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SWOT—So What?

SWOT analyses have been around a long time, and continue to be popular in the business development community. Unfortunately, the vast majority of SWOT analyses are essentially useless—not because the tool is broken, but because its not being used properly. The ultimate goal of a SWOT analysis is to produce actionable intelligence—and yet that is precisely the step that is most often neglected.

For the uninitiated, a SWOT analysis is a simple four-quadrant assessment of a competitors Strengths, Weaknesses, Opportunities, and Threats (SWOT) in the context of a specific opportunity. It is a simple, easy-to-understand tool that helps identify the internal and external factors that either help or hinder a companys probability of winning.

Despite popular belief and practice, a SWOT analysis is not complete when the quadrants are filled.  When the strengths, weaknesses, opportunities, and threats have been identified, and documented in the four quadrants, this is merely the first step. The final step requires moving from observation to analysis. Observation provides the what,” while analysis provides the so what.” This requires developing key strategic implications from the SWOT factors. To put it another way, the next step” is to use the completed SWOT chart to predict likely actions the competitor will take.

Competitive analysis of any company must include a predictive element, which attempts to answer the question What is the company most likely to do next?” The four elements of a SWOT chart, if accurate, can be extremely useful in developing these predictions—but they do not explicitly provide the answers in and of themselves.

So how does one take this next step? There are several ways of deriving implications from a traditional SWOT chart—one of the more effective methods involves examining the intersections of the various factors two by two, in an attempt to discern the most likely action on the part of the company. For example: if the company has [Strength #1] and [Opportunity #1], therefore they would most likely do [Implication #1]; if the company has [Weakness #1] and [Opportunity #1], therefore they would most likely do [Implication #2], etc.

This may seem daunting, but the payoff is great! The result of this step is a list of likely competitor actions that are both rational and defensible. Can you see the value of providing such a list to decision-makers? It enables informed decision-making in a way that a SWOT chart simply cannot do. Yes, its more time-consuming, and prediction is inherently risky, but taking this step is the only way to get true value out of a SWOT analysis.

For more information on Competitive Intelligence or Price to Win Analysis, please contact Richter & Company.

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OutsideIn™ Analysis: Seeing Yourself As Others See You

man examining analyses on wall

Capture teams in the government contracting world spend a lot of time trying to determine the right balance of solutions and strategies that will differentiate them from their competitors and make them more attractive to their customers. Deciding how best to position your company, understanding what your competitors know about you, and analyzing how that is likely to impact any potential decisions means challenging all your assumptions about your business. Our experience is that the best way to do that is through an unbiased view of your capabilities that is free from internal influence.

Traditionally, businesses have evaluated their strengths, weaknesses, opportunities, and threats from an internal vantage point. Known as an “inside out” strategy, this approach looks at what the company can accomplish using existing resources, typically by streamlining operations and reducing spending. While the “inside out” strategy may create short-term shareholder gains, this focus ultimately limits the company’s ability to note emerging trends and adapt to changing markets. 

A landmark book entitled Strategy from the Outside In: Profiting from Customer Value upended conventional wisdom about how to analyze a company and make improvements. This is the first reference in print to the concept of “outside in” thinking, an approach that uses customer trends as benchmarks for product and service development. Its premise is built on the idea that studying customer trends from an external perspective is the most effective way to design their strategy. 

At Richter & Company, we have adapted these strategies into a service called OutsideIn™ Analysis. By turning our proven competitive intelligence-gathering process onto you instead of your colleagues in the marketplace, we can leverage open-source research to identify how you, your team, your capabilities, and your solutions are being perceived. 

Our OutsideIn™ Analysis provides you with a third-party, objective assessment based on our independent research, interpreted using our sophisticated tools in light of our extensive experience. Only open-source material is collected and analyzed; no proprietary information is gathered. The earlier an OutsideIn™ Analysis can be performed in the capture process, the more effective it can be. 

Businesses can be slow to adopt an outside-in analysis because it goes against the grain of traditional systems planning. Whereas “inside out” thinking leverages software to smooth processes and increase efficiency for back-end systems, an “outside in” approach embraces forward-compatibility with an emphasis on designing systems based on emerging data to create value for the end user and solve evolving customer issues. 

As fast as the market changes, it’s increasingly important to know and understand your customers. In a down market, it’s a temptation to overlook the long view, instead of focusing on short-term strategies that will increase revenue and decrease costs. It’s proving more effective, however, for companies to focus on external trends, customer behaviors, and new technologies that are changing the industry landscape going forward.

OutsideIn™ Analysis is one of the best ways to help you see what your competitors are seeing, and in many cases, deliver the eye you need to win.

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Competitive Analysis Leads to a More Successful Price to Win

Businessmen discussing an analysis

“It is wiser to find out than to suppose”. – Mark Twain

Many organizations and capture leaders understand and appreciate the value of Price to Win analysis in enhancing Pwin. Unfortunately, some view Price to Win as a standalone activity that does not require Competitive Analysis to support it. For those who are not familiar with Price to Win, it is more than a number; it reflects the complex relationship between customer needs and budgets and bidder solutions and strategies. It represents a tradeoff between price and capability that forms the foundation for successful bid strategies.

Therefore, Price to Win is based on data and assumptions about the customer and the competitors. So where does that data come from if not from Competitive Analysis? Oftentimes, capture teams believe they already have all the answers thanks to their years of experience in a given market– but this often leads to a rude awakening when they lose to a surprise competitor or an unexpected strategy. There are questions that must be answered– questions as simple as:

  • Who is the customer (decision-makers AND influencers), and what are their hot buttons?
  • Who are the competitors?
  • What are the competitors’ capabilities? solutions? strategies? discriminators? strengths and weaknesses?

There are also more complex questions that are more specific to a Price to Win– questions such as:

  • How will the customer calculate the total evaluated price?
  • What are the competitors’ cost structures?
  • How do competitors plan to bid in terms of teammates, locations, and aggressiveness?
  • What component pricing data is publicly available to help develop the bottom-up cost estimate?

These are all questions that Competitive Analysis can help answer, and as Mark Twain said, “It is wiser to find out than to suppose.” Early engagement in the procurement process allows more time to gather competitive intelligence and identify additional questions that can further increase win probability.

Competitive Analysis allows an understanding of customer requirements and the ability to craft solutions that beat the competition. This allows for an independent assessment of the competitors’ capabilities, strategies, and potential solutions.

As organizations approach Price to Win, it is important to remember that price is NOT simply cost + profit, as most tend to think of it. More accurately, price = cost + strategy. This makes Competitive Analysis the other strategic half of a successful Price to Win process. It is nearly impossible to develop the optimum strategy to position your solution without both.

For more information about Competitive Analysis or Price to Win, contact Richter & Company, and we’ll be happy to help you take the guesswork out of a potentially winning solution.

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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!

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SWOT Part 2: So What?

As I said before, the other most common mistake that deprives SWOT analyses of their value is the failure to take the essential next step, after it has been completed.  “What is that next step?” you may ask.  The answer lies in the fundamental intent behind the SWOT analysis.  The purpose of a SWOT is to help analyze and assess the competition.  And what is analysis, other than simply deriving meaning from data?  There is a big difference between observation and analysis.  Simply put, observation provides the “what,” while analysis provides the “so what.”

Herein lies the reason why many deride and dismiss the SWOT chart as useless. In its standard form, it is data with no analysis. It includes nothing more than four lists of characteristics or factors about the company, none of which articulate any kind of strategy or action on the part of the company. Therefore in the eyes of the savvy decision-maker, it fails to answer the critical “so what?” question.  You can imagine your executives saying “So… the company is strong in these areas, and weak in these areas … so what?  And… the company is affected by these external opportunities and threats… so what??”

It is my assertion, therefore, that the true value of any SWOT analysis appears only after completely (and correctly) populating all four quadrants, and THEN developing key strategic implications based on those factors.

Competitive analysis of any company must include a predictive element, which attempts to answer the question “What is the company most likely to do next?”  The four elements of a SWOT chart, if accurate, can be extremely useful in developing these predictions – but they do not explicitly provide the answers in and of themselves.

So how does one take this next step?  There are several different ways of deriving implications from a traditional SWOT chart – one of the more effective (albeit labor intensive) methodologies I have come across involves examining the intersections of the various factors two by two, in an attempt to discern the most likely action on the part of the company.  For example: if the company has [Strength #1] and [Opportunity #1], therefore they would most likely do [Implication #1]; if the company has [Weakness #1] and [Opportunity #1], therefore they would most likely do [Implication #2], etc.

There are two downsides to adopting this “extra step.”  First, it adds a layer of complexity to a process that is otherwise very simple and user-friendly (which I would argue is one of the reasons SWOT is so popular).  Second, prediction is a dangerous game.  Those who attempt to predict the future invariably expose themselves to personal risk – risk to their reputations. Success will earn them great respect and even reverence – but failure may cost them the trust of their customers.

But analysis is not for the faint of heart!  In my judgment, the benefits far outweigh the costs.  So be bold.  Be fearless.  Be ruthless in your zeal to add real value in the form of that elusive treasure – the life-blood of our profession: actionable intelligence.