RFPs are the number one reason why Telecom is no longer innovating. How can a new product be innovative if at best it takes 1 month to go from idea to RFI budget approval, 3 months to do an RFI, 6 months to do an RFP and 6 months to implement phase 1? All taking into account that there are no reorganizations in the middle or deep backoffice integrations.
RFPs are also flawed in another aspect. They assume that a business case can be made upfront and that the operator understands what the end-customer wants. For all those that have read “The Innovator’s Dilemma“, will understand that for any disruptive technology, existing marketleaders can not go and ask the end-customer.
So what is the alternative for RFPs?
Another book is helpful here: Nail it then Scale it. Do not assume you understand what customers want. Do not start to make a first release and a business case and launch something.
Start by understanding what the customer’s pain points are. Understand if a solution for these pain points is big business or not, a.k.a. a vitamin or a painkiller [You want it to be a painkiller because then it is no longer optional].
Nail the pain points by talking to customers and understand the size of the market. When you understand what to solve, then design a solution. The solution should be in the form of a virtual prototype [on paper or Powerpoint]. Sit together with customers to validate if this resolves the pain. Adjust if necessary. Repeat the process as often as needed to nail the solution to solve the pain points for a potential big market. Create a real prototype with the absolute minimum functionality to sell to customers. Nail the go-to-market strategy (customer buying process discovery, market infrastructure discovery and pilot customer development). Nail the business model (predict business model with customer data, validate financial model, interatively launch the business, monitor business with continuous data flow). Scale it and take into account Crossing the Chasm.
So far the theory. Now how can this be brought into practice?
The solution: Tiger teams.
A tiger team is a very small team that is responsible for the Nail It part. A tiger team is a cross-functional team. There are three main areas in the tiger team: product, technology and sales.
Initially 1 or 2 people will focus on the product. It is their task to nail the customer pain, discover if the business is large enough and to come up with a solution and a virtual prototype that fulfills the customer’s most basic needs [minimum feature set]. If the customer signs off on this then the tiger team is expanded to include 3-5 technology experts that can build a real prototype. Afterwards the team is extended with 1 or 2 sales and marketing experts to nail the go to market strategy and the business model. The team is given a limited amount of time (e.g. 6 months) to reach customer traction (e.g. minimum number of paying customers, generate profits, etc.). Afterwards the team gets to the second round in which they get an extension of 12 months and some second capital injection to grow the business. This capital injection should allow for more people to join the team. What is important is that the resources should still be on the lower side! By giving too much money too early you will kill the innovative spirit. This second round should allow the team to cross the chasm. If they do, then it is time to transfer the new business either into a business (unit) of its own [if it does not fit the current business] or to incorporate it into an existing business unit.
Should the idea fail, the prototype not take up, the solution not cross the chasm, then no harm is done. In case of failure you would not have spend any more money then the typical cost of a full RFP process. So you fail quickly and scale even faster if things are working correctly. Remember failure means learning more than moderate success and is often only a step away from a real success…