Intuition rather than analysis can lead buyers astray, according to Bryan Holmes. The founder of Bid Logic Solutions provides a few examples of how this manifests during a travel management company sourcing project and describes a more measured approach.
A bat and a ball cost $1.10 in total. The bat costs $1 more than the ball. How much does the ball cost? Did you guess 10 cents? You’re wrong, but not alone.
An unsurprising number of people use a mental shortcut and make the same guess. A smaller number of numerate folks, however, stop and calculate the correct answer: The ball costs 5 cents.
Nobel Prize-winning psychologist Daniel Kahneman wrote about this riddle in his 2011 New York Times bestseller, “Thinking Fast, and Slow.” It demonstrates how people often rely on intuition (“fast thinking”) instead of taking time to analyze a problem (“slow thinking”) and how our instincts can lead us astray. It highlights the importance of stopping to think critically.
To find the right travel management company, buyers need a robust sourcing process. But that’s not enough. They also need to account for major, and often invisible, risks: human confidence and intuition.
Here are two real-world examples of how this plays out in a corporate travel management company sourcing project.
In a TMC RFP, it’s common for responding suppliers to either fully answer a question, partially answer a question or address it while adding additional information. The last option can be the most dangerous, as it feeds into “fast thinking” and biases. For example, if a supplier is asked to describe how it will support a company’s sustainability efforts, that supplier may overshare and describe its own sustainability efforts. It may be challenging for the buyer to avoid unconsciously awarding extra points.
By giving a supplier extra points for something you didn’t explicitly give other suppliers the same opportunity to address, you’re not rationally comparing suppliers on how they might serve your needs. Rather, you’re intuitively scoring them on how well they can sell themselves to your company.
Let’s consider another familiar situation. I love data. I love data dashboards even more. So do a lot of travel managers and TMCs. But do they matter? I believe the answer is undoubtedly “yes and no.” It depends on whether your organization will productively use a dashboard.
What happens when a a major stakeholder in your company is bedazzled by reporting dashboards and a TMC does a great job demonstrating its own? That’s right, that TMC gets big points. And if you haven’t taken time — in advance — to think slow and establish the precise value of a dashboard for your company, you’re not rationally scoring suppliers based on how they might serve your needs. You’re using fast thinking to score how well they can sell themselves to your company.
How To Fix Your RFP
Using scorecards at the end of a project is a helpful way to make supplier selection decisions. However, they can be made more powerful if used throughout the project.
If buyers start with it, weight everything on it and make it sticky, they can transform a scorecard into a TMC sourcing superpower. Here’s how:
Start with the scorecard. A funny thing happens at the end of a TMC sourcing project: Stakeholders tend to overvalue what their preferred TMC does well. To avoid this, engage stakeholders to help create a weighted scorecard before the RFP is sent out. This reduces the risk for bias and encourages healthy internal conversations free from the pressure of selecting a winning TMC at the end of the project.
Weight everything scored. Scoring suppliers across different dimensions is beneficial, but it’s important to also weight the relative contribution of each score. By forcing stakeholders to stop, engage in slow thinking and weight everything on the scorecard, they also are forced to consider what truly matters and inoculate themselves against bedazzlement.
Make the scorecard sticky. Running a travel management company sourcing project is more like drinking from a tsunami than a fire hose. Information is coming at you from all directions. Fortunately, a comprehensive scorecard, created and weighted ahead of time, gives you a structure, stability and a filter for anything that comes flying toward you.
Be mindful of how fast thinking can misguide us. By doing so, we can reduce the influence of bias and ensure our TMC sourcing process is robust and fair — and based on what truly matters.