A race to the bottom: How RFP's are broken and what to do about it


One of the benefits to being an agency that builds a lot of the web and mobile applications, is getting a chance to take a step back on trends.  We meet with 2-5 new entrepreneurs a week that come from places like LightBank, have their 1st or 2nd round of angel investing, or who are now bootstrapping their project.

In these conversations, we are 1 of at least 3 firms that are bidding on their next digital initiative. The conversation goes like this:

  1. The idea and why.
  2. The scope of features.
  3. The sites/app/companies they turn to for inspiration.

We then take that RFP and go into our Ron-May-style dark chamber where we come up with an estimate of costs broken up by tasks and hours.  The baseline for these numbers end up being a measure of what it would ultimately take to do a great job on all of the listed features.

Therein lies the problem: An entrepreneur comes to an agency/studio with a list of features so that they can objectively compare the costs of building those features across firms.  

This has been going on for years, so why is it a problem?  

It creates an environment where all the firms that are bidding on the work are trying to give you the best cost they can on your full list of features.  To you, this list represents a calculated group of puzzle pieces that if not executed in tandom will take all the value out of the product.  What you don't know, is that all these pieces put together may never fit together.  Regardless if that's the case, you are now using those features to decide your projects fate based on getting all (or most) of them executed.

To use an analogy, let's imagine you are building a house.  You bring in a set of magazines from Dwell to Modern House Magazine to your architect and say, "Here are all the things I'm looking for."  You talk about the number of bedrooms, custom staircase, the appliances it needs to use, and often times most importantly, the style it needs to have.  You cite Wright and the Eames and have communicated your expectations.

This is an important analogy because it is equivalent to citing Apple.com or Kayak.com,  sites that required a unique balance of time, care and investment to properly articulate and execute. But you are sure you understand it.  This is the way it should be.  It's a standard. It's been done before. It can be done and it needs to be done by a firm that can give you the best bang for your buck.

This is the race to the bottom.  This is why so few design awards are going to Chicago-built interactive projects.  In many ways, this is how San Francisco's Silicon Valley experience has helped them execute on such a higher plateau.  They understand how production value translates to business value.  There are agencies in Chicago that are capable of doing great work.  Yes, GREAT work.  But they aren't even given a chance because of this RFP process.

Why?  Because objectively you won't hire them.  Comparing apples to apples, they will never rise to the surface.  One, because they're being conditioned to be as competitive as possible, and two, because they'll never be able to convince you that the production value of their work is worth the additional investment. 

What to do about it.

Stay goal-oriented.  Don't put together a list of features you know you need.  Come up with the core thing your app is going to do better than everyone else, and pitch that to potential partners.  You'll have plenty of time to work on new marketing initiatives as your fan-base builds steam.  Stick to nailing the core of your application.  This gives you an opportunity to keep your taste in what you're building.  It also keeps your team from running around building 15 half-thought-out widgets on a short timeline or thin budget.

Focus on the end-to-end.  If you're hiring a shop that has a great development team but isn't known for great design, find out a way to fill in that gap WITH your partner.  This is equivalent to hiring a cinematographer, having him shoot your film in New Zealand, then handing that footage over to your Director and Actors who have a screen play set in LA.  Get ready for a turbulent experience.  The people you hire to do your project, whether in-house or at an agency, must be able to communicate on the same plain and work together with those other vendors you bring to the table.  By not doing so, you introduce insurmountable inefficiencies both from a production cost and timing standpoint.  

Be open about your budget.  If the firms you're talking to have ANY kind of portfolio, they will be able to tell you roughly what it cost to build certain features of those sites.  Budgets help determine material costs, how much to spend on features, and take unnecessary guess work out of the bidding process.  Imagine going to an architect and saying, "We want a modern home like in Dwell."  And when she asks you about your budget, you keep it from her.  This is next to unheard of in the construction/building vertical.  In digital, it happens 95% of the time.  Had she known your budget, she might be able to still give the kitchen layout of your dreams, but using concrete counters instead of granite and a prefabbed trim.  You still get what you want but within your means.  Instead, she gave you a bid on granite and left the custom molding in.  You ultimately chose a less talented architect to do your kitchen because she was too expensive.

Understand that quality is always in balance with cost.  There are many studios and agencies in Chicago that are capable of building a dream product for you.  A product that meets and exceeds both the websites and apps you have come to love.  But with that, be realistic about how much those sites cost to make.  If you are citing Mint.com, know the rough financials around what it took to build certain pieces of that site.  Don't assume that great information architecture, copy, design, and development is a commodity.  It requires leadership, orchestration, time, and trust from you and the team you hired to be successful.  Never pit your budget against the team trying to execute your vision.  You will get a compromised product every single time.

Bake autonomy into your vendor relationship.  Try not to dictate the way your site or app needs to be designed and built in your RFP.  This goes beyond the initial meeting, but great artists must have an opportunity to make your project their own.  It's very disingenuous to assert that you want the partner you work with to believe in your product, then not trust them to bring it to life.  Knit picking the execution of call outs, or the way a certain flow happens has it's place, but those things ultimately won't be what makes your app successful. The best products are the ones where the team executing KNOWS it's just as responsible for the success of your application as you are.  If you dictate every pixel, you take away their stake in the action and as such the people you are "trusting" to execute will stop caring.

As the Chicago tech entrepreneurial community grows, it is also important that it grows in concert with the teams executing the work.  I'm of the belief that eliminating the communication and process breakdowns between our threaded industries is the only way we will reach our ever-growing potential.

The money that San Fransisco has always had is here now.  We have a decision to make:  Continue to cheapen our projects to the lowest bidder, youngest talent, outsource, and scrap our way to the bottom.  Or instead, put the focus on expertise, quality, and the core of what makes our projects great.  

Together, let's get back to racing to the top.

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