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Bids, Tenders and the ‘WOW’ factor

June 29, 2011

On the IACCM LinkedIn group message board, Veronica Whitmore entered a plea for more supplier innovation – a plea that was picked up by John Hansen in his blog.

Veronica said: “I write tenders & oversee tender evaluations for an Australian government body – and I’ve always included criteria around “innovative” business processes & systems. Sadly, the responses to these questions are usually very disappointing and just offer up the industry standard fare…
I don’t think that a supplier having a competitive advantage contradicts the concept of a fair and level playing field – it is almost a silly comment to my mind. Just because it is a government tender it doesn’t mean we are looking for mediocrity and / or uniformity. I for one would love to see a tender response that made me say ‘wow’… still waiting… ”

I think this is a big topic – and very worthwhile. As we all know, lack of innovation is one of the most common complaints about suppliers; yet suppliers say that it is often the customer that frustrates the innovation. So what may be causing the problem that Veronica outlines?

I don’t know what percentage of client organizations invite ‘innovation’ in their tender documents. And of those that do, I suspect in many cases it appears to be a bit of throw-away – “Oh, and by the way …”. It seems rare for innovation to actually have any specific weighting in the evaluation criteria …

And there are several reasons for this, not least of which is the fact that the standard tender process cannot sustain a true ‘level playing field’ if it also seeks true, radical innovation. So we are probably talking about two different processes – one where you know what you want and may be open to marginal variations; the other where you truly wish to find a new form of solution.

But is Veronica still right to be disappointed in the supplier response? First, suppliers respond to the things that they think will make them win – so if innovation is not a high priority, it will receive little attention. Second, as mentioned above, real innovation will often challenge many of the assumptions that procurement included in their requirements document. In other words, if I offer innovation, I may need a completely new bid document … and I rarely find procurement groups that are open to that particular challenge.

And then there is simple logistics. Suppliers are complex organisms just like customers. Assembling the team to get the basic bid completed on time is usually hard enough. Getting an expanded team together to brainstorm and produce innovative ideas is a tough proposition. And some on the team are reluctant to play ball. Sales is often nervous about confusing the customer – or even worse, causing a delay. After all, if I offer something ‘wow’ (to use Veronica’s term), chances are that you will go back to the drawing board and re-issue the tender … so what does that mean to timeframes, competition etc?

Another factor is that if I have something really innovative, do I want to expose it in the context of a competitive bid? There is a high risk that the customer will then reveal my idea to others, to test their ability to do something similar. If I am really innovating, I probably prefer to initiate that discussion by a different means than a bid response document …. and I may prefer to have the conversation somewhere else than Procurement.

So – as Nick Sullivan explained in his response – we should not think of traditional bidding as a way to solicit innovation. And Frank Ibazebo goes further by recommending the use of ‘trial tenders’ in cases where you are seeking innovative ideas. He also correctly points out that the key is to be clear about your tendering strategy and this must be driven by clarity over your  objectives.

One Comment
  1. The answer may lie not in the response to Veronica’s tender question, but in the question itself.

    Does she ask for “innovation”? If so, what does it mean? Does she ask for innovation in product, process or service? Without that, the supplier is left guessing.

    Does she ask for x number of innovations during the contract period, without defining what will count as an innovation? If so, the supplier will then waste a lot of time proposing innovations which either the customer doesn’t define as innovation, or didn’t want in the first place.

    Does she ask for specific innovative proposals in the tender? In that case, Tim’s point above is pertinent. The supplier is highly unlikely to give their best ideas in a tender document, given that the tender may be rerun with the innovative idea exposed to all involved, to see who can deliver at lowest cost. This principle also applies to the contract term, if it allows for innovations to be open tendered.

    Who owns the IP? If this isn’t defined up front, it will limit both the ability and willingness of the supplier to propose innovation.

    Or, does she ask about the supplier’s track record in innovation with customers, and for a commitment to participate in a collaborative process to deliver innovation together? Now we’re talking. It’s crucial for the supplier to understand your business, your strategy, opportunities, needs, barriers, customer motivations etc etc. Then you must work together to define and implement the innovation. You shouldn’t expect the supplier to throw stuff over the wall for your detached consideration.

    I’ve written more on this subject in two blog posts – and

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