INCUMBENT VS.
CHALLENGER: WHO
HAS THE EDGE?
The Curse of the Incumbent
in·cum·bent
…to lie down … Lying, leaning, or resting on something else (like
your laurels!)
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
How you can lose an incumbency
How You Can Lose
How to Mitigate
Weaknesses known by the client
Closely monitor customer satisfaction
Inertia of current processes; cost-efficient to keep
status quo
Competitor offers “pretty new toy”
Propose cost-neutral (or reducing) innovations and
efficiency gains
“Ghost” those new toys we anticipate will be
proposed
Selectively mix deep experience with “fresh blood”
and push work downward
Get independent assessment; don’t rely strictly on
project team’s perspective
Build costs exclusively on RFP specifications. Use
negotiation rounds to add costs as needed.
Long-term staffing model creates increased labor
costs
Complacency – can’t see blind spots
We know too damn much and our proposed LOE
reflects what we KNOW they want rather than
SOW states
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.
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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!
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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.
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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.
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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.
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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.
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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.
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Mitigate Client’s Transition
Concerns
•
•
•
•
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Schedule
Risk
Costs
Relationships
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
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
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
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
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.
Recap: To win, incumbents must
1. Maintain excellent project performance.
2. Begin preparing for the recompete soon after you win the
contract.
3. Bid to the specs to keep costs down.
4. Innovate without introducing risk during the current
project; bid innovations in recompete.
5. Avoid complacency.
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To win, challengers must
1. Solve the incumbent’s performance problems
2. Bid innovation without introducing risk.
3. Influence the solicitation in your favor.
4. Price aggressively.
5. Eliminate client’s concerns regarding transition.
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