First, a bit about Leah Power

A proven results-oriented finance and operations executive, Leah has 20 years of experience supporting agency leaders develop and achieve strategic plans that lead to consistent growth and award-winning client work. She has advised C-level execs at the operational, regional and global levels on issues of financial leadership, agency acquisitions, operating system implementation, information technology integration, agency transitions, management of Capital projects, as well as fee, scope and contract negotiations. Her agency experience includes time most recently at Grey Canada as Chief Operating Officer plus financial leadership roles at Grey SF, DDB Canada, Downtown Partners, Echo Advertising, and Rapp Collins Worldwide.

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless. On today's show, folks, we're talking with Leah Power from the Institute of Communication Agencies. Hey, Ed, how's it going?

Ed

It's good Ron. It's cool in Texas and it's mid-April, so I will take every cool day I can continue to get.

Ron

It's nice here, too. So I'm excited about today's guest. I know we both read the report that she edited. And let me read her Bio so we can get her in here. A proven results-oriented finance and operations executive, Leah Power has 20 years of experience supporting agency leaders develop and achieve strategic plans that lead to consistent growth in award winning client work. She's advised C-level executives at the operational, regional and global levels on issues of financial leadership, agency acquisitions, operating system implementation, and a whole bunch of other things. Her agency experience includes time most recently at Grey Canada as Chief Operating Officer plus financial leadership roles at Grey SF, DDB Canada, Downtown Partners, Echo Advertising, and Rap Collins Worldwide. Leah Power, welcome to The Soul of Enterprise.

I got to meet you when you brought me up to do a talk to the ICA, and that's where I met Blair Enns [Episode #188] for the very first time in my life, as we had corresponded a lot but I never got to meet him. So I credit you for that meeting. And also, I met David Meikle, who we’ve also had on the show [Episode #206].

It was fascinating to meet David because, as you know, he spent time working in Russia with Ogilvy, wasn't it?

He told me just so many stories about what it was like to work in Russia. It was just great. But Leah, how have you been doing this year? It's been a crazy year.

How have agencies been doing up in Canada? We hear from Tim Williams a kind of lay of the land when we talk to him. But how are they, in your field of vision, doing this past year?

It seems like a lot of the professions are doing okay. I think this whole thing has brought us closer to the customers and probably deepened the relationship a little bit. We certainly see that in accounting, where all of the loans and bailouts ran through the accounting. So the accountants were in great demand for the past year. You published the QBS Agency Search Guide back in 2019 and it was authored by Cal Harrison, and you edited it. Why is it time to change the agency selection process, which is what this report is about?

That's a great point. You do a wonderful job in the report of tearing down the price-based Request for Proposal [RFP] process. And you've probably heard us talk about the author of Let's Get Real or Let's Not Play. His name is Mahan Khalsa. He's got a line in the book, he thinks dysfunctional buying processes resulted from dysfunctional selling processes. And I can't think of anything more dysfunctional than the billable hour. And that is something that we as professionals foisted onto the customer; the customer didn't ask for it. And Tim Williams has a great saying, “If you want to avoid procurement, stop selling things that can be procured.” What do you think about that?

And you landed on this Qualifications-Based Selection [QBS] process, which was developed decades ago in engineering and architecture, is that right?

There's a derivative of Murphy's Law that I like. When a pilot gets into the fighter jet. [“Never forget that your weapon is made by the lowest bidder.” ––Law Number 20 of Murphy’s Laws of Combat]. You want the person or the firm that can build it the best, like you say. What I found fascinating about QBS is it doesn't initially evaluate price. But I'm sure Ed's going to take you further into this conversation but unfortunately we're up against our first break.

Ed’s Questions: Segment Two

We are with Leah Power, the editor of the QBS Agency Search Guide. And Leah, Ron set me up perfectly for what I wanted to talk to you about. I'm just going to quote a little from the report. We'll talk about each of these. In the report it says, “While it appears to be a reasonable and balanced procurement process, the typical price-based RFP has many issues, many of which are not immediately obvious, but real and costly nonetheless.” And then you talk about some of them and illustrate some examples. I'd like you to give me a chance to talk about each of them. But the first one I think is probably the most insightful for me as an outsider to the agency space, is that price often becomes the deciding factor, even when it is weighted only as little as five or 10%.

That brought up a question in my mind as I was reading through this. As you know, one of the things that Ron and I advocate for is giving the customer choices. And what have you seen, if any, the reaction of procurement when you provide in your response three choices, rather than one particular price? What happens?

That's the axiom of the presenting problem, right? The presenting problem isn't necessarily the real problem that the customer has, or even thinks they have. But is there a positive or negative reaction, or neutral reaction, among procurement people when an agency provides choices when they're not asked for them? I'm just really curious about that?

The second one in the list has got to hit people like a ton of bricks. And that is, “Suppliers are incented to focus on providing the least [viable], instead of the most valuable solution.”

I'm skipping a little bit ahead here, but I think it's an appropriate point to bring up. There's a story in here, where the author was speaking at a conference and told them that they needed to disclose a budget for procurement. Someone said, “But if I disclose my budget, that's all we're going to get is the bids in line with the budget.” And he said, “Well, that's a huge difference, because that way, they're all working toward the same thing. And that way, you'll get to find out who's going to be the most innovative within that constraint of the budget.”

Yes, it's critical. I'm skipping to the third because you dealt with it, which is about the time-consuming process. I'm going to the fourth in this section, which is “The most qualified firms are the least likely to respond to a price-based RFP.” Yeah, that's what I want. Give me the crappiest people, please. That's what I'm looking for.

And the last one—we’ve only got about a minute left—is that “RFP projects begin agency relationships as adversarial while the QBS is far more collaborative.” And by the way, this is absolutely true in just about every professional space that I've worked in, especially with regards to say ERP systems, which is my background. Why are we starting our relationship off on an adversarial basis? So talk briefly about that.

Outstanding. Well, we're up against our next break.

Ron’s Questions: Segment Three

Welcome back, everybody. We're here with Leah Power from the Institute of Communication Agencies. Leah, I wanted to ask you about in QBS, there's no spec creative. And this must be an objection you hear all the time from the client side, “Well, how can I evaluate them without seeing their creative work?” But creative work done, as you say, without client direction really has no value?

Ed mentioned in your report you talked about the best agencies might not even get involved in a price-based RFP. Can you imagine the day, because this is my dream world, where agencies would charge for an RFP, because competition is useful and valuable to the buyer. Why shouldn't they charge for it?

When you talk about how QBS lowers costs, fosters communication and collaboration, and it's a true relationship, one of the greatest pieces of empirical evidence to back that up, is you cited a 2009 American Public Works Association and American Council of Engineering Companies study that said, most projects have about a 10% change order cost of the total project. Whereas in QBS, it's 3%. I know, Ed, you run around with some statistic that's mind blowing about scope creep, and cost overruns. But this seems to be really good at controlling that. Do you think, Leah, that's because there's better communication and better diagnosis being done up front?

By the way, one of the things I thought of, looking at the list of all the different advantages of QBS: It lowers cost, fosters communication, all these different things that it does. And I was thinking, because QBS is in 47 States here in the USA, what happened with the Obamacare website? I wonder if that went through some QBS process because that was a disaster from start to finish, but that's an unfair question, it’s just commentary on my part. So this report has been out there for a couple of years. Obviously buyers and agencies have to have to buy into it. But I would think there's more onus on the buyer’s side, the client side, than the agency side, since they control this whole RFP and agency search process. Have you seen success in getting some clients, some advertisers, to adopt this model?

It's a great point. Another idea that's been around for a long time, maybe not as long as QBS, is value pricing. In the last couple of minutes that I have you here, I wanted to ask you, how has that been going with agencies? Do you see more agencies adopting what Tim Williams and Blair Enns and what I've been talking about, what we've talked about on the show all this time?

Great point, the billable hour does commoditize the relationship, that's one of the things that's most pernicious about it. It just turns everything into commodities, like you said. But Leah, unfortunately, I'm up against my last break with you, and Ed's going to take you home, but I just want to say thank you so much for appearing on The Soul of Enterprise, it's been a great discussion. And we're going to link to where folks can get a copy of this report (ica.ca/qbs). And if you're at all involved in RFPs, procurement, you need to take a look at this. There's some really fantastic ideas that, by the way, apply to all professions, not just agencies. I can see accounting firms and law firms learning some useful things out of this. So thank you for all of that.

Ed’s Questions: Segment Four

We're talking with Leah Power. And Leah, as you and Ron were talking toward the end of the last segment, this thought came to my mind: We could take this report and cut and paste it and use it to buy accounting software. And it's almost worse, because in the mid-market space that many Sage partners work in, they're not dealing with procurement. It's worse. They're dealing with finance, directly. I did want to ask you this. There's a whole section you have on creating your QBS document, which is great. We don't have time to go through each of them. One I wanted to ask you to explain is you say that price compliance is mandatory but not evaluated. Talk a little bit about that.

And number seven in this list is never request free consulting in a proposal. You talked a little bit about that with Ron, but when I read that section I was immediately reminded of the great scene that Ron and I have played at many presentations with Don Draper and Conrad Hilton, from Mad Men. [Connie’s] basically asking for one for free? And Don Draper has that great line, which I've encouraged others to use, “Connie, it's my profession. What do you expect me to do?” And I really love that, and I really wish that far more professionals would have the self-esteem to be able to say that and stick to their guns about it. They think they have to give away something for free in order to prove their worth. And I think if you withhold it, that is what is actually proving your worth, which is what the great Don Draper does.

We've got about four minutes left. And you and Ron were talking during the break about the possibility of bringing a subscription-based pricing into the mix here. And you said that you were a big fan. I want to hear more about that. Do you think that would be another potential either solution to this problem, or tool in the in the belt of agencies, to be able to use subscription pricing for some of this stuff?

It's similar in a way to the space that I'm in with ERP software, and what most buyers think they're buying is a transaction, they're buying the implementation of the new system, or they're buying some creative work from an agency. But the good ones know that, long term, it's more you're buying a relationship, not just the initial thing that the RFP was sent out for to begin with.

Well, outstanding. Leah Power is the editor of the QBS Agency Search Guide. We're so happy to have had you on The Soul of Enterprise, Leah, we hope you come back another time.

And Ron, what do we have coming up next week,

Ron

Next week. And we have [Jonathan Stark, host of the Ditching Hourly podcast], which is just fantastic.

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

This week is bonus episode 336 - More QBS and why car companies blew it on subscription

Here are some links discussed in the bonus episode: