Eye on the States: Don't get tripped up by these market traps

Thomas Davies

Every market has its sand traps, and state and local is no exception. Try your best to avoid these situations:

Trap 1: "Just because you can, you should." State and local customers are very accessible. The closer you get to local government, the greater the access to senior executives and policymakers. But just because you can get access doesn't mean you should.

Too often companies believe that rubbing shoulders with the head honcho is what it's all about. Access has its limitations and pitfalls.

In some governments, selling at the top may jeopardize your chances of winning the business where it needs to be won -- in the trenches. After all, it's the users who will have to live with whatever selection that is made and who will eventually determine the overall success of any project.

You may bypass them in the short term but only at your long-term peril.

Trap 2: "It's all politics." The late Rep. Tip O'Neil (D-Mass.) once said, "All politics is local." Some people take this to the extreme, operating on the view that everything in state and local government is political.

It's naive to think that politics doesn't play a role, but the trap is in believing that by playing the political card, you can always get decisions to go your way.

Politics won't help you out of a non-performing contract. Your campaign contributions will not keep you off the front page if you fail to compete within the rules.

Even the best companies, at times, have overplayed the political card and lived to regret it.

Trap 3: "Bad press happens to the other guy." Some companies in this market do lead a charmed life -- at least for a while. They skate by with favorable stories about their businesses. But there isn't a leading technology company in this market that hasn't been on the receiving end of negative press at one time or another.

A transgression, a contract performance failure (which at the federal level could easily get buried in a General Accounting Office report) and the next thing you know, it's on the front page of the local newspaper. So grow some thick skin if you want to do business in this market; it comes with the territory.

Trap 4: "If it's not working, cut your losses and run." If you stumble in this market, it can be tempting to cut and run. Why not just pack your bag and move to the next government down the road?

State and local governments have long memories. They don't have formal past-performance, source-selection criteria like the federal government, but they do have informal, peer-to-peer grapevines that are just as effective, if not more so.

These governments can be very forgiving when problems arise if companies stay and work through them. What they won't forgive is a company that sacrifices customer commitments for short-term financial gain.

Trap 5: "The state and local market is a single, unified enterprise." You would think because these governments serve the same citizens, report to the same executives, are held accountable by the same elected officials, get their funding from the same sources and share common missions that they're all part of the same enterprise. Most of this isn't true.

There are some enterprisewide administrative services, such as human resources, but unlike their federal counterparts, these agencies are rivals in a zero-sum game for funding. Look no further than the struggle between police and fire departments over homeland security funding to see the infighting at work.

Thomas Davies is senior vice president at Current Analysis Inc. in Sterling, Va. His e-mail address is tdavies@currentanalysis.com.

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