Is there such a thing as too much due diligence? Dictionaries define it as “research and analysis of a company or organization done in preparation for a business transaction.” Some people love the act of researching a purchase. They’ll spend hours investigating a $50 gadget before they commit. On the other end of the spectrum are those who leave with a $50,000 car an hour after walking into the dealership on a whim.
Most of us fall somewhere in between. But then there are those who seriously overdo their diligence (pun intended). Diligence should end with a ‘yes’ or a ‘no’. When it ends with inaction, or a never-ending ‘maybe’, damage is done to the business.
As a vendor to the printing industry, I get a front row seat to all kinds of purchasing and investment behaviors. The one that puzzles me most is when people “overdo” diligence. You could also call it the “wait-and-see attitude.” These two quick stories illustrate the dangers of such an approach. Both involve Technifold products but that’s not what’s important. What’s notable is the effect the attitude had on their printing or print finishing business.
Twelve years ago a print shop owner called me to discuss our then-new product, the Tri-Creaser®. I knew from experience that if our creasing products took off, it would change how printers compete. Printers simply wouldn’t ignore a way to eliminate outsourcing. Plus they’d jump at the chance to combine separate operations into one in-house, high-speed operation.
After a few months of probing and questioning he finally said, “I’ll wait and see what happens.” Fast forward five years and this same fellow calls to admit, “You know Andre, you were right. All my competitors now use your products and I can’t compete the same way I used to. I’ve lost lots of jobs and profit over the years. Send me two of your Tri-Creasers.”
At a recent Graph Expo a printer stopped by to confess she had first looked at our products over 10 years ago at our first trade show. She too had done plenty of due diligence all those years ago. I asked how her wait-and-see approach was working. She shook her head and pulled out her credit card. Over-cautiousness caused nothing but 10 years of headaches. Customer complaints and re-work had taken its toll.
This is not an unusual scenario. It happens on a regular basis. We see a steady trickle of eventual customers who struggle with print finishing problems for 5-10 years after their first contact with us.
Why do so many of us succumb to such “analysis paralysis”? Here are five common reasons why diligence gets detoured from its final destination.
Fear of failure
This is a tough one to overcome. After all, from our earliest days at school we’re taught to pass tests and avoid failure at all costs. Naturally we don’t want to commit to a purchase only to find that it fails. We feel it’s a reflection on us personally.
The reality of business is different. Progress is measured in failures. Printing salespeople have to go through a certain number of “no’s” before they get to a “yes.” Marketing people test advertising campaigns until they find one that succeeds. Inventors create machine prototypes and do beta testing until they find a version that works the way customers want.
Failure in this sense is a good thing. Mistakes and failures will always happen. The key to success is to get the mistakes out of the way sooner rather than later. Learn to fail faster.
To be clear, we are talking about failure as a part of business development, and not failure as part of production operations. We don’t want to fail during production. It’s costly. Of course there will be production failures. When it happens we should use them as opportunities to improve the production system.
Asking the wrong question
Too many people start (and end) with “What does it cost?” instead of “What is my return on investment?” When cost is your sole consideration for a purchase, opportunities are lost. Proper due diligence hasn’t even started. The problem that caused the search for a new tool, machine, or software still remains. Complaints, re-work, job rejection, and customer losses cost money.
Also the perception of cost is extremely subjective. A number that feels high to one person is low to another. Return on Investment removes the emotion and begins the due diligence process.
Being insulated from the customer
Bureaucracies slow things down. When there are many layers between the decision maker and the customer, there are often different priorities with each layer. In small companies almost everyone’s job is closely tied to “How do we satisfy this customer at this moment?” In a bureaucracy, one person’s priority might be to protect and increase the budget, another’s is to manage operations, another to interact with other departments.
A purchase decision might involve multiple departments and agendas. I’ve watched people from in-plant printing operations suffer by avoiding the purchase process for years. Only when the pain of poor results on the front lines reaches up into the higher levels is the purchase made.
Inertia or Procrastination
Here we have every good intention of acting on an issue, but daily chores and the status quo keep new things from happening. In a busy environment the easiest thing to do in response to a problem is sometimes nothing. Take care of business, send jobs out, assign complaints to a colleague, etc.
Yet doing nothing can also be a costly approach. When you give up a pro-active stance, your problems take control and set your agenda. They don’t just disappear. You have to forcibly carve out time to finish your diligence process. Get to the “yes” or “no” before they get to you.
Perfectionism
The perfectionist wants the perfect solution to his or her problem. The searching and questioning go on and on. The problem with this approach is that you can always find a reason not to commit to something. Time is wasted, productivity suffers, opportunities are lost, and perfection is never found.
Years ago I heard a saying that helps me combat perfectionism—“Good enough is good enough.” This doesn’t mean your effort is bad or average. It means that you’ve done your research, put in your best effort, this looks like a good decision, and it’s time to make something happen. Yes, we always strive for perfection but we should never let it stop things from moving along.
The Power of Action
The majority of our customers move quickly through diligence and into action. The numbers seem to back this up when I compare our customers to the entire pool of print service providers. According to the US Bureau of Labor Statistics, in a recent two-year period 7.9% of all private printing companies in the USA went out of business.
During that same two-year period, only 1.3% of our active customers went out of business. In other words Technifold customers are part of a group that has a negligible chance of going out of business. I believe it’s a reflection of their action-oriented approach to business.
They don’t wait to see what happens. They do their research, take calculated risks, and have a pro-active culture of constant improvement. And that is what keeps them in business.
Today, all good vendors remove the risk from any transaction. Most will allow some sort of testing coupled with a return policy. For instance we offer first-time customers a full, one-year, 100% money-back guarantee in addition to a 30-day free trial. Such guarantees remove the risk of failure. Good vendors also answer questions and address return on investment.
For your own sake, don’t get stuck in “overdo diligence” or analysis paralysis. Do your research and keep things moving.
Have a comment or diligence story to share? Let us know in the comment box below. And be sure to share the article with your colleagues.
