Why do axiomatic winners often lose “franchise maker” programs?
Reflecting on TMI’s 30 years of consulting and hundreds of engagements on Winning and Performing, we can conclude the following: There seems to be nothing new in winning (or losing) other than the history from which companies have failed to learn. Obviously, in each case, the reasons for winning or losing are situation-based, depending on the character and nature of the program. However, to benefit, historical lessons must be considered in context of the new start’s situational facts.
Lessons from industry-wide win/loss studies yield the obvious reasons for losing. Among these are:
– Late start and lack of commitment to win
– Failure to define and fix competitive shortfall
– Ineffective capture leadership
– Lack of upfront investment in demos and Engineering to Win
– Low TRL and proposal risk, etc.
However, one reason seldom considered is difficult to describe, but is statistically significant: Confusing Winning with Performing. What does this mean?
Simply, it is an overemphasis on and concern for performing on the program (if awarded) at the expense of first focusing attention and effort on developing the integrated product offer necessary to win. Management reviews too often emphasize minimizing company exposure to cost and schedule risk to the detriment of helping the capture team create a winning offer.
Part I of this two-part Winning Insights post discusses how winning gets confused with performing. Part II (posted March 2018) will present how changes in how business was done enabled successful execution on programs where “gamey” price and “gooey” schedule commitments were necessary to win.
Confusing Winning with Performing
Confusion manifests over time as it creeps into the proposed offer via:
– Task expansion as technical experts gold plate the design to help score high on the technical evaluation;
– Conservative cost estimates by performing organizations;
– Gate reviews staffed with well meaning, experienced senior functional managers still “snake bitten” by problems on recent programs;
– Brilliant “too smart to win” and technically incisive engineers who derive a register of proposal risks that scare the customer and often fail to claim credit for risks already mitigated;
– And, most importantly, lack of general management and leadership focus on the question: “How can we adapt and streamline our way of doing business? (i.e., how can we simplify processes for the new task, re-assess make versus buy, craft an efficient organizational structure, consolidate and reduce overhead, etc., to ensure meeting the cost/price and schedule commitments needed to win?)”
What it takes to win is driven by the outside world of customer and competitors. In sum, the following tasks are necessary, but not sufficient, to win a franchise program:
- Win Strategy (WS) and Price-to-Win (PTW), derived well in advance of the draft RFP, based on findings from comprehensive Situation and Competitive Assessments, must drive the positioning to win initiatives and tasks.
- The competitive assessment must be updated along the way to the final RFP: as the requirements are finalized; as competitors team and assert claims about their product’s capabilities; as the Acquisition Strategy changes; or events affecting the program occur.
- Investment must be made in key personnel and Engineering to Win (CAIV trades (cost vs. performance vs. risk); trade tree rationalization of technical baseline; CONOPS and mission analysis to help customer rationalize best value; TRL maturation; risk mitigation demos; etc.).
The above tasks, plus others that are unique and sufficient to win, are accomplished in a competition wherein competitors can be characterized by the following factors:
- At least one competitor with a technically acceptable product offer views the opportunity as survival and/or strategic, and bets the business unit in order to win. Internal company approval for this is enabled by crafting a business case value well beyond the profit of the immediate program being bid. And thus, the competitor accepts greater pricing risk. The lower offer price is enabled by forthcoming business model changes crafted to deliver at price bid.
- The incumbent contractor on the current or recent program, which will be cut back, displaced and/or ultimately replaced by the new start is both “blessed and burdened” by their last success. Competitors exploit the incumbent’s burdens and neutralize its strengths in the context of the new opportunity.
- During the pre-draft RFP phase, one of the competitors makes a product and/or programmatic choice that ultimately shapes or paces the competition in a pivotal way. A good example is Lockheed Martin’s early Joint Strike Fighter decision to invest in and perfect the lift fan (vise pure jet) approach to VTO for the USMC version. The history of major programs is abundant with pivotal pre-RFP decisions. For example, in 1961 and 1962 GD Forth Worth’s aerodynamic design enabled OSD’s imperative of a common development for USAF’s TFX and Navy’s Missileer in what became the joint USAF and NAVY TFX (F-111). (We will present additional examples in Part II of this series.)
- One of the competitors significantly enhances its Pwin by teaming to win early on.
- Others to be discussed in Part II of this series.
The above characterizes typical positioning decisions and actions of competitors. Meanwhile, what it takes to perform (cost and schedule) on a new start is driven by the inside world of functional managers and process compliance folks, who also want to win. The functional organizations view each new opportunity as a means to develop capabilities and grow their organizations. Also, the “professional manager” syndrome results in “worshiping at the altar” of process, which delays or ignores the hard decisions needed. And compliance folks prompt task expansion with “one size fits all” processes and policies, instead of tailoring and streamlining them driven by what it takes to win as well as execute the program.
Interesting dilemma…but “so what?”
“So what?” will be answered in Part II of this post, where we will discuss examples of actual cost/price and programmatic initiatives used to win, and the associated changes to the company business models. Among these are:
– Early derivation of Price to Win and Design-to and Buy-to Goals
– Proven Design and Management best practices to ensure NRE and Unit costs remain independent variables throughout the EMD effort
– Development of evidence and implementation of best practices (comprehensive task and schedule planning; critical path analysis; head start tasks and schedule sensitive risk mitigations to ensure schedule slack and margin, etc., to substantiate an executable schedule.
– Organizational and business models driven by efficiency and lower cost.
– Strategic and incisive management of the Supply Chain, which now provides 60-80 percent of unit cost on Integrated Systems and System Solution Programs, etc.