Hello, business developers. Welcome back to another episode of breaking biz dev. If this is your first time here, thank you so much for joining us on this podcast. We like to beat up and break down topics related to business development. My name is John Tyerman, and I'm joined as always by my trusted cohost. Mark Wainwright. Mark, how are you doing today?
I'm well, John. Great to see you today. thanks for the intro there. I hope we have plenty of business development professionals and maybe even wannabes, listening in today. Exactly.
Yep. And, you know, maybe you consider yourself an underdog and you're in the right place because that's exactly what we're going to be talking about today is the underdog effect and why it's killing your business. Mark, you wrote a blog post about this topic. that's linked in the show notes. It's on your website, wainwrightinsight. com. And I'm excited to dive into that. But before we do that, I think in a spirit of this conversation, do you have a favorite underdog story?
Everybody has underdog stories. The, the, the fictional ones, that immediately come to mind for me, pull from, movies in my past. the bad news bears, hopefully the older audience, has, has watched that. It's a fantastic underdog story. I'm certain that I have personal underdog stories personally and potentially even, even, you know, in the workplace, in, you know, in professional situations. I'm sure that, that I have underdog, stories in my past.
I mean, there's, there's many Friday night lights. There's, you know, all those types of movies are, are there, are there any that, that spring to mind? For you, John,
I'm a football guy myself. So, and I'm a commander's fan, unfortunately. So seeing the giants in the super bowl is not something that I typically like to see, but back in 07, when they were facing the 19 and Oh, Tom Brady led Patriots. I couldn't help, but root for the giants in that scenario.
Right, right. It's so funny that the, the, the, it just took hold of you. Right. Exactly. Against your better judgment, you were rooting for, rooting for the Giants, the, the, the one that likely springs to everyone's attention. was back at the 1980 Lake Placid Olympics with the Miracle on Ice, right? Where the U. S. men's hockey team was facing Sweden, I believe, in the, what was it? The semi finals? I think it was Sweden.
No, they were, sorry, they were facing Russia in the semi finals and then they went on to play That's right. Then they went on to play, I think Sweden or one of the Nordic, countries in the finals and, and, and one get your, get your history straight Mark. Uh, and that was, that was a fantastic one. I remember where I was when I was watching it on a, probably a little, little 13 inch black and white television, in, in my, my, my friend's, you know, room. Back in back in the hometown.
So yeah, there's so many wonderful underdog stories, but we're going to talk a little bit about why the underdog story and what we'll call the underdog effect can often lead us astray. Why that can mess with us.
you can't help but root for the underdog in these scenarios. And that's, that's something that we're going to get into. We're going to unpack why that is, but first let's start with maybe some of the numbers, In, in the article that you wrote, you had some interesting statistics on how often underdogs win outright. So can you explain a little bit of what you got going on there?
Sure. Sure. And, and, you know, for our business development friends out there, this is, we're going to bring this full circle back, but I hope everyone is just picturing in their head sort of scenarios of, of, of underdogs, and you know, likely in your professional lives as a business business developer.
Sure. So I. I dug into this a little bit because I saw so many situations in, in, in business development and professional situations where, firms were either seeing themselves as the underdog or approaching some situation, some competitive situation as an underdog. and, that evoked various sort of irrational, beliefs. and expectations and things like that. So I did a little digging into this and I thought, what is behind this whole underdog thing?
And the underdog effect is a, a psychological state, right? It is a, it is a, it is a psychological sort of cognitive bias. and I, I've came across some, some numbers from a guy named Phil Steele, Phil Steele. I believe annually, I believe he still does it. You know, people can correct me if I'm wrong on this, but I think Phil Steele writes this, this, this book that is published prior to the men's world cup. NCAA college football season called, Phil Steel's college football preview.
It's like it's still active. Oh, there you go. There you go. It's still active. And it's, uses numbers and uses data to predict the outcomes of the coming, men's football season. Season, right?
So, at some point, I think back in 2015 or so, Phil wrote a blog post where he wanted to answer the simple question, how often do underdogs win outright, And this is without a point spread and whatever else is, you know, how often do the underdogs, you know, when, when faced with, with certain defeat, how often do they win outright? Outright. And he studied, and I know you love this cause you're a data guy.
He studied, you know, 15 plus maybe 18 years or so of games, over 12, 800 college football games. And he went back and looked at the numbers and looked at the data. And he found that the unfavored team won only 24 percent of the time, even though we're rooting for the underdog to win game in and game out. 24 percent of the time. And then I took it a step further and I thought, so what's, what's really, what could we call an underdog situation?
And in sports you often view an underdog as a team that is, clearly not going to win the game. Sometimes The opposing team is favored by, let's say a touchdown or two, right? That's, you know, 10, 15 points, whatever it is. And if you look at that situation where really you're in sort of a David versus Goliath situation, that kind of thing, the underdog, the true underdog one, you know, 15 percent or less of those, of those games. And that's over, like I said, over 12, 000 games.
so underdogs win outright only 15 percent of the time, right? Right. So, 85 percent of the time they're, they're not winning. So how does this apply to business? What is the underdog effect and how does it manifest itself in business development for professional services firms?
You know, the same rules apply, right? We've got, we're, we're, we're using this, this college football sort of data, this analogy, and trying to relate it back to, to business and business development and pursuing new business.
And a lot of times professional services firms will find themselves in a competitive situation, where they're vying for a contract or a project or, you know, what have you, and sometimes there will be an underdog in the situation and, you know, A lot of times, the, the, the leading firm, the top choice, could be an incumbent. it could be a very large firm. You know, if you think about, you know, an engineering firm, and they aren't very large.
I mean, there's, there's, there's very, very large engineering firms out there that pursue and win a lot of work in various municipalities all over the, all over the country and the, in, in the globe. And they do so because, you know, they have, nearly endless resources. They have, a lot of expertise, tons of capacity, all that sort of stuff. The little guys show up trying to chase after these projects. Now I'm all for, firms of all different types and sizes.
Being able to win projects, you know, from local governments, from private clients, whoever they are, the challenges. And I think one of the big realities in this whole world of business development that we're in is that these pursuits are extremely expensive. That is one of the, I mean, if, if there was no cost involved and everyone just sort of threw their hat in the ring and they were, they were chosen. These, these pursuits.
And people, there's a lot of people listening to that kind of know this, these pursuits organizations will spend tens of thousands of dollars and really big ones, hundreds of thousands of dollars, you know, and obviously the total contract value is somewhat relative there.
But you know, if, if there's an organization that's, you know, your local municipality has a, a solicitation out, and it's worth a million dollars, this contract's worth a million dollars, you could, you could easily spend your margin. You know, on that, on that pursuit. So that's the trick here is that the underdog effect is, is interesting. And, you know, like you and I have said, it's, it's very, very compelling.
And we felt it ourselves and we love to root for the underdogs, but there's a cost factor involved here and that's how it. That's, that's kind of how we bring it back to this whole business world.
What, what I think is interesting to point out too, is this underdog effect can be exacerbated by, you know, certain economic environments, right? So right now, for example, we're in an economic environment where, you know, there isn't a lot of dollars being spent. And so the, a lot of firms and a lot of buyers are trying to mitigate their risks. And so how that plays, plays out is these municipalities who are, sending out RFPs, right?
They're probably more likely to go with someone with the lower risk, which is not the underdog, right? But at the same time, on the other side of the coin, these smaller firms, they need business, right? They need. Revenue. And so that the, the MO is to respond to a bunch of RFPs, right. To go after and chasing those deals.
the word you mentioned there, that's a really interesting term that we can wrap into all of this is risk, right? risk is such a powerful tool that's kind of in play. And to bring back a little bit of the science, some of the research that, that I did in some research that, that others have done this whole risk thing.
with underdogs, we all like to align ourselves and, and support underdogs oftentimes in these sort of competitive business situations, we will often identify ourselves as underdogs, you know, right? So that underdog effect is happening inside of our own organizations as we're, as we're pursuing these, these long shot. Effects, but I came across this interesting, article on, on, on medium, written by, a doctor named, Jonathan Adrian.
And he had this to say, and I thought it was kind of a, kind of an interesting quote. Another area that we often fail to distinguish is the difference between rooting for an underdog and actually expecting an underdog to triumph Right. We may generally Desire an underdog to topple the top dog But we may not necessarily want to bet our money on it. Our hearts may be with the underdog But our wallets are with the top dog. So that was his quote.
I thought it was a really interesting statement, kind of an interesting juxtaposition that says we emotionally will root and support the underdog, which oftentimes could be ourselves. But when it comes down to, placing the bats or assessing the risk, right? We like to go with the heart and mind, right? We go with it. We go with the top dog. We have to set our emotions aside and we go with the top dog.
So, you know, this underdog effect is a really challenging thing for businesses because we're dealing with these emotions that are kind of deep in our belly. And it can have really devastating impacts on our businesses. Right. And the, article that I wrote about this underdog effect is titled the underdog effect is killing your firm. So that's, you know, it, it, it needs to be, people need to be aware of it and you need to understand what we need to do to.
You know, to avoid the underdog effect, or at least as an alternative to kind of walking down the path of this, this, this hazy vision driven by the underdog effect.
So, so let's explore what firms can do to separate their hearts and minds. And avoid falling in that trap of looking at themselves as an underdog. In the article that you wrote, you say time and time again your company is radically and irrationally over investing in long shots while under investing in forsaking existing relationships right in front of you. Is that something that firms, let's expand on that one point. Cause that's really important.
What confirms do to expand those existing relationships?
Right. There's some interesting things that come in there as well. It's, you know, that, that whole, that whole saying of the grasses. Grass is greener idea, right? You've maybe you've worked with an organization, maybe you've had a client for a number of years and it's been going fine. You know them, they know you, but the excitement, you know, the honeymoon of the relationship is in the past. and you start wandering and looking elsewhere, for that spark. Yeah. Right.
That, that new relationship, that, that new, that new contracts, whatever it may be. So totally understandable that people will, will do that. But you know, the, the, the downsides of all of that, are, are huge, right? We've talked about the fact that pursuing new work with new clients is very expensive. We've talked about, You know, these new shiny pursuits that come your way can be a huge distraction from your existing clients and also from your contracted work.
And there's a massive opportunity cost involved in, in all of this. Pursuing new work means that you're spending, you could, you could otherwise be spending those, those hours either doing billable work or serving existing clients. That sort of thing. So, so what confirms do so we can be aware of the underdog effect. We can kind of dig into this and understand what's the science that's at play in our, in, in our minds.
Well, I guess like let's pause there for a second. So what are some signs that you are an underdog?
Yeah, I think that what a few of the very clear ones are, if your decision making process, maybe your qualification process for entertaining new opportunities starts to get clouded. By, you know, this, this, this situation, a lot of times firms will try to create a go, no go process or, you know, some filter, some way to consider new opportunities.
And a lot of times those are done in hopefully a more rational, Way where they're trying to wait certain characteristics of new contracts, new clients, new opportunities in a more, in a more balanced fashion. what happens when the underdog effect comes, comes along is that a lot of that rationality just goes right out the window, right? So you start cutting corners in the go, no go process.
Sure. It's almost like you're, you got to sell not only, To the prospect, but then internally as well, you're like doing double sales
duty. No doubt about it. selling internally happens all the time, particularly with pursuits that are kind of long shots is that, you know, you have to, you start to try to invoke people's emotions and energy and enthusiasm. and more than likely there's some rational people in the organization saying, why, why are we doing this? What, what is the deal?
And so they can be the canaries in the coal mine. Okay. So there's, there's maybe, one example. So first red flag is if you're cutting, cutting corners on your go, no go process, maybe you've got a murky ideal client profile, and maybe you're making them. consolations to that and tweaks to that as you go. So that could be an, a sign that you're falling into the underdog. Right. Okay.
I think another is when you come to, you see very clearly in your pursuit process, because a lot of times you're putting together a proposal document and then you're hopefully going to pursue, you know, move to an interview. You will find that when you are assembling these. These documents or preparing for an interview is that you don't know the client well enough.
They're new to you, you chased after this as an underdog, you didn't do sufficient homework, and you don't know their ins and outs and their ups and downs, you don't know their preferences, their priorities, what's most important to them right now, What do they like when they work with consultants like you? What don't they like? So you have a very shallow understanding of the clients in the work.
So you start applying a lot of your kind of typical sort of boilerplate to your proposal, your approach, that sort of thing. It's not bespoke. It's not customized. and the, the prospective client can see right through that. Okay. Right. They can, they can see the underdog show up. They're like, Oh, great. We have a new entrance in, in, in this, but it's very clear to us in this proposal that they've written that they don't, they don't know us.
They haven't taken the time to get to know us and our organization, our ins and outs. And, it comes out very clearly in this proposal. They've they've sent.
That's interesting. You'd think that as an underdog understanding. That about your firm and in your relative to the other firms who may be bidding on the project that you would take that that extra time to go out and try to understand what that prospect values.
Well, I think what happens is firms will overvalue their what they believe to be their unique. Approach. So they, but it's not a differentiator. It's not a, it's well, or it's not enough of a differentiator. and I believe, you know, on balance, what you're, given a strong approach or a really deep understanding, my bias is always towards a deep understanding.
You know, because the deep understanding yields this, this acceptance and this welcoming from the, the prospective client that says, Oh, you guys really, really understand us. Now let's roll up our sleeves together and get, get into solving this problem together. So I think firms will overweight their Their approach, because they think they have some unique spin on the potential project, they believe that they can apply their expertise in a particular way that differentiates them.
but they haven't built the foundation. They haven't, they haven't built this approach on top of a firm, a firm understanding. So that's, that's critical, right? So that's, that's one of the, that's one of the, it's another leading indicator that you're quite possibly being impacted by this underdog effect. Okay.
So let's say that you are, as a firm, as a business development professional, you are aware of your status among firms that have thrown their hat into the ring. What, what can you do apart from, so you've gone out and you've talked to your clients, you've got a better understanding, what's next?
Right, so in a competitive situation, if you're clearly an underdog, I think people just need to, to, to back off, just say, Hey, this is not, this is not a winnable situation for us. Let's, let's, let's draw some wisdom from Phil Steele. And, you know, since underdogs only win 24 percent of the time, let's, let's not chase after this and let's spend this time.
Some other way and a fantastic way to do this is, you know, go talk to your existing Customers out there and go talk to your existing clients ask them how things are going how they're doing ask them how? Happy they are with the work that you are doing with them ask for you know solicit feedback Ask them really good questions, about your relationship, about how the work, is going.
If there were any issues that arose in previous contracts, previous work that you did, what were they and, you know, do we need to, to revisit those things? Learn everything we possibly can about their business, what their priorities are, what their plans are, all that sort of stuff.
So instead of investing the time into pursuing new pursuits, you're taking that same amount of time and you're reinvesting that into your existing portfolio of clients.
Exactly, exactly. So we need to kind of double down on the time we're spending with these existing clients so that we can move, and hopefully we've already moved there, but if, if we haven't, we can shift from. Being a vendor, you know, to being this sort of trusted, trusted advisor level where when clients have issues or challenges or needs, they pick up the phone and they call us. So that's, that's ascending to that, that level, that, that deeper, deeper level.
you know, moving to that deeper level with the clients. And, and what we really want to do is ultimately develop these long term mutually, mutually dependent, mutually successful relationships. We want to care about each other. You know, we want to develop professional relationships by and large, you know, feel like really good personal relationships. As well.
And the time spent on these long shot underdog pursuits, you know, could yield a dramatically better return if they're just spent more wisely, if they're reinvested in the, in the, the organizations that we know.
Well, I think becoming a trusted advisor as an outcome is, is absolutely something that will happen by investing that time and understanding. I think another thing that could happen as a result of that. Is you have a better sense of who your best fit customers are, right? Is because you're having, you, you have this understanding of your clients. Maybe you can take a look at your notes across your different, across the clients in your portfolio and say, okay, what are the common themes here?
What did we learn? And then how can we apply that to the new pursuits that we're going after?
Yeah. Great, great point. All this leads back to, in the statement you just said, all this leads back to a need to really focus. which is oftentimes so difficult for professionals, creative professionals, who want to do a diversity, of work types, project types, you know, they want to want to work on all different types of, of contracts being focused is sometimes. Sometimes challenging, but so much more beneficial, right?
You get better at something, you can do it more effectively and more efficiently, your profit increases, your clients regard you as a true expert in in these focused areas. All those things are are really positive, positive benefits of focus. And that's really effectively what we're talking about here is that anything that sits at the edge of your expertise, anything that's a real long shot, Maybe just, just reconsider that and kind of redirect your, your, your energy.
I don't think that chasing after new opportunities, is a terrible thing. I think if firms want to expand their service areas, expand their expertise, expand their geographic reach. Sometimes you find yourselves in a situation where you have to. To, to stretch a little bit, but it's just these overwhelming competitive situations that you are clearly the underdog. Maybe that's not the best place to do it.
I think a lot of times it's, it's one of the best ways to expand your expertise, your geographic reach, whatever it is. is to work with existing clients and have them take you there. That happens again and again and again. You know, if, if your existing clients have a, have a new or emerging need, if they want to expand their business geographically or whatever it is, and you've become a real trusted consultant, a really trusted advisor, They'll take you there, right?
You can kind of go along with them. And that, I think, as opposed to a really competitive underdog situation, that scenario is a much better way to kind of expand and grow your, your expertise and your reach, that sort of thing.
All right. Well, to recap, the underdog effect. is a phenomenon that happens where we want the, the underdog to win, although the numbers don't bear that out. So about 24 percent of the time, the underdogs win outright, long shots. It's even less than that. And as this applies to a professional services firm, go out and understand your best fit clients. Go out and understand, what makes them tick. so that you can provide better service for them.
And then along the way, you understand the kinds of firms that you are best equipped to help.
exactly. And we all love. An underdog story, but let's do everything we can to keep it out of business. Go, go grab your bucket of popcorn and sit down in front of your favorite screen and, turn on, the mighty ducks or Rudy or Friday night lights, or, if you're up for it, the bad news bears and enjoy a wonderful, heartwarming, underdog story, but just leave that at home for work. Let's stay focused on these, these current clients and things that have a radically higher chance of success.
Well said Mark.
All right. Well, thank you so much for this conversation. Folks that are listening to this, go check out Mark's blog post. It's linked in the show notes below and Mark until next time, until next time, John.