Many small to medium size businesses are brought to their knees after winning new business becomes 100% dependent on responding to requests for quote (RFQ).
Did I just describe your own company?
Consider the merits of divisional autonomy compared with a culture of collaboration.
A VP of Sales of a medium size manufacturer with multiple divisions invited me to help him. He had a divisional collaboration issue.
Organizationally, the corporation looked good on paper. Together, the organization was capable of designing and delivering complex manufacturing projects from A to Z. Each division’s services complemented the others.
So far, so good.
The collective capabilities of the corporation appealed to new customers, especially in Europe. As a result, the VP of Sales won increasingly complex custom manufacturing projects.
Then some sticking points emerged.
In the past, each division worked well on its own and enjoyed high levels of autonomy. Now, these autonomous divisions had to work collaboratively.
Initially, projects went smoothly. Most of the time.
Gradually, divisional plate tectonics emerged. Previously, the corporation had functioned as a group of independent divisions for a long time. As a result, the ability to sustain cross-divisional collaboration evaporated.
Collaboration was bred out of divisional DNA.
Division heads missed their respective independence. In addition, divisions were increasingly accountable to one another. Finally, everyone reported to the VP of Sales and the CEO specifically.
Folks were not happy.
The division heads developed a counter-strategy to reclaim their lost autonomy. They decided to prove they were capable of winning new contracts for their specific services.
In response, the corporate CEO did what any command-control CEO would do when challenged. He told them to go ahead. Sell new business. Then fill the order productively and profitably.
On one condition: that they continue to meet timelines and manufacturing milestones on new business that the VP of Sales had won.
An indiscriminate RFQ Mill travels along the road to engineering chaos.
Consider this. In their former lives, each division served an order-taker role within the corporate business model. Now these same divisions became seller-doers, with very little guidance or protocol.
The division heads “sold” in the only manner they knew how, by:
- Responding to any and every RFQ listed on specific websites;
- Calling peers at current customers’ companies about referrals; and
- Asking engineering staff to inquire amongst their peers about any upcoming projects requiring RFQ submittal.
The engineers became busy “selling.” They were so overwhelmed in the busy work of selling, that they were unable to do the jobs they were hired to do.
- First of all, the engineering staff spent entire days completing RFQs, often multiple versions of the same project for different companies bidding on the same job.
- Also, the divisional engineers were unable to complete in-house engineering projects in a productive and timely manner.
- Finally, the division heads’ indiscriminate RFQ mill sales model paralyzed corporate cash flow.
Subsequently, each division suffered, including those complex and lucrative projects the VP of Sales had spent so much time developing and winning.
Collaboration is difficult when everyone seated around the business table is “right” (and defensive).
The corporate revenue stream continued to be degraded by the divisional standoff with the CEO. As a result, the VP decided it was time for an intervention, co-created with yours truly.
Here’s how we handled this business case over time. Collaborating together via enterprise-level facilitation, we:
- Conducted an autopsy of the current customer base, identifying valuable A-List Customers .
- Explored why an indiscriminate RFQ sales model is not feasible.
- Focused on selling to skeptical technical decision makers.
- Learned about the value of value propositions.
- Wrestled with a fair amount of dysfunction.
An indiscriminate RFQ Mill sales model is not sustainable.
Let’s face it. When your small to medium size business wrestles with unstable cash flow and sales pipelines, business becomes a roller coaster ride. In desperation, any RFQ looks good. Your organization ends up spinning your collective wheels doing business with inappropriate customers.
If you currently do not have a strategy and tactics for responding to the “right type” of RFQs, your organization will quickly descend into the business case chaos I’ve just described.
The good news is that this corporation rapidly recovered from the error of their ways. We created a balanced program that allows them to compete for lucrative complex projects. At the same time, the autonomous divisions are adept and discriminate when targeting the right type of contracts with the right type of customers.
Does this corporation’s business case resound with your own organization’s?
Babette Ten Haken is a management consultant, strategist, speaker and coach focused on customer success for customer retention. She traverses the interface between human capital strategy for hiring and developing collaborative technical and non-technical teams. She serves manufacturing, IT and engineering intensive companies. Babette’s playbook of technical / non-technical collaboration hacks, Do YOU Mean Business? is available on Amazon. Visit the Free Resources section of her website for more tools.
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