How IBM managed to turn the game around: vision reengineering!

“Have you ever played a game, being sure of winning, maybe already leaning forward to take the money of the poker table, when your opponent makes that last, smart move and you realise that you simply lost it?”

This is the story on how an already announced winner lost a big deal in the last and final round to the underdog.

The game, the players and what happened*

A few years back when a Swedish insurance company) had international ambitions to grow fast, they realized that the current homewoven IT infrastructure became a hurdle, not the stepping stone to growth as they needed to make IT more efficient.

The client had always used a local company as their house supplier . The vendor had everything: Installed base, contracts, relationships, local presence: you name it. Since the planned outsorcing of the IT was such a important part of the clients growth strategy the decided to go out on a big tender process (RFI/RFP) to the major players (one of them was IBM).

As I was told by an insider the tender was more or less rigged by the present vendor as they had the power to influence at an early stage**.

IBM faced 2 major challenges they had to overcome if to win the deal:

1. Lack of management relations
Since IBM had few relations with management directly it minimized IBM′s ability to sell at the right level.

2. No obvious competitive advantage
The local vendor “owned” the present solution, had relations at all levels and had actually designed the new solution!

IBM pulled a few tricks out of their Solution Selling magic hat.

 They knew the case was lost if they followed the rules of the tender process – one of the terms was: “No contact with Skandias management outside procurement is allowed during the tender process”.

IBM knew that if they became in position to negotiate, they would need to negotiate at the highest level of the client, with the CIO, to defend the price and (possible) widen the scope.

To establish that contact without beaching the rules of engagement, a high level manager at IBM reached out to the CIO of Skandia, informally to get his thoughts on “trends in the international insurance market”. The IBM manager shared that he knew about the tender but this conversation was not related to that issue. The CIO accepted the informal lunch and a contact was now established. (Use High level managers that are far away from the deal to form high level relations)

The next challenge was about the competitive advantage. IBM was at the client known as a complex and expensive vendor. The sales team sat down and did a “differentiation grid”, finding the “killers” (high customer value / unique to IBM) of IBM′s value proposition. They found one: International coverage.

To make that differentior count, IBM in conversations with procurement, managed to anchor the need for a player who already had local deployment with local resources in local languages (does it make sense to have Americans deal with Skandia in US?).

At the time it was just a clarification of the vendor requirements, as a part of the RFP.

Lets cut to the chase, a bomb explodes***

At the end of the tender process the clients procurement asked the local player to submit information on international, local recourses. They could not come up with a risk free option. Procurement found IBM as the vendor who had the best fit for deployment. (The bomb)

Since IBM was expensive, an intense negotiation began to take place. At that point of time the relation between the CIO of the client and the high level IBM manager came in handy….

Lets take it slower (and learn quicker)

IBM identified 2 issues: lack of relations and no competitive edge. They played the cards one at a time:

1. Creating relations at the right level through informal contacts
2. Finding a risk related “USP”****
3. Placing the “bomb” at procurement (the formal approver)
4. Negotiation CxO and CIO, cross cutting procurement (strategic level)

Since these 2 things did not change the solution or challenged the local player, they did not notice. I don’t think they become overconfident or so – these guys are know to ambitions and hard working – they just did not know about the IBM way of selling.

I learned that playing on more than one string makes the song better – and have that bandwith within ones organisation is admirable (IBM in a nutshell).

Final good words

You and I are not IBM. That is true and we may not have the power of IBM – but we can learn to foresee potential bombs and use informal relations before they are needed. And find that “killer” that can turn the deal around – or try to detect your competitors moves early enough to counter them!

 Like Al Pachino so elegant puts it in the movie “The devils advocate”: “They never saw it coming”

Good luck

Jens “salesmakeover” Edgren

Jens is the CEO of Salesmakeover, a Solution Selling partner.

Jens is also the author of several books on how to sell solutions, available at adlibris.

www.salesmakeover.se  [email protected]

PS: IBM quickly replaced all managers at the IT department to minimize resistance to change (securing the victory)

* Later the client actually withdraw from global expansion after loosing millions of euros (CEO fired)

** The evaluation plan again!

*** A Solution Selling method called “vision reengineering embedded in the evaluation plan

**** Unique selling point