Oct 312014

Dr. Earl R. Smith II

You don’t have to be around government contracting long before you realize that the dominate currency of the realm is relationships with your clients. That being said, it is hard to come to terms with how badly some companies manage those relationships. One of the first things I look for when I am called in to a distressed situation is how many long-term customer relationships a company has managed to maintain and grow.

A real red flag shows up when I find a constantly changing customer base. As I drill deeper I generally find that the churn is due to a less than focused effort in deepening those relationships. Over the years, I have developed a list of underlying causes.

Disrespect: This one dominated the run up to the bubble bust a number of years back. I came across management teams that looked down on their clients – considered them ‘backward’ or ‘poorly informed’. One CEO who operated at the extreme of this view once told me that this customers were ‘uneducated rubes who just don’t get the new paradigm’. The corrosive nature of this attitude is plain to see. If your customers – the key decision makers – come to realize that you don’t respect their professionalism and experience – they will quickly look elsewhere for a team that does.

Impatience: This is a variation of the first red flag. Decision makers in government agencies operate within a highly proscribed environment – they have to deal with a maze of regulations and procedures over which they have little control. That is one of the major reasons that the sales cycle for federal contracting is so long – often eighteen to twenty-four months. The pressure of building a business often overtakes the ability of a management team to understand that some decisions will never be made as fast as they would like. Pressures of inadequate resourcing often add to this impatience. One particular variation of this shows up when a company that has been successful in the commercial space decides to set up a ‘federal division’. I have seen many of these efforts fail simply because the management of the parent company did not understand the process and the pace at which it works.

Walking in their shoes: A key skill in federal contracting is to understand the environment and restrictions that effect the decision-making process. Very experienced business development types understand this well – they are able to ‘walk in their customer’s shoes’. I once had one of very best of these tell me that he spent a lot of time getting to know the specifics of the situation that a potential client was operating under. “It is my secret sauce – the real reason that I have been so successful”, he told me.

Asking to listen: I am always amazed at how good the very successful business development types are at listening and interpreting what they hear. Most customers will tell you what you need to know – all you have to do is ask and then listen. They have specific needs and are almost always under a great deal of pressure to have them met. An example of this occurred during a recent seminar that The Federal Circle organized. One of the panelists was a very senior team member of a major government contractor. During his presentation he lamented that he had lots of requirements that could not be filled. The audience – mostly mid-level contractors who made their living in teaming relationships – was clearly taken aback by the statement. They spent their days trying to break through and join teams. Here was someone telling them that there were more opportunities for teaming than could be filled in a timely fashion. As you can imagine, the effect of this realization was electric – you could feel it shoot through the room. When pressed, the panelist described the situation. “I have needs for specific contributions but most of the time I am approached by companies that contend that they do much more than their size would indicate they are capable of. They come to me and say ‘we do all of this’. But much of ‘all of this’ is the reason that we pursued and won the contract in the first place. I am not about to let a company on the team that seems to intend to try to take away business that we intend to do.”

Situational awareness: Understanding the situation and its potential – accurately understanding the limits and possibilities of an opportunity; particularly if you are a mid-level contractor – is one of the keys to success in the space. This is not a question of your technology or people – it is a matter of understanding or misunderstanding what is there before you.

Risk and risk-aversion: There is an old saying – ‘you never go wrong hiring the big guys’. Most decision-makers know that this is seldom true. Increasingly the government needs the agility and new thinking that smaller businesses bring to the table – particularly when new approaches to hard problems are required. But decision-makers are risk averse. They don’t want to risk their careers on a bet that doesn’t pay off. When pursuing business – and particularly when it comes to getting new clients – it is critical that you understand this dynamic.

Know, like and trust: Some years back I was working with a mid-sized government contractor. The engagement was a coaching one and the client was the CEO of the company. He was pushing hard to expand the company’s business base. During one session we focused on the reasons why they got the business they had. I asked him to tell me what he thought. The response was predictable – ‘our technology is solid, our people are first rate and we are a great place to work’. I then tasked the CEO to visit all of this clients and ask them the same question. To his credit, that is exactly what he did. The session after he returned from his journey was dominated by what he found. “None of them mentioned the things I listed”, he said. “They all said the same thing – ‘we trust you to understand our needs and meet them. If something goes off the rails, we believe that you will make it right’.

Relationships matter: People do business with people they know, like and trust. They do business with people who understand their needs, the situation and respond by meeting – or, better yet, exceeding expectation. Much of my coaching work is focused on helping CEOs and teams get very good at doing precisely that. If you want to take your company to the next level, take your ability to do that and the rest will follow.

© Dr. Earl R. Smith II


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