winning companies take the time to develop corporate goals and objectives.  They develop high-level strategies for achieving their goals within a defined window of time. They communicate these items across the company, so that business units – and business developers – can help the company win by putting together – and executing – their own sub-goals, objectives, strategies, tactics, and plans. They are ruthless in rejecting pursuits of opportunities that do not support corporate goals, reserving finite resources and funds for those which do. Like pitmasters, they love to win – and burn with the white-hot fires of hate when they lose.  In business, be the Pitmaster.
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5 Ways to Win Federal Contract Dollars

From early market research to Price to Win positioning, Richter & Company’s goal is to help you win business.  Here are five of our top recommendations for consistently winning federal dollars: Winning MoneyPlan your work; work your plan.  Get involved in the program early.  If you’re an incumbent contractor, even earlier than that.  Preparation for the re-bid begins on day 1 of the contract.  Build relationships with the buying and end user customers.  Influence the RFP, so that discriminators rule in your favor.  Prove the benefit of your solution.  Build a value added team, build a plan, and then follow the plan, making necessary changes as you go. Proofread.  Don’t finish your proposal two hours before it’s due; there’s just no time to proofread if you’re making changes last minute.  Make sure pricing in your proposal matches pricing in your cost volume.  Don’t leave internal comments in your final document.   Obvious, but it happens all the time.  You don’t want your outbrief to be a rundown of your glaring mistakes. Examine and assess your own company.  Many companies don’t examine their own structures to target cost reductions.  Look at your salary percentiles:  consider the labor needed in the contract against the labor you’re offering.  Build cost pools to bill direct costs to your customer, and leave out those unnecessary to the contract.  Reduce cost.  And be aware of where the costs you do have are coming from. Build a compliant solution.  (Read:  Don’t sell your existing solution.) Build a notional bottoms-up solution based solely on the requirements of the RFP:  where does this solution leave your Total Evaluated Price?  Be sure all your additional capabilities are ones that matter to the government.  Prove the benefit of your solution.  Make sure the value you’re adding outweighs higher price.  Know your customer, and cater your solution to their needs.  Even “COTS based” solutions should be tailored to the needs of your customer. Don’t go status quo.  Today’s current hypercompetitive environment is not what it was five years ago.  Ten percent fee and gold plated benefits packages won’t pass muster before evaluation committees.  Make sure your bid is both reasonable and realistic.  Know what your competition looks like before the final stages of capture, and position accordingly.  Employ consultants like Richter & Company to help you find your position to win!  
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Competitive Analysis and Price to Win – like PB&J

Often times, clients want to hire us to perform a Price to Win analysis late in the game.  You know… when the RFP is out, the proposal is due in 28 days and their hair is on fire. They tell us they don’t need a Competitive Analysis, but are looking for Price to Win support for the program.  And while we’re happy to help our customers in any way we can, this is not an ideal situation. Competitive Analysis and Price to Win Analysis go together like peanut butter and jelly.  We don’t want to separate them! Competitive Analysis defines the solutions and strategies your competitors are likely to employ in approaching an opportunity.  At Richter & Company, we define Price to Win as Cost + Strategy, so it’s pretty difficult to come up with a Price to Win number with only half of an equation. The ideal time to hire consultants (and start your own internal efforts) is early on in the procurement process.  Your Competitive Analysis should first cast a wide net, before targeting specific competitors and identifying specific solutions.  The Price to Win should also go through multiple iterations for best possible results. Contact Richter & Company today for more on our winning services!