Collaboration is a hot topic for organisations within the Life, Pensions and Investment (LP&I) industry. Defined as the “situation of two or more people working together to create or achieve the same thing1”, new collaborative approaches are redefining how employees communicate with each other and work together, how LP&I companies interact and co-innovate with suppliers and ecosystem partners and interact with advisers and end clients to improve the experiences they provide.
Outside of our sector specifically, initiatives range to collaborative healthcare and collaborative policing to new business collaboration tools that support virtual communication, project management software for cross-geography teams and design thinking-based collaborative working practices. In short, we’re all living and working in an increasingly collaborative world.
But what about collaboration in more traditional LP&I business processes, could it work? And would it be beneficial? The answer to both questions appears to be yes.
Sourcing is a prime example. Although it’s still relatively early days, the use of ‘innovation partnerships’ in the public sector is a great example of what can be achieved2. These enable authorities to create flexible frameworks within which multiple new solutions can be researched, prototyped and deployed as part of a single procurement process.
In the world of consulting, I’m very familiar with the procurement process. The trusty RfP (Request for Proposal) – the bidding process where a company, interested in procuring a service, requests potential suppliers to submit business proposals – is a key part of this job. The RfP is also a ‘bread and butter’ process within the LP&I industry, with companies frequently leveraging RfPs to procure new products and services, ranging to full blown new platforms through to discrete services to plug into their evolving ecosystems.
Responding to RfPs can be an extremely challenging process. Rigidly structured questionnaires often make it difficult to understand what the LP&I company really wants. That means the supplier is left asking “what fundamental business issue is the LP&I business looking to solve?”, “what did the company mean by that question?”, and “could my firm propose an alternative service that may deliver greater value?”
Because the RfP is typically a standardized, one-size-fits-all process, bidders often lack the insight into the client that they need to tailor an effective response to any or all of these questions. That means making a tough judgement call: play it safe and respond with what the prospective client appears to want or propose the solution you think best meets their needs (and run the risk of being way off target).
Either way, this makes things difficult for the bidder. And it also means the LP&I company doesn’t always end up with the supplier best-suited to provide the solutions they need. Things don’t have to be this way, however.
A collaborative approach to the RfP
In refreshing contrast to old-school RfPs, we’ve recently been supporting an LP&I client through a collaborative RfP process. The company released an early-stage RfP and the eventual shortlist of vendors worked with them to collaboratively define the final RfP questions – all of that before the RfP was formally issued.
Of course, there was a level of give and take. The various parties involved all needed to commit a fair amount of time: the collaborative process involved a series of workshops between the company and potential suppliers to deep-dive into the business challenge to different business functional perspectives.
The overall consensus? It was time well spent. The LP&I company that issued the RfP was able to adapt its requests based on leading best practice to within the supplier industry. It also obtained invaluable insights into each vendor’s working style, culture and innovation mindset.
From a supplier perspective, the ‘information vacuum’ was removed. Suppliers had a chance to road-test appetite for alternative solutions to the proposal. Crucially too, it also gave each of them the opportunity to evaluate whether the company offered the partnership qualities they looked for in a new client.
That’s a big plus. With the trend towards strategic, long-term relationships, rather than transactional engagements, both sides want to be as sure as they can be (as early as possible) that there’s strong compatibility between the contracting organisations.
The process demonstrated that the LP&I industry, which frequently gets a bad reputation for lacking innovation, has been able to lead the broader Financial Services pack in proving innovative collaboration works, even in the most traditional business process areas.
Expect to see more collaborative sourcing to now on. ‘Request for Partner’ processes are being developed all the time. Recent reports point to the refinement of methodologies for complex and/or strategic engagements, with the University of Tennessee among those publishing approaches to drive momentum in this space3.
It’s time we stopped restricting how we do business by sticking to “the traditional ways of doing things” within LP&I. We know collaboration works, let’s come together to make it happen.