Big business want to get value for money for the services they bring in from contractors. Small business want to provide that value. So why is it that big business keeps hiring other big businesses for contractual work, and complaining about the lack of value they receive?
One answer: procurement.
Procurement processes are set up (supposedly) to protect the interests of big businesses by forcing contracting agencies to show proof of capability via a record of revenue generation and liquidity. And that might make sense where big business needs a contracting agency to handle scale of production of widgets.
But in most cases it doesn’t make sense for the delivery of services. Yet firms use these widget-oriented standards repeatedly for services, merely in order to tick a box in risk management activity tracking. They do this in spite of the fact that shorter term consultancy projects with small, agile players might suit their immediate needs. Further, trial contracts, very short term projects and cultural fit tests could be a much better test of capability for small businesses than most procurement paperwork hurdles.
Ironically, big business is beginning to understand that you need to embrace risk to innovate, to invest profitably and to source talent. It’s just in procurement that processes are still strangling value at birth.
Procurement sucks because big business doesn’t understand that when you take the risk out of buying, you narrow your opportunities for value creation. But if you’re prepared to change the way you buy, opportunities abound.