How Many Times do you Want to Pay Half Price?
How Many Times do you Want to Pay Half Price?
Chief Financial Officer,
Chief Financial Officer,
This thought runs through my head whenever we miss a contract because our price seemed too high to the decision maker.
I understand the motivation behind that decision to save money. There’s an immediate sense of value attainment in getting something on the cheap. That giddy win of buying on a markdown. It also explains all the clothes we never wear in the back of the closet: they were a "good deal".
When we buy discount gasoline at the start of a long car trip, or have an unreliable friend drive us to the airport – well, the cash saved is insignificant in comparison to the risk we are introducing to the success of the undertaking. These examples are personal and put only our own experience in peril. But when things we buy off the discount rack are tools to be used by employees or customers to get work done, then those users might not appreciate our attainment of a "good price" at the expense of their experience.
For commodities, or arguably other identical purchase options, seeking the lowest pricing might make sense. But I'm starting to suspect that the RFP process for digital products leads decision makers to believe they are buying a commodity when they are not.
"Well, we basically know what we want and have specified that.
These seem to be roughly the same response from two different suppliers, but one’s cheaper, with shorter turnaround, hmmm. Go with the cheaper one."
Cha-ching. Value attainment.
Well, we'll see... (you later).
The problem is, buying made-to-order digital products important to your organization is not a commodity purchase. To get what you actually require from a new digital tool or re-engineering an existing tool, you also need to be buying what (should) come before the project starts and what (should) come after it's complete.
Albert Einstein said:
If I had an hour to solve a problem I'd spend 55 minutes thinking about the problem and five minutes thinking about solutions.
He would then likely assign a team of experienced craftspeople to build exactly what the situation needed. To stay in business, he'd need to charge for that initial 55 minutes. Contrary to Einstein's approach, many vendors get straight to building what the client has asked for without substantially exploring the problem any further. If Albert were submitting a quote, most purchasing departments would determine Einstein and Co.'s price to be “too high”. And with that determination, they've already put the project off the rails.
Purchasers of digital work would do well to consider that they are not going to end up where they need to go if they are just buying a vendor's development time.
They should instead be thinking about a package of three things:
- Proper determination of what to build;
- Project craftsmanship; and
- Future-proofing the tool's usefulness.
These elements are part of what the savvy client seeks as necessary to a successful outcome in their software or innovation project. Einstein's "measure 11 times – and cut once” determination of what to build is captured at zu in the Design Thinking stage of our development process. The second part – "project craftsmanship" – is not just about the build quality, it is also about the effectiveness of the project management, a ball that is often dropped with "value" vendors. The last element – "future-proofing" – recognizes the annoying thing about solving a technological problem and that's that it only stays solved briefly.
We've been paying to watch movies for 150 years. The technological solution for watching movies, though, has gone from silent black & white through the addition of sound, then colour, then onto video tape, laser discs, DVD's, MPEG downloads, then portably streaming on phones with Netflix, and so on. Movie producers and "film" publishers have successfully skipped from technology to technology to ensure users could always buy their movies one way or another.
Similarly, to extend the useful life of a digital capability you are planning to purchase, you need an adaptive path forward after purchase. You'll want your offering to stay relevant to users even as their needs change and the technology of delivery changes. On the Internet, this happens incrementally and then abruptly with bigger advancements or hazards happening unexpectedly. Anyone with systems touching the Internet knows it doesn't take a big change for something to break or much time to pass before your tools seem obsolete. If your mobile app or website in question has an impact on your end users’ experience, it has an impact on your business’s competitiveness. A commodity-minded purchase evaluation will seldom result in a good outcome.
Now, most solution-seekers have a good idea of what they need and generally know who their users are. But this is about determining what users need, and never assuming what they need. If you proceed with your interpretation of what they need, you will likely end up with the wrong thing, or at best, a thing that could have been much better. From this start – likely poorly embraced by stakeholders – you’ll waste additional effort defending decisions and pointing fingers. You’ll double down with additional change management and training and further distort your budget by deploying additional development resources now shooting for even a minimal success. Instead of moving into the future, enhancing a solid beginning, your efforts will be diverted to fixing a tool with numerous congenital defects.
But at least the price was good!
Having a quality tool makes work a joy. Like my new bread knife. After laboriously cutting several dozen crusty loaves over the past year I purchased a Shun Classic 8-Inch Offset Bread Knife. (Background: Usually twice a week I cook a hefty sourdough bread for the staff, which I like to cut it up precisely and kind of thin). Sure the knife cost a pretty penny, but it’s much easier to use and saves time. I have the pride of making the right choice, and the pleasure of having quality in my hand every time I use it. Plus it delivers a more inviting offering to the zu team and so increases their enjoyment as well.
In this case, I was both the budgeting decision maker and the employee who uses the new tool, while zu staffers are the end user-customers. Admittedly it took nerve for the decision maker to buy the best tool, but the bread cutter loves the effectiveness and the customers enjoy a consistent, positive result.
Whether your users are employees or customers or both, think about your digital products and services from their point of view. Is your plan to dress them in outdated, discount clothing, and then expecting them to like it? Are you giving them an average knife and disappointed when they can't work miracles with it? Perhaps a little more training will make them appreciate their funny-looking duds or dull knives.
If you really like shopping, buy on the cheap, because you'll be back at the store when the thing breaks or is unusable. This is why at zu, we are patient when folks walk on price. As things deteriorate, they will either be cajoled into endless rounds of fixes by their current vendor's sales team, or if what they need is actually important to them, they will have to hit the market again with a more experienced mindset. We will welcome them back.
The issue with a failed purchase of client-facing software or other systems is not just the hassle factor or loss-of-face the decision maker encounters, it manifests as a failed service and an ongoing frustration. It grows into a loss of reputation. Cutting corners on the tools you provide to your employees or customers sends the message: "this is good enough for you". Their lived experience undercuts the company's claims that "the client is important", or "our people are our biggest asset".
Spending on the system continues whether the purchase was a success or not, if the system is important. If you've built the right thing you will be making enhancements – not fixes – to optimize what you are offering. You will be investing in superiority and market leadership. If you didn't get the thing right in the first place, however, you will be constantly repairing or trying to repair a minimum viable product. No one will be happy with this situation. It will be shuffled to the back of the corporate closet with no mention of the good of deal it once was.
You want this new investment to be a process that delivers a tool that's relevant to users before it's built, relevant when it's built, and, despite the speeding passage of Internet time, relevant long after it's built.
It's not just about buying a solution; it's about getting a solution to address the right problems. Additionally, it's not just about having the right solution on Day 1; it’s about having the means to ensure it's the right solution on Day 1000. It’s about taking time, like Einstein did, before any building begins. It’s about how the movie industry adapts delivery of its original product despite changing technologies and changing expectations of how their users want the experience to happen.
Sure you can find a cheaper deal to get something done, but how many times do you want to pay half price?