The Seventh Wave


The Seventh Wave

“Life can only be understood backwards, but it must be lived forwards.” Paul Rogers looks back at the waves of disruption affecting procurement, waxes his surfboard and prepares to ride the seventh wave.

Death of a salesman 1950 - 1988
We can characterise the business-to-business sales process during this period in terms of a proactive salesperson targeting the budget holder or Very Important Top Officer (VITO) and pitching their value proposition directly to the decision maker. If there was a purchasing person involved, they would raise the Purchase Order long after the deal had been done. Of course, there would be some exceptions to this generalisation, but I will characterise this period as a time of “selling to”.

The First Wave 1988 - 2015
The post-war dominance of relationship-based business-to-business sales processes was disrupted in the 1980s with the emergence of professional sales strategies. Two methodologies warrant attention; SPIN Selling and The Challenger Sale. SPIN Selling involves a proactive salesperson and a reactive prospect. Of course! But at least it recognised that the prospect has needs, though the salesperson is needed to ‘help’ the prospect to define their needs. What does that say about the role of procurement people?
The Challenger model is best understood by reference to the subtitle of the 2011 book that launched the approach. It reads “Taking control of the customer conversation”. Not much room for an empowered procurement team there! The Challenger model also assumes a proactive salesperson interacts with a largely passive prospect. A key difference between SPIN Selling and the Challenger Sales model is that in the Challenger model the salesperson acknowledges that the prospect may already have developed an understanding of their needs and understand the market. Remember the matrix based approaches so beloved by procurement folk were first published in the 1980s and this is just 30 short years later. We can characterize the first wave in terms of increasing professionalisation of sales practitioners beyond the ‘relationship sell’, but it is a still a drama with no role for procurement practitioners.

The Second Wave 2000 - 2015
The second wave of disruption affecting business-to-business sales processes didn't happen in the sales function at all. It happened in procurement departments in larger corporate and public sector organisations. Investments in procurement capacity and capability and the implementation of procure-to-pay systems which hardwired procurement governance created the preconditions for ‘buying from’ instead of ‘selling to’. Sales strategies focused on VITO and budget holders were identified as ‘maverick behaviour’, and procurement teams increasingly took control of their organisation’s procurement process.
Of course, some VITOs still did their own thing, but the timing of procurement decision-making, the selection of which stakeholders were involved, the definition of needs, the specification and the selection of bidders all became decisions for the client, not the sales organisation.
The emergence of professional procurement disrupted the business-to-business sales process into the business-to-business procurement process.

The Third Wave 2015 - 2022
The Third Wave began in the early 2000s when the originator of SPIN Selling (Neil Rackham) authored a book called Rethinking the Sales Force with John DeVincentis. While there are still some sales teams who deny that their roles are changing, the emergence of ‘buying from’ instead of ‘selling to’ meant that progressive sales teams had to refocus their effort using the segmentation methods so beloved of procurement practitioners. If it is premature to ascribe the First Wave to the emergence of professional procurement, the Third Wave is 100% the consequence of professionalisation of procurement.
Proposal management has been around for a long time, but as RFPs became increasingly important as a way of winning work, more and more sales teams recognised the need to develop capacity and capability in proposal management. The point is that the business-to-business procurement process has changed how organisations organise and resource their sales processes.

The Fourth Wave 2022 - date
The Fourth Wave is happening right now. It involves the adoption of Artificial Intelligence (AI) by proposal teams and it is changing both sales and procurement processes. To understand why, let's classify the content in an RFP response into three types. Type one content is content that does not change from bid to bid. This might include quality frameworks, risk management frameworks and other governance that is not updated for each proposal. Type two content is content that may be configured for different proposals but is substantially the same from bid to bid. Case studies would be the most obvious example. Finally, type three content is content that is originated specifically in response to an RFP question. This might involve designing a bespoke solution for a particular client's problem.
This is both a challenge and an opportunity for proposal teams. The opportunity is to use AI to accelerate the creation of draft proposals using a library of draft content. Type one and type two content can be configured quickly, focusing the proposal team's effort on originating type three content. The challenge is that machine learning models need training data. Lots and lots of sample proposal responses. Where does the training data come from? There are two potential sources of training data. The first is previous proposals developed by the organisation and the second is public domain information that can be scavenged from competitor’s websites.
This might include quality policies, risk management frameworks, etc. Critically, what it won't include the is type two and type three content from competitors. But it will be relatively easy to train on type one content. The way the training will work is that the model will be taught that content A is poor and will score 3/10 or 4/10 in evaluation. Content B is average and will score 5/10 or 6/10 and so on. AI solutions will produce content designed to score 10 /10 and will incrementally improve the content to approach that goal.

The Fifth Wave 2024 onwards
Imagine that multiple bidders all train their large language models using similar content. What do you think will happen next?
The AI-generated content will progressively converge until submissions from different bidders are virtually indistinguishable.
In the past type one content might have been scored in a range from 5/10 to 8/10 during RFP evaluation. It is likely that the range will compress so that there might be a range from 8/10 to 9/10. For type two content there may also be some convergence, as the AI algorithms progressively align content to the evaluation criteria of the prospect. This means that clients who share their evaluation criteria will get back responses with exactly what they are looking for. Result!
The consequence will be that some content of written RFP responses will no longer be a discriminator between respondents

There may be a gap between respondents who use AI as part of their proposal generation and respondents who do not. For those respondents who do use AI as part of their proposal management solution, content generated by large language models will increasingly converge, and the difference in quality between responses will be within the margin of error for the scoring and evaluation process.

The Sixth Wave 2026 onwards
My contention is that AI-created proposals will reduce the effectiveness of scoring of written submissions in support of proposals because of two key processes. The first is the ability of large language models to generate content which gives the client exactly what they are looking for. Well written easy-to-navigate proposals which ‘tick all the boxes’.
What the evaluation team is scoring is the quality of proposal writing, not necessarily the underpinning capability of the organisation submitting the bid.
The second process is the progressive convergence of AI-generated content, undermining the ability of documentary evaluation to distinguish between respondents. What is the point of spending hours, days or weeks evaluating written submissions if the respondents all score between 75% and 80%? Is that “clear blue water?” Is it unrealistic to anticipate that other forms of evaluation will become disproportionately important? Interviews, presentations, reviews of past performance, site visits and maybe even client testimonials. The RFP evaluation process will be disrupted just as surely as professional procurement disrupted the sales process in the Second Wave.

The Seventh Wave 2028 onwards
I suspect that AI-driven RFP evaluation solutions will emerge, if they haven’t already. There may be little point in scoring type one content as the differences between competing submissions may be minimal. Such content may be evaluated on a risk-rated basis, or simply pass/fail. Many procurement teams rely on third-party compliance providers such as Avetta. An ‘adjacency’ for compliance providers is not only to host documents, but to evaluate the submissions against a common framework using a panel of subject matter experts. Imagine the savings if every client inviting proposals from (say) facilities management providers agreed to accept the scoring of each company’s governance library by an expert panel instead of reading and scoring multiple sustainability frameworks, environmental frameworks, gender equality frameworks, quality systems, risk management frameworks etc
The time saved could be better deployed in interviewing the proposed delivery team, exploring the feasibility of the proposed solution, validating that the claims made by the proposal writers are supported by evidence in the field and, of course, negotiating mutually acceptable terms.

No hoverboards here!
“Prediction is very difficult, especially if it's about the future!” I tried to envisage the near future for business-to-business procurement processes without resorting to stale old cliches such as showing procurement practitioners on hoverboards. Instead, I went for procurement practitioners on surfboards, riding interacting waves of disruption. But what do you think? Let me know in the comments!