2. Incumbent vs. challenger: who has the edge?

3. The Curse of the Incumbent
…to lie down … Lying, leaning, or resting on something else (like your laurels!)

4. To Defend an Incumbency
Showcase performance
Prove you can continue to meet client needs
Demonstrate innovation and a path forward
Set an aggressive price target
Treat every re-compete as a new opportunity

5. How you can lose an incumbency
How to Mitigate
Weaknesses known by the client
Closely monitor customer satisfaction
Inertia of current processes; cost-efficient to keep status quo
Propose cost-neutral (or reducing) innovations and efficiency gains
Competitor offers “pretty new toy”
“Ghost” those new toys we anticipate will be proposed
Long-term staffing model creates increased labor costs
Selectively mix deep experience with “fresh blood” and push work downward
Complacency – can’t see blind spots
Get independent assessment; don’t rely strictly on project team’s perspective
We know too damn much and our proposed LOE reflects what we KNOW they want rather than SOW states
Build costs exclusively on RFP specifications. Use negotiation rounds to add costs as needed.

6. The Time to Start is NOW!
It’s often early in the project, whether it’s a new project or a transition from another vendor, where the significant lessons are learned.
Capture these issues and how you resolved them in a lessons learned database that you can build on and pull from as needed. This information will be critical during a re-compete.

7. Take Advantage of Access7
Take Advantage of Access
Don’t lose the incumbent’s advantage and fall prey to the incumbent’s curse!
You have access to the customer that most challengers will not have. Use your project staff as critical eyes and ears within the customer environment from day one!

8. 8
Build Relationships
Some research shows that when an incumbent doesn’t take advantage of their position to influence the competition, their chances of winning plummet to just over 40%.
Knowing the politics and players, understanding customer hot buttons at an individual level and knowing the WHY behind what the customer values puts incumbents at a distinct advantage. It takes time to build and strengthen those relationships.

9. 9
Project Staff
If an incumbent is doing well, it can often be attributed to the project staff. As those team members become more senior– and more indispensable– their salaries usually rise. This can mean that the incumbent’s biggest advantage can also be very costly. Do you pass those higher salaries on to your customer in a re-compete?
Planning for this throughout the initial contract, bringing in more junior staff and ensuring they are up-to-speed on customer priorities without any disruption to service, can help alleviate this cost concern before it’s an issue but it needs to be done throughout the contract life.

10. 10
Test Innovative Ideas
Don’t assume that what you bid to win the contract initially will be enough during a re-bid.
Test innovative ideas with the customer during the current contract to ensure that the value to the customer is in line with your costs.

11. Identify areas of high costs11
Identify areas of high costs
There’s a common misconception that customers will do anything to avoid the hassle of a transition. But this is becoming less and less true.
Not only can incumbents be seen as stagnant (vs. innovative) but because they have 1st hand knowledge of the true costs, their prices are often higher than challengers seeking to win/buy new business.

12. 12
Begin at the Beginning
Tracking those costs from contract inception, building strong relationships, testing innovative ideas and capturing cost-saving value-adds can mean the difference between winning and losing.

13. Mitigate Client’s Transition Concerns
Schedule
Risk
Costs
Relationships

14. Strategies to Exploit Incumbent Weaknesses
Long-Term Positioning:
Identify vulnerable incumbents
Penetrate the customer organization
Build customer dissatisfaction
Qualification/Assessment:
Increase knowledge of customer and incumbent’s performance
Develop potential solutions; evaluate their feasibility

15. Strategies to Exploit Incumbent Weaknesses
Capture Strategy:
Estimate P-win and Price-to-Win; can you win/perform?
Infiltrate incumbent’s team members (both staff and companies)
Vet potential solutions
Proposal Strategy:
Focus on solution benefits
You must underbid incumbent

16. Proposing Improved Performance
Must identify HOW things work under the current contract (Neutralize incumbent advantage)
Must also know HOW a better solution will benefit the customer without disruption or added costs
Benefits must be what the customer wants:
Faster
Cheaper
Higher Quality
Lower Risk
Contract Requirements/ Customer Hot Buttons
Incumbent Performance Score (1-5)
Incumbent Deficiencies
Our Improved Solution
Gaps in Solution
Actions Required to Mitigate Gaps

17. Determine PTW/Pricing Strategy
Learn the customer’s budget and cost expectations
Study the incumbent’s resourcing and apparent pricing
Develop a bottom-up cost estimate:
Fresh, objective look at resource requirements
Take advantage of innovative pricing opportunities that the incumbent won’t consider:
Standalone cost structures
Fixed or unit prices for portions of the contract
Reductions in annual costs as objectives are met

18. Additional ways to ensure objectivity
Include non-project staff on team, especially to lead price/cost strategy, areas of technical or managerial vulnerability.
Maintain written action plans with what, when, who and how; prioritize key issues requiring resolution.

19. Recap: To win, incumbents must
Maintain excellent project performance.
Begin preparing for the recompete soon after you win the contract.
Bid to the specs to keep costs down.
Innovate without introducing risk during the current project; bid innovations in recompete.
Avoid complacency.

20. To win, challengers must
Solve the incumbent’s performance problems
Bid innovation without introducing risk.
Influence the solicitation in your favor.
Price aggressively.
Eliminate client’s concerns regarding transition.