Collaborate to Innovate – changing the way you play the game in the public sector

Invention is a new idea. Innovation is the successful commercial exploitation of that idea.

At what point do some businesses lose their mojo?  We’ve seen companies become reckless as they try to grow too quickly (see recent news from John Cutt).  An acquisition strategy can break you as easily as it can make you.  In the UK, the combined timing of Brexit and COVID has certainly hurt a variety of businesses – mostly small ones – while others have prospered (I mean really, how many of you knew about Zoom before COVID?).  Is it just the market environment that drives us – or is there something unique to our internal decision-making that can keep a good thing going?

The Mayor likes to have a cheesy classic dance tune with every blog – this one is more my speed.  So, if you don’t have Spotify head on over and put that right

I’m dating myself here, but have you seen the Friends episode where Ross buys a new couch and decides to carry it up to his apartment instead of paying for delivery? The word “pivot” will never sound the same to me again. But that scene also has a lot of key elements in it – documenting your strategy, recruiting the right resources, communicating your implementation plan as you try to “pivot”.  According to Goldman Sachs, as early as September last year, 45% of small businesses in the UK had “pivoted” or changed their business model. Trying to succeed in small business is a competitive game. And on the playing field, a good pivot can get you the extra yardage you need for a win.  So, how can you be innovative enough to you keep on winning?

Small vs. Large - who's more nimble?

Some might argue that large companies are more innovative than smaller ones.  After all, they have a lot of advantages – access to capital and a myriad of resources; lots of employees, legal teams, and robust methods to ensure they can protect anything proprietary.  And with multiple acquisitions, a large company can gain access to complementary products and established brands as a means of broadening its customer base.

But bigger isn’t always better.  Larger companies tend to be hierarchical.  Multiple layers of management slow down the implementation of new ideas.  Try something innovative in a big organization and it goes through so many reviews and revisions that by the time it’s approved, the originality of the idea is too watered down or the window of opportunity has passed for anything good to come of it.  That’s why most “innovation” in large companies often comes from small improvements to existing products (e.g., Apple’s modifications to the i-Phone) rather than novel breakthroughs.  Just ask Eric Yuan, the founder of Zoom. He worked as the manager of WebEx, a video conferencing division purchased by Cisco in 2007. Eric found their videoconferencing product inferior and felt the company needed to move to a better, cloud-based product before the competition did.  He took his idea to management but couldn’t convince them that their current product was vulnerable.  So, he left to start his own small company.  And, well we all know how that turned out for him.

Small businesses have the capacity to be more focused and nimble.  With flatter organization structures they can assess and execute on new ideas more decisively.  Their employees and culture are often more entrepreneurial in nature – they can be just as motivated about a new idea as they are about a pay cheque.  And that tends to make them less risk-averse.

What do small businesses and Prince Charles have in common?

Rural farming, apparently.  The Prince of Wales recently wrote an opinion piece in the Guardian in support of the small rural farmer.  His article had elements of insight that could easily be applied to SMEs:

“they are a remarkable breed; adaptable, resilient and incredibly hardworking.  And they are no stranger to innovation through diversity”.

In 2020, there were about 6 million SMEs in the UK (defined as any business with less than 250 employees).  They represent over 99% of all UK businesses.  And 96% of these businesses have fewer than 10 employees.  How many of these businesses are actually encouraged to bid for public sector contracts?  And even if they do, how many actually have a chance of winning one?

For years, the UK government has noted that SMEs can deliver significant benefits to the public sector through greater innovation at a lower cost relative to larger corporate contractors.  This is at the crux of their recommendations in the 2020 Green Paper aimed at transforming public procurement rules to make it easier for SMEs to win more public contracts.

But let’s face it.  Small companies have limited resources.  And if you’re one of the 4.5 million businesses where the only “employee” is you, then you’re intimately familiar with the challenges of wearing multiple hats within your organization, resulting in a limited amount of time available to focus on generating leads or finding new ways to “pivot”.

When you’re losing the game, it’s time to change the way the game is played

If the winner takes all, then everyone else is a loser. This is what’s referred to as a “zero sum game”.  But out of this theory has come an alternative strategy called “coopetition”.  It’s based on the idea that sometimes the best way to win is by collaborating with your competitors.

Through cooperative competition, you can move the market from a zero-sum game, where a single winner takes all, to an outcome that benefits the whole and makes everyone more profitable.  Business competitors can effectively work together, pooling their resources for mutual gain without ignoring their own self-interests.

Just recently we saw this model put into action when the world was in dire need of an innovative solution to the pandemic:  the collaboration of Pfizer and BionNTech on the COVID-19 vaccine.  But other big players have led the way in this regard – think Apple and Microsoft on patents, bitter rivals who nonetheless found that working together could benefit all the players involved.

Horizontal coopetition – teaming with direct competitors to extend your market reach or improve your position against other competitors (e.g., SMEs vs. large corporations) – is a viable strategy that can result in a number of benefits including cost savings, reduced time to market, or a bundled offering of products that improve the overall value to the customer.

Strength through collaboration

Are you playing in the market with a competitor who has complementary strengths?  Do you each bring something unique to the market that, when combined, improves the overall value to your end-user?  Transform your differences into growth opportunities.  Move the market away from a zero-sum game by changing the way you play.

When we created The TenderHood, we used a few sporting metaphors and developed a “playing field” to acknowledge that being in business means being in competition.  We also believe that the elements of a good game can be challenging, but also innovative and FUN.  If you can work collaboratively and be innovative with your tactics, you’re far more likely to keep your business fit enough to stay off the bench and on the field.  And if you’re anything like us, you’ll have fun doing it.

What changes do you see coming in your industry? Do you have any tips to staying ahead in the game? As a small business playing in the public sector, what would you like to see The TenderHood doing to make your life easier? Use the comments field below.

Mo Devereaux Head of Strategy at The TenderHood

MO DEVEREAUX – aka MoBot, comes from a rich background in startups and business development, and is responsible for marketing and business strategy at The TenderHood.

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Responses

  1. The definition of Invention and Innovation was an interesting starting point, adding to the point is the concept that innovation is also the ability to apply what exists to anew environment. Often we look at scalability, and flexibility as progression alone. They require innovative thinking. Just because a system is scalable doesn’t mean it will achieve the outcome when applied in a global setting, those adjustments and tweaks are part of the innovation process.

    To win more public sector contracts the SME must demonstrate, competence, compliance and value for money as the underlying philosophy, because they don’t have the capital reserve to throw at a solution. Therefore, this new round of public procurement adjustment presents the opportunity for all SME owners to look at bringing their best to a best with equals.

    The number of businesses that subcontract because they are afraid of the paperwork associated with the win is incredible. But when they have created the right partnership structure and management tools it is very easy to manage. The FM Giants prop themselves up with local contractors who should be managing the contract locally. Often 13% of the contract value is lost to the Giant which could be the foundation of local job growth, professional development for young people.

    A great article and some interesting thoughts I really enjoyed reading it. I actually wanted to respond to every line of reasoning but remembered I’m a guest.

    1. Thanks so much for your comments. Excellent observations. I always find obstacles can be opportunities and I’m hopeful that in this changing environment we can support SMEs so that they can find new ways of winning more business. Keep sending us your thoughts. We value your input!

  2. Absolutely awesome blog Mo!! Can’t agree more with the view that bright ideas get “watered down” or impeded by overly complex hierarchies. The larger the business, the more likely it is that individuals are pigeonholed and/or edged out of decision making. Small businesses are much better placed to leverage every employee’s wider skillset than bloated behemoths that view people as numbers rather than stakeholders.