An emerging trend in recent years has been how SMEs are succeeding in public procurement processes. There has been substantial change in how often large companies win bids. Increasingly, they are losing market share to smaller businesses, consortiums and specialists. There are steps they can take to defend their market share however. We outline some practical tactical steps they can take below.
Large companies win bids when they focus on the strategy and what they need to do to win. Sometimes, they can be rigid in approaching bids and do not submit their best possible submission. Too often, they do not seek to identify specialists as often as SMEs do. This can leave opportunities open for them to be outflanked by stronger, combined offerings.
Large companies can bring SMEs under their wing
Find some competent smaller businesses that you can collaborate or cooperate with for the purposes of public bids. This allows large companies to tick the “SME” box in their application while potentially enhancing their own offer. A large company’s size and positioning means that they may be able to offer big opportunities. Big companies can provide access to contracts of scale SMEs can’t attain on their own. Meanwhile, large businesses can mitigate the effect of strong, specialised SMEs eating into your market share.
Large companies can do what SMEs struggle to do
Smaller businesses struggle to practice and apply competent key account management practices. They can hit their capacity quite quickly. This creates an opportunity for larger businesses to defend their position by targeting contracting authorities that buy a lot of their works, goods and services from SMEs. Key account management works but it is often applied unevenly. Selecting the best targets for a large company and then actively using this technique can help to defend and/or win over accounts (subject to usual tendering rules).
Write better proposal documents
Large businesses often produce outstanding bid documents. The exact same people are capable of producing very mediocre documents. Too often, large companies over-rely on previously developed content or boilerplate material that misses the mark or is too generic in its content and purpose. Instead, make sure the organisation understands its core strengths and competes vigorously where it has core competencies. Where a bid requires the strengthening of internal capacity and capability, bring in specialists that improve the quality of the bid. Doing so can help with CVs, Case Studies and specific insights into methods and proposals that large, less specialised organisations may not identify or know. This can enhance competitiveness.
Large companies win bids when they rigorously analyse their bids – both winning bids and losing bids. What can be harder for established companies is to understand when they win because of their relationships and brand as opposed to their documentation. This can give a degree of false comfort within larger bureaucracies. As Henry Ford put it, Quality is what you do, when nobody is looking. If a company gets any bad feedback, especially on accounts where relationships are weak, they should take a step back and review their document (in addition to asking themselves why they are bidding in the first place, see next point).
Use a bid / no bid process rigorously
Use a bid / no bid decision making process to decide whether to bid or not. Many organisations do not follow these processes or lack the discipline to use them properly and make speculative decisions as a result. While internal appetites around marginal opportunities vary from company to company, organisations can position themselves to win more frequently by investing time in account development activity first. The conditions for success can be influenced through engagement and by only bidding when the environment is at its most propitious for the bidding company. While this does not guarantee success, it aligns with the criteria associated with the high win rates achieved by the most judicious bidding firms. Large companies win bids when they rigorously reflect on the techniques and tactics necessary to win.
Focus on the traits you need to bid strongly and expertly. SME consortiums and specialised smaller businesses win market share because they consistently deliver value for money. Value for money means that they are often cheaper and work to a similar standard.
While some companies under deliver, others over deliver and drive their prices higher than they need to be. Public clients do not refuse over-delivery but if it is not something they would pay for separately, it impacts competitiveness. Larger companies in particular can make themselves uncompetitive quite quickly this way.