It's OK To Be Linus - Just Be Clear About It
It's that time of year - the Holiday Season - when you might be considering renewing your consulting/outsourcing agreement next year. When it comes to running a RFP process for a new consultant or outsourcer, one of the more interesting questions (and one of the first questions we ask our clients ) is;
"Will you invite the Incumbent?"
You're considering going to RFP for a reason; there is an issue, or something isn't "right" with the relationship. On the surface, it might seem like a no-brainer to include them - after all, they're familiar with your organization and have been doing the job. But dig a little deeper, and you'll find that this decision isn't as straightforward as it appears.
The Case of Linus' Blanket
Now, you might be thinking, "But we want to be fair and give everyone a shot!" That's a noble sentiment, but let's consider what "fair" really means in this context.
Is it fair to put your incumbent through a time-consuming, expensive RFP process if you're absolutely committed to change?
Conversely, is it fair to other firms to have them invest significant resources in a proposal when you're not quite sure you'll make a change? We all know that the biggest challenger to any change is the comfort of the 'status quo.' For all of you Snoopy fans, Linus was quite comfortable with his blanket.
True fairness might actually mean being upfront with your incumbent about your intentions - whatever they are. If you've genuinely decided to change, tell them and move on.
BUT WHY?
The Hidden Costs of Including the Incumbent
Running an RFP is no small feat. It requires a substantial investment of YOUR time, money, and effort and that of the participating firms. When you invite the incumbent, you're essentially asking everyone involved to pour resources into a process that could signal that this may be influenced from the start.
Other firms that do propose might be hesitant to bring radical new ideas or propose at all! This can result in a missed opportunity for real change, fresh perspectives and transformative solutions. (Recently, we listened to the story of a difficult RFP process where it was hard to get new firms to bid).
So, if you're moving away from your current advisor, then do them and yourself a favor and leave them out.
I Really Want To Get Better Results Now - Alternative To The Full RFP
But if you're just looking to improve performance, keep them on their toes or negotiate a better deal, there might be more direct (and less wasteful) ways to achieve that goal.
A 'Re-implementation' or 'New Beginning' (Dare I say 'Marriage Counseling?): Have an honest conversation with your incumbent about your concerns and goals. You might be surprised at how they are willing to change and what they're willing to offer to retain your business. This should touch on the processes, deliverables and most importantly, the chemistry of your relationship.
This also includes a thorough review of your current advisor's associated fees. Your needs may have changed from the past. Refresh the contract as well. This can help you identify specific areas for improvement or negotiation....and remove unnecessary friction.
Phased Approach: If you're not ready for a full change, consider bringing in a specialist advisor for a specific project or area. This can introduce new ideas without completely disrupting your existing relationship.
Limited RFI: Instead of a comprehensive RFP, issue a Request for Information (RFI) to a select group of firms. This can give you a sense of what's available in the market without the full commitment of an RFP. Frankly, we aren't crazy about this...but, in select cases, it can be helpful.
A Word to Potential Bidders
If you're on the other side of the equation - a firm considering responding to an RFP where the incumbent is involved - we know you are doing your best due-diligence. Don't be afraid to ask direct questions about the client's motivations for the RFP and their openness to change. They (or their Procurement or Sourcing Advisor) should be crystal clear with you and the market at large. It is a principle of how we do business in the marketplace, and this should be commonplace.
If it becomes clear that the incumbent has a material edge on renewal, you might save yourself a lot of time and effort by politely declining to participate.
The Bottom Line
Ultimately, the decision to include an incumbent in an RFP process should be made thoughtfully and with clear intentions. If you're not genuinely open to change, it might be more productive (and fair) to work directly with your current advisor to address your concerns. Sometimes, that might mean sticking with what you know. We can help with that in a way that honors your relationship and investment.
But, if you decide to move on and go to RFP, then it's time to find the best possible partner to help your organization succeed. In this case, it means having the courage to make a change. We can help there as well and have a 'effective' way of going about it.
It's quite ok to be Linus. But, whatever you decide,
be transparent,
be fair, and
keep your organization's best interests at the forefront. After all, that's what good advisors - incumbent or new - should be.
COMING SOON - When you are required to 'check the market.'