Let’s fix the RFP process…
a thought inspired by Joe Rogan
As some of you know, I like to run. When I run, I listen to a podcast, or music or just think. This weekend I did a bit of all three.
I was listening to a few hours of Joe, and he talked about the scoring system for Mixed Martial Arts (MMA) and how it replicates the same system used in boxing. You get 10 points if you win the round and 9 points if you lose. I don’t know the finer points of MMA, so that system seems ok to me. (If it worked for boxing all these years, surely it will work for MMA, right?). But Joe and his guest felt differently and made it clear that it doesn’t. Though MMA and boxing are similar, they are different in many aspects, which is why they emphasized that MMA needed its own scoring system.
As I plodded along, I got thinking. The RFP process was designed decades ago by financial institutions to onboard legacy technology vendors. But it’s not designed to onboard the newer FinTech start-ups.
The RFP process is painful for both financial institutions and start-ups.
It takes too long and is optimized for not getting it wrong, rather than getting it right.
So let’s fix it. Let’s work together to make it better.
What is the main issue? The main issue is that the template for an RFP was written
decades ago, and we are still using that same outline today. It has also become a box-ticking exercise rather than a value-added process.
“We need a new vendor”
“Ok let’s do an RFP”
It’s a knee-jerk reaction. New project? Let’s do an RFP.
But we use it because it is there, not because it is the best solution. It takes months to create an RFP, months to send it out and allow the vendor to fill it in, and months to analyze.
It’s often a one-year process to get to the starting line. It’s being used as a risk mitigation strategy. When things go wrong, the fallback saying would usually be – “Well, we did an RFP”.
Don’t get me wrong, you do need to minimize risk, and the tool you have now is an RFP.
So what is the alternative?
RFP V2. Requestfor Partner.
A one-month, two-way selection process.
It must be a partner you are looking for. We have to end this one-sided mindset.
Financial institution (FI) selects start-up. Start-up selects FI. Imagine that. Both get to choose. Then you start work in an environment of partnership, not them and us. It can be done. We did it with Standard Chartered. It was very clear it was a project of equals. They know finance; we know tech. Think about it. Who knows more about the tech? FI or the tech company? So why does the FI have sole rights over who to choose? Makes no sense. Ultimately the FI does choose but if it’s a two-way discussion the final output will be better.
Remember we are optimizing here for the best final deliverable.
Here’s what we need to do:
- A centralized database with all the ‘standard’ RFP questions. Security, Finance, Tech standards, History, References, etc. Each start-up has the responsibility to ensure its data is updated. It is on them. If a start-up does not have one of the criteria, then the FI can make a judgment call. Risk and reward. This step is critical and should eliminate so much of the repeatable work that is done each time.
- A month of discussion, evaluation, show and tell, and selection will be structured to enable the FI to select its partner
The FI will simply and concisely outline the project based on what they believe the best outcome could be (always optimizing for the outcome). The start-ups review and comment on how to improve the outlined project and why they should be shortlisted. The FI and start-up will do this via a 30-minute video submission using Loom – just like this.
The FI then selects 4 start-ups, via the video and centralized database, to go to the one-month selection. They will meet with the 4 start-ups and look at the product, team, and their previous deliverables. They will also take in feedback from the start-up on how the project can be improved to get better outcomes. The FI then interviews the start-ups and vice versa. Any FI that won’t do that, doesn’t deserve a partner.
From this point, the FI lets one start-up go each week till they have the final two ready to participate in an in-person interview. By the end of week four, the FI can choose who they want to work with. It’s optimized for the best outcomes and it’s a win-win.
But how to get this started?
We will build a Google spreadsheet with all the templated centralized RFP standard questions. We will produce a full 30-minute example RFP video you can use. Feel free to use the example of the video submission in this link, as mentioned above. You just need a subscription to Loom.
If you want the RFP question database and video links DM me here.
Better process. Less time, cost, and pain. A better outcome for all.
Founder & CEO