Recently, I’ve seen more and more examples of companies particularly large companies accepting poor performance and I see this happen quite often in the costs of delivering things and it’s what I like to refer to as the ‘Boiled Frog Syndrome’.
So you might know the story of if you put a frog into a boiling pot of water the frog will immediately jump back out. But if you put a frog into a cold pot of water and gradually turn up the heat it will boil itself alive and I see this happen in an organisation quite often.
So, what happens is that they’re so used to the costs of things being so ridiculously expensive that they’re unaware that that’s not normal and it has become a new normal for them. I’ll give you an example; I was in a company recently where we were adding a single screen to a mobile app with very little logic built into it and the quote for this piece of work came in at something like £370,000 and my immediate reaction when I looked at that was, that’s an obscene amount of money for the amount of work that needs to happen here.
And when I gave that feedback, the reaction I had from the business was “What do you mean? That’s pretty cheap for this kind of work, that’s normal. That’s what we pay” and this is where the ‘boiled frog’ comes into it because that’s not a normal price at all and by questioning it and challenging it, we managed to get it down to £177,000 so nearly £200,000 saving. But even that revised figure it was still ridiculously high. I couldn’t push it any further at that particular client but if I was to give the same spec, that same piece of work to a small digital agency they’d probably charge me in the region of 10, 15 to 20 grand to do the work because that’s all the work required but we’re so used to seeing things being very very expensive that we’ve become immune to that challenge and I see this time and time again.
So, I think it’s something we need to remind ourselves that we should always look at things with a fresh pair of eyes. Particularly, where costing a piece of work trying to avoid the temptation to compare it to what another piece of work costed and get different quotes.
The other thing you see these days are preferred suppliers or not even preferred supplier but single suppliers where big tech companies and big implementation companies have sown up all the work and so you’re stuck with them the price they quote you to do that is the price you’re going to pay whether you like it or not. I think it’s a great opportunity to have more than one supplier.
If I was a really big organisation I think I would even consider hiring a firm not to do any delivery for us but actually just to provide alternative quoting so that we can see how much of a delta there is between what work really needs and what our preferred supplier is actually charging us for that work. It’s another form of waste that we see in organisations and one that kind of goes undetected by most firms.
It’s another powerful way of looking at your supply and how you can improve performance in your organisation.