The oracle, the dashboard and the RFP

In the technological ‘boom’ of the late 1990s, Warren Buffet had been widely condemned for being past his prime or out of touch with the ‘new’ economy. You all went through the presentations, heard the prognosticators and read the articles about the ‘new’ economy. Then there was the speed bump known as the ‘bubble bursting’ in tech or the ‘tech meltdown.”]’ 

On the flip side, CDNow was seen as part of the ‘new space’ or ‘new economy.’ The company, founded in February 1994 by twins Jason and Matthew Olim, sells CDs over the internet. No stores, no bricks and mortar to drag them down. The brothers soon wrote a book about their success and how things would work in the internet age. And why not? They had phenomenal growth and were being considered for stock swapping/combing with some old line companies like TimeWarner and Sony.

Mr. Buffet was widely quoted as saying he wasn’t investing in ‘tech’ as he didn’t see the facts and figures he usually looked for. He did not see the fundamentals he knew and invested in. He knew his paradigm; he knew his space.

As we and Mr. Buffet know those that don’t learn from history are condemned to repeat it. Mortgage-backed security (MBS) anyone? Although an attempt at humor, it is easy to see we humans tend repeat ourselves. However, looking at the mortgage meltdown and the ‘tech bubble’ and so on, it is clear fundamentals are not always that sexy, or don’t get headlines, at least initially.

As sellers and buyers of technology, solutions and systems, we need the discipline to keep our customers and ourselves focused on the fundamentals. Groupthink can make you popular for a while, but if it strays from fundamentals, popularity won’t save you. Those in the MBS world know the downside of groupthink firsthand. They missed the fundamentals.

As that seller or buyer, choosing what matters is a critical step. As usual, we start this process with a Request For Proposal (RFP). How that RFP is built and evaluated has tremendous bearing on a company’s results. In the MBS example, clear focus, understanding of the issue or program was not the issue. The parties were clearly focused. The plane of focus was the issue. The parameters of success were built from within. The organizations needed depth and breadth, but focused on the ‘new’ paradigm. It is easy to explain away the core fundamentals when you mention those rules no longer apply. The surest way to end an argument is to claim new rules.

As I sit in seminars today instead of hearing about new economies I hear about the necessity of a dashboard: ‘Without a dashboard you and your business will be lost. Can you imagine driving without a dashboard?’ I am not sure they have ever driven a car. The presenters mention that a dashboard is to focus on the three or four items critical to your success. However, a ‘dashboard’ is not a critical component of driving. I argue that steering, gas and brakes are the most critical components and the dashboard can’t help a driver with those functions. Race-car drivers don’t use dashboards. I can get to work without once looking at my dashboard. The driver of the car in front of me only needs me to have a brake pedal and a steering wheel. My speedometer and gas gauge don’t help if I need to brake or steer. Like the MBS crowd, strict focus on a dashboard can be just as bad. If the people shaping the conversation build the dashboard, it is ultimately self-serving. Warren Buffet’s ‘dashboard’ came from him, but also from basic undeniable facts. His measuring stick he uses is rooted in provable truths. He chose what was measured, but based on proven success and solid macro practices.

Back to the RFP, for this example, let’s say there are three needs to meet the ‘ideal’ RFP requirements. In the end, you know, as we all do, two out of the three are all we really expect. After the RFP is answered, along come the presentations and pitches; looking at all the data it is clear the first provider provides two needs and a little of the third, let’s call that 2.1 needs. The second provider provides two needs and slightly more of the third, we’ll call that 2.5 needs. The receivers of the RFP have to evaluate two closes without a clear hit on all three needs; again, as is usually the case.

The presenters are not in a vacuum; they are more aware of what they lack and what they missed than the requesting company. They can probably tell you exactly what the other provider does and doesn’t provide. Therefore in their presentations, they bring in noise. The noise becomes about the value of 2.1 versus 2.5 and vice versa. Out come the bells, the whistles, and the magician’s hand wave to divert attention. Outcomes a dashboard, but is it measuring the right needs?

I like to think I am an innovator and love new things. When autos replaced horses, the same measures of a horse could not and would not apply to a car. However, the basic focus of each did not change. The basic ‘dashboard’ or measure would be getting from point A to point B. The next measure would be how. Is it a road or a trail? Is speed important? Comparing a horse to a Jeep becomes easy and straightforward. Using history and known macro truths can be applied to each model. I am not against cars; I am only against choosing a car when you need a horse.

Without a supplier providing all three of the needs, doubt of the RFP originator can creep in; maybe we chose the wrong three needs?  Maybe the RFP was wrong? Are the 2.1 and the 2.5 equal on the two? Were the two needs must haves and the third need a ‘like to have?’ Are the two needs equal? At this point are you Warren Buffet or the CDNow guys? Did you make your plans under false assumptions like the MBS world? There is always room for new ideas, new insights and different opinions. It can be argued once the RFP is written it is obsolete. The original needs though were once important and to lose sight of them just because you are only getting two of the three met can lead down a slippery slope. The two core needs should be kept in focus. The discipline of focus and understanding the fundamentals can’t be overstated.

Time and time again we have all seen the process bog down organizations, become a political battle, and see teams become enamored with a bell when they need a buzzer. The upside of focus and of knowing your space is it then becomes easier to choose a pitch. The upside is Berkshire Hathaway. The downside is $150 billion disappearing in a month. The downside is history just hit you from behind and landed you in the headlines for the wrong reasons. The downside is you are now controlled and reacting to your future instead of proactively choosing among the options for your future.

Sorting through a 2.1 RFP versus a 2.5 RFP will keep a company good or make it great. More often than not, a 2.1 can be better than a 2.5. Those needs may be the core functions and the 2.1 could be better at the core than the 2.5. All the bells and whistles don’t replace the need for those two core needs. Focus and fundamentals are the keys and it is incumbent upon both parties to understand both areas. Is the RFP being measured and evaluated correctly? Are you driving via the dashboard or the steering wheel? Are you on a horse when you need a Jeep or vice versa? Do you want to own Berkshire Hathaway stock or some CDNow stock? May we all be as insightful and successful as Mr. Buffet?

About e2Value, Inc.
e2Value, Inc. is a full-service application development, insurance consulting, strategic technology partner and provider, offering products to assist with Insurance-To-Value (ITV) and workflow solutions. It was founded in 1999 by former insurance executives and based in Stamford, Connecticut, offering full-featured, knowledge-based Internet applications that enable consistency and standardization of pricing, processes and procedures for insurance, real estate and banking professionals. Its clients range from the world’s leading insurance companies to one-person insurance agencies, as well as banks, property appraisers and risk managers.

For information visit www.e2value.com, or contact sales@e2value.com or 888-371-2788.

About Todd Rissel, Chairman, CEO & Co-Founder of e2Value, Inc.

Rissel is the founder, CEO and chairman of e2Value, Inc. and is one of the nation's leading experts on property valuations. Rissel is a former insurance executive who recognized the shortcomings of the traditional appraisal and valuation systems. As such, many of the world's leading insurance companies are now using e2Value to more accurately assess the true value of properties. For more information visit www.e2value.com.