All posts by Gordon Donovan

Well-known to the UK and Australian procurement community, our Procurious guest blogger this week is Gordon Donovan – Principal Consultant to The Faculty’s Training and Capability division. The first in a series of guest blogs, Gordon will be unpacking the news and providing us with a ‘what this means for procurement’ viewpoint.

With 25 years of procurement knowledge and expertise and a vastly experienced trainer, Gordon has designed and delivered accredited and non-accredited programs covering the full range of procurement and commercial skills programs, including: procurement strategy development; sourcing; cost management; negotiations; risk management; source to contract; supplier relationship management; market and supplier segmentation; and category management.

During September, October,and November Gordon will be running Category Management Accelerator and Negotiation workshops in Sydney and Melbourne, Australia. Learn more about the procurement training programs Gordon delivers here: http://www.thefaculty.com.au/capability-and-training/open-training

Gordon is also a Fellow of CIPS and an active member of CIPS Australasia. A keen supporter of Manchester City and Hawthorn football clubs. He enjoys the fact that both teams he supports seem to be doing quite well at the moment! For his non-sport, non-work downtime, he and his wife enjoy entertaining their young son and friends generally over dinner and wine!

If you found Gordon’s insights valuable, why not reach out to him directly via his network on Procurious and follow him on Twitter @gdonovan1971

In Search of Influence – The Traits of Influential People

With an understanding of what influence is, and how procurement can leverage it, we can now look at what the common traits of influential people are, and how to develop them.

Influential People

In my previous article, I reviewed some of the available literature on influence and influencing skills, in this article we look at what the key traits of influential people are, and how to best develop these skills ourselves.

These key traits and ways to develop have been identified following a range of discussions with a variety of procurement leaders.

1. Excellent Communication Skills

The most important trait to of influential people was the ability to communicate effectively. An example of effective communication was described as, “when they spoke to a room, it felt as though they were personally being addressed”.

This ability to communicate to many people, and make each person think that the message is for them, was identified as a key communication skill.

The research identified that there are different aspects of excellence in communication skills, which can be summarised as:

  • Develop and adapt communication plans based on the listener

When developing communication plans, it is imperative to consider how the person being communicated with likes to receive that communication. This then drives the method of communication – be it face to face or electronic, as well as the actual content. This adaptability of communication is again one of the key traits of influential people.

Goleman[i] suggested that effective planning specifically for the individual is a critical success factor for effective communication.

  • Make persuasive arguments

This links to making points in specific language that the listener understands. In other words, when making persuasive arguments, influential people spoke the language of the listener, rather than their own procurement language.

  • Listen to the responses and read the room

Listening and active listening is a key trait of an effective communicator. That it is more than what is being said that makes an effective listener.

2. Delivered results and built trust

The need to deliver on the promises that have been was seen as a ‘ticket to entry’ to a wider discussion. Therefore the ability to keep ones promises, i.e. contractual trust[ii], was identified as a non-negotiable to build trust both for the individual and the function.

The leaders influence increased within their businesses the more they delivered either on bottom line savings or on specific projects that they were asked to deliver.

3. Top influencers have empathy (and not sympathy)

Sympathetic listening is defined as how we care and show we care about the other person, and that we pay close attention and maybe share their feelings. Whereas when we listen empathetically, we go beyond sympathy and attempt to seek a fuller understanding of how others are feeling.

Empathetic listening means listening to the responses and asking more questions to understand the points made, which requires excellent questioning and close attention to the nuances of emotional signals.

4. The best influencers have great knowledge and great passion

Top influencers need to have credibility in order to be considered influential. When reviewing top influencers, all of those people had “been there, done that”, and were able to bring a huge amount of experience and credibility.

This referencing of credibility has an interesting link to the French and Raven work on expert power[iii].

Having passion in the field in which the influencers excel, be it procurement, or other topics, allows the influencer to demonstrate knowledge about their subject matter, which will increase the ability to deliver great outcomes.

5. Network and built great teams

The idea of networking with other senior leaders and influencers is an important leadership development tool. Harvard Business Review identified networking as operating at three levels, Operational, Personal and Strategic.

In order to be an effective influencer, the procurement professional needs to operate at all three levels.

How to Develop Influence

So if these are the key traits of influence, how do we go about developing these skills?

  • Observation is king

The number one thing that influential people do to develop their skills is the observation of others, especially those that they felt were influential.

This is then internalised by the individual to consider what it meant to them, and whether they felt it was something that they could do themselves, or something that they did not wish to do, or could not apply to their own style of influencing.

Top influencers have stated that they learnt as much from bad influencers as good ones, as this leads to things definitely not to do.

  • Training programs can add value…but need to be linked to on the job development

Attending a specific training program can provide lightbulb moments in terms of developing influencing skills. Many top influencers stated that this was unlikely to be a “learned skill” from a textbook, but more of an acquired skill through observation and mentoring.

This seems to add credence to the 70-20-10 learning methodology[iv], its application for active learning programs, and the use of formal mentoring or coaching activities.

  • Feedback loops from trusted and diverse sources

The requirement for an independent person to review performances and give detailed feedback on what was done well and not done well was considered to be a key ingredient to developing these skills.

The trusted sources could be a mentor, either formal or informal, potentially someone that the individual trusted or rated as a top influencer. Some have also mentioned that having a different diverse perspective in giving this feedback was a great way to develop skills, both in general and in relation to the topic of influencing.

  • Practice makes perfect

The need to practice the new skills when they had learned them links back to the earlier identified method of more on the job based training, or more planned activities following specific training programs. Top influencers have stated that the more they practiced and prepared the better they got.

Summary

  • There is a need to identify who you are trying to influence and decide on the best way to influence that individual.
  • This means that the practitioner needs to have multiple ways to influence rather than rely on the same approach for all.
  • If you want to develop your influencing skills then there is a key need to understand the way you process information and learn new skills.
  • Observational skills are paramount to increasing your influencing skills.

[i] Goleman D (1998) Emotional Intelligence: Why It Can Matter More Than IQ; Bloomsbury Publishing

[ii] Sako M; Does trust improve business performance? London School of economics 1997

[iii] French, J. R. P., Jr., & Raven, B. H. (1959); The bases of social power. In D.Cartwright (Ed.),Studies in Social Power (pp. 150–167). Ann Arbor, MI: Institute for Social Research

[iv] Kajewski K, Madsen V, (2012), Demystfying 702010. Deakin Prime

In Search of Influence – What the Literature Says

Searching for the true meaning of influence, and how procurement professionals can, and need to, become better doing it.

Influence

I have recently completed my masters, and my dissertation looked at influencing within procurement and how to develop these skills.

This article looks at the published literature around influencing. The next article will review the opinions of top influencers and consider what their key traits are, and how these skills can be developed.

Much has been written about the need for the professional skill sets required by procurement professionals to change. According to CIPS over the last 5 years, the skills required have changed as the table below: [i]

Skills Table - GD

For Procurement to achieve its goals, more work needs to be done to align to key stakeholders and understand the business operations, in order to become a true strategic partner.

This means moving up the value chain to ensure that the function is involved much earlier in the decision-making processes and clearly demonstrating how active involvement adds tangible value to both the bottom and the top lines.

In order to do this, Procurement as a function needs to expand its ability to influence, and procurement practitioners need to expand their own personal influencing skills (along with other soft skills).

So what do we mean by influencing and what are the different ways we can influence?

What is Influence?

Influencing skills, have been defined as the ability to get people to do what you want[ii], or changing people’s behaviour to act in your favour through the use of persuasion[iii], or wielding effective tactics of persuasion[iv].

How can we Influence

We all have differing influencing styles which generally will fall into any of the following:

  • Asserting – where you insist on your ideas being heard, and you challenge the ideas of others.
  • Convincing – where you put forward ideas and offer logical reasoning, which convinces others of your point of view.
  • Negotiating – where you look for compromises and make concessions, in order that you can reach an outcome that satisfies your greater interest.
  • Bridging – where you build relationships and connect with others, using listening and understanding to build coalitions.
  • Inspiring – where you advocate a position and then encourages others to come round to the idea by sharing a sense of purpose.

Dale Carnegie[v] wrote, that in order to become effective influencers, we need to influence people at an individual level. He also argued that the steps for effective influencing are:

  • If you want to make a good first impression, smile.
  • If you want others to like you, don’t criticise them.
  • If you want others to gladly do you favours, show your appreciation frequently.
  • If you want to be interesting yourself, be interested in others.
  • Show your appreciation for others by talking about what’s important to them.
  • We like people who show their appreciation and remember things about us, like our names.
  • Avoid all arguments – they cannot be won.
  • Never tell others they are wrong, they will only resent you.
  • Whenever you are wrong, admit it immediately and clearly.
  • To be convincing, get others to say “yes” as often as possible.

Emotional Intelligence

Emotional intelligence is the capacity of people’s ability to recognise their own, and to understand and recognise others’, emotions, and use that information to guide behaviour and therefore influence.

Daniel Goleman argues that just having one persuasion skill alone, and deploying just one, may not be good enough to gain influence. He argues that being influential is having the ability to sense what other kinds of appeals will persuade key decision makers.

Critically, Goleman argues, it is noticing when one tactic isn’t working and when to switch to a different one which adds impact to an individual.

So what are the persuasion skills?

Persuasion

Manningham and Robertson[vi] identified 6 persuasion strategies from their research:

  • Reason – the use of logic or facts to justify a request
  • Assertion – making a direct request and using emotion to underline our need
  • Exchange – the trading of one thing for another
  • Courting favour – being friendly or positive with people
  • Coercion – the implication of negative outcomes on not agreeing
  • Partnership – gaining the support of people both within and outside the organisation.

In developing this research on persuasion tools, Reynolds developed the Persuasion Tools Model[vii], based on work by the psychologist Kenneth Berrien. It links negotiation and persuasion style, to emotional intelligence (EI), and in some ways echoes the work of Manning and Robertson

The Persuasion Tools Model
The Persuasion Tools Model

In this model, the horizontal axis represents influencing, which Reynolds states is a measure of your overall persuasion capability. The vertical axis represents the level of intuition required.

Summary

Two main thoughts are drawn from this research:

  1. That deploying one persuasion tactic as part of a plan is not enough; and
  2. Influencing, when it happens, happens with one person at a time.

In the next article, we will identify the traits of top influencers and how we may develop these skills.

[i] CIPS (2015) Advanced Diploma in Procurement and Supply; Chapter 4 Skills for Category Management

[ii] Mullins, L. (1996). Management and organization. 4th ed.  Pitman

[iii] Manning T; Robertson B; (2003),”Influencing and negotiating skills: Part I: influencing strategies and styles”, Industrial and Commercial Training, Vol. 35 Iss 1 pp. 11 – 15;

[iv] Goleman D (1998) Emotional Intelligence: Why It Can Matter More Than IQ; Bloomsbury Publishing

[v] Carnegie D; (1937) How to win friends and influence people: Simon and Schuster

[vi] Manning T; Robertson B; (2003),”Influencing and negotiating skills; Part II: influencing styles and negotiating skills”, Industrial and Commercial Training, Vol. 35 Iss 2 pp. 60 – 66;

[vii] Reynolds, A. (2003) ‘Emotional Intelligence and Negotiation,’ Hampshire: Tommo Press

What Does Procurement Agility Mean in 2016?

Discussing the term ‘Procurement Agility’, and the ways in which procurement organisations can become more agile in their activities.

Procurement Agility

In various reports and papers published over the last few years the phrase “procurement must be agile”, appears on a constant basis. Indeed, there is even a regular publication called ‘The Agility Agenda’. It’s an excellent read and well worth subscribing to.

This article will try and give some practical takeaways for procurement professionals to consider when applying in their own environments.

When considering procurement agility, we need to consider internal and external environments for the two main themes that are emerging in 2016.

Procurement Talent

With the release of the recent Deloitte CPO Survey, attention has once again fallen on talent, and the acquisition, developing and retaining of it. According to the report over 60 per cent of CPOs feel that their teams do not have the skills needed to perform their roles. What is also interesting in noting that the report suggests that these CPOS are not looking to change their teams, but to develop them.

The report states that training budgets have largely stagnated, if not fallen. So how can CPOs develop their teams without a large training budget.

The answer could be an agile programme that blends the theories and methods of procurement with an increase in workplace based development. These programmes, sometimes called Active Learning Programmes, are a mix of short classroom based sessions, which are then immediately applied back in the workplace. When those skills have been applied, it’s time to move to the next set of skills.

These activities are supplemented with desktop video learning. Again, the importance is on the quick application back in the workplace. The idea here is to utilise more of the 70-20-10 learning methodology. Writers such as Tough (1979) and Kajewski and Masden (2012) have argued that the majority of adult learning (about 70 per cent) takes place outside institutional frameworks, while 20 per cent is supported by those who are not professional helpers, such as supervisors, colleagues, parents and friends. Professional helpers, such as teachers, trainers and counsellors, account for only 10 per cent.

For example:

  • 70 per cent – informal, on the job, experience based, stretch projects and practice
  • 20 per cent – coaching, mentoring, developing through others
  • 10 per cent – formal learning interventions and structured courses.

The application of this theory into development platforms has gained momentum in recent years, and this has impacted how people put together formal programmes. For example, according to Kajewski and Masden (2012), an Australian firm has 70 per cent of learning as experience on the job to integrate, practice and master new skills, knowledge or changes in behaviour.

20 per cent of learning is from exposure to others, such as learning through the observation of others (mentors, coaches), and reflection on the impact of this behaviour on one’s own practice. Just 10 per cent of learning is from formal programs designed for the acquisition of knowledge or skills through carefully programmed instruction.

Alternatively, an Australian public sector programme has been set out in a more simplistic way, in that 70 per cent of learning is experiential, 20 per cent of learning is relationship based and 10 per cent of learning is formal.

What is clear is that despite the differences in application the methodology allows multiple ways for practitioners to develop their skills as opposed to formal training alone.

Responsiveness

One of the constant gripes about procurement is the time it takes to “get things done”. Procurement therefore needs to be agile in responding to its stakeholders, both internally and externally.

The fundamentals of Just In Time suggest a review of the non-value and value-adding activities as a means of eliminating waste. If we apply this to our process and procedures, we may find that the need to ask the same question multiple times adds to the turnaround time in procurement, and frustrates suppliers.

Many procurement organisations decide, for a number of reasons, that they need to deal with a set of suppliers who have already passed the hurdle required to supply to an organisation. This could be supply chain transparency, insurance requirements, past history. The ‘barriers’ are yours to set.

Pre-qualification allows these questions to be answered once, and also will allow procurement to have pass/fail rates for areas such as supply chain transparency and accreditation. Ultimately this will also help to develop better relationships with those critical suppliers, to reduce lead times, allow for innovation, and allow procurement to focus on other value adding activities.

When considering the matter of procurement agility, it is imperative to understand the multiple ways we can be agile in meeting the changing needs of our organisations. From building better teams, equipped with the skills and knowledge our organisations require for the future, to ensuring that the suppliers we work with can help meet the objectives of the organisations, procurement agility comes in many shapes and sizes.

C3PO Teaches Us About Proper Communication

wpid-uncle-owen-c-3po-luke-skywalker-tosche-station-power-converters

Uncle Owen: “What I really need is a droid who understands the binary language of moisture vaporators.”
C-3PO: “Vaporators? Sir, my first job was programming binary load lifters very similar to your vaporators in most respects.”
Uncle Owen: “Can you speak Bocce?”
C-3PO: “Of course I can, sir. It’s like a second language to me. I’m a-”
Uncle Owen: “Yeah, alright. Shut up. I’ll take this one.”

So Star Wars: The Force Awakens opens soon (or has opened – depending on where and when you are reading this!) and following my article about change management one of the drivers (or stoppers) of change is communication.

Tony Hadley sang that communication lets us down, and in procurement it’s so true. How many of us plan our communication strategies, what we are trying to do, how are we are trying to say it, who do we actually want to speak to?

This article then is designed to give you a road map and some pointers for planning and executing your communication activities. There is a lot of advice out there on the internet, and a quick analysis of them leads me to summarise them thusly;

A simple communication plan should cover the following:

  • Who do you want to communicate with?
  • What’s the purpose/objective?
  • What is the key message?
  • How will this be delivered?
  • Who will deliver it?
  • How often will this be delivered?
  • Specific content

Who (audience)

A good place to start is to define who it is you’re trying to communicate with. Is it a person or a whole department, a key internal stakeholder or external supplier? A good piece of advice that I received was, to consider who influences this person? It may be that if we couch what we are trying to say with an analogy of the persons mentor or influencer then we may be more impactful.

For example, if the individual likes Richard Branson, we may start our messaging (see below) with an analogy of something that he did or said and how it relates to our points. This will help identify your history with this person and therefore will start to influence the overall purpose and objective

Purpose

So what is this piece of communication trying to do? Is it for information, or trying to persuade? Is it simply just to change a perception of someone about you or the whole department? Are we trying to get someone to be influential on our behalf, or are we actually trying to influence them?

Key Message

What is the overview or key message that you want to leave the person being communicated to with? By focusing on the end result we can then shape the actual message to ensure we deliver it accordingly. For example, “We want the supplier to consider us a potential strategic partner” means that the messaging and the method need to be aligned, and it’s likely to be a campaign of communication rather than a one off.

How (Delivery)

So now we come to deployment, the “nitty gritty” of communication. Face to face, telephone or email (letters anyone?)? Well it depends on what the purpose is, and importantly how the person being communicated to wants to be communicated with. Finally you need to consider the how impactful of the method.

Lots have been written about Albert Mehrabian and his study into communication. Essentially what he said was we get most of our clues of the emotional intent behind people’s words from non-verbal sources. And when the two are in conflict, we believe the non-verbal every time.

When you write an email there is no emotional intent that is being able to be read (even with emoticons), it also becomes easier to ignore. Have we ever read an email that in a way that is different than the sender intended? Emails are an essential part of our communication, as we use them all the time, but they are flat pieces of communication, if we want to become more impactful using our tone of voice, and being aligned with our body language will do this in our communication and therefore we need to plan for delivery.

Who (Delivery)

So who is the right person to deliver the key messages? Here’s a thought – does it need to be you? This is where your earlier planning will come in. We may not have access to the person we are trying to communicate with, it may be that others have an easier time to get this persons time, or alrerady have a degree of influence? (see the first who).

Suppliers use this strategy to influence decision makers when they are not readily available to be influenced directly. They identify an internal person who could be utilised as an internal brand advocate.

Frequency

How often will you need to communicate with this person? Is this a campaign or a one off? This will link back to the purpose, if we are trying to turn a detractor into a supporter, its unlikely that we accomplish this with just one meeting. Its more likely to be a concerted campaign and the messages may well change as we move them along our supportive line. On the other hand, it could be just for information only.

Mind your language

Finally it’s critical to use the language of the person to whom you are communicating with. All the planning in the world will not overcome the basics of not being understood.

Consider where the individual works, how will they be able to understand our acronyms, short cuts or techno babble?

So we need to consider changing our language and speaking theirs.

Unless of course, you really do speak Bocce…..

Happy Christmas, and may the force be with you.

David Bowie and Procurement – Dealing with Ch-ch-ch-ch-changes

Bowie_Changes

Ch-ch-ch-ch-changes, (Turn and face the strange),

Ch-ch-changes, Don’t tell them to grow up and out of it,

Ch-ch-ch-ch-changes, (Turn and face the strange)

Ch-ch-changes, Where’s your shame,

You’ve left us up to our necks in it, Time may change me,

But you can’t trace time.

I recently sat through a presentation on dealing with change and being resilient. Sadly most of what I took away was negative, telling people to “get over it”. It reminded me of the Bowie song, and I decided to write some thoughts about change management down.

A former manager of mine once said, “Gordon, in procurement we are basically change agents.” Every organisation needs to bring about changes in its management and policies, but besides the improvement of systems, there must be a change in the people as well. If not then the thousands of dollars invested will go to waste. Therefore every organisation needs to support the employees in the process of making transitions or changes. These individual transformations can be traumatic and may involve a lot of power loss and prestige issues.

In reviewing the range of literature there are some guiding principles for change management that have jumped out:

  • People – the main point to address are the people who impact or who are impacted by the change being proposed. Therefore there is a need to address the “human side” systematically
  • Change starts at the top – if you haven’t got buy in from decision makers, its unlikely that the change will happen. If the exec champions the change, then the change will be made.
  • Burning platforms – if there is a reason for the change to happen that everyone can relate to, the change becomes smoother. A friend once said to me that he had found lots of issues with a process that could have caused a large problem, however he couldn’t make those changes because they had “got away with it”!
  • Empower the “bottom” – although it starts at the top, it’s imperative that those directly affected have the chance to shape the nature and implementation of the change. This may then head off any disruption part way through.
  • Be realistic with the change – if you try and change too much too soon, you may end up actually losing ground like Evil Knievel and his Snake river canyon jump
  • Communication – I am planning the next article to discuss more on this important aspect, but suffice to say, the type of communication and the language you use is important.
  • Scenario plan options – I have written previously about the need to scenario plan.

Change Models

Here are the most used change models with a summary of them:

Kubler-Ross

The-Change-Curve

The Kubler-Ross Change Curve (which is also known as the 5 stages of grief) is a model consisting of the various levels or stages of emotions which are experienced by a person who is soon going to experience change. The 5 stages included in this model are denial, anger, bargaining, depression and acceptance. This model was introduced by and is named after Elisabeth Kubler-Ross in a book called ‘Death and Dying’ which came out in the year 1969.

The ADKAR Model

This Model was created for individual change management by Prosci. This model demonstrates the 5 ingredients needed for change to be possible and successfully implemented. These 5 ingredients are given as follows:

  • Awareness – Awareness is a very important building block that helps one understand why change is important and needed.
  • Desire – The desire to be a part of change and support it is another vital ingredient.
  • Knowledge – The desire is incomplete without knowing how change can be brought about.
  • Ability – Even on having the desire to change and the knowledge to bring about this change, things can go in vain if the individual does not have the ability to grow with it.
  • Reinforcement – This building block is important to sustain the change.

John Kotter: 8-step Strategy for Change Management

John Kotter suggested a strategy for change management consisting of an 8-step process to deal with change:

  • Create: Establish a feeling of urgency or hurriedness towards change.
  • Build: Formulate a guiding coalition.
  • Form: Develop a strategy to bring about change. This requires having a plan and a vision.
  • Enlist: Communicate or put forth the vision or strategy for change.
  • Enable: Empower the employees for taking action to incorporate the changes.
  • Generate: Formulating and generating short-term goals and achieving them
  • Sustain: Capitalisation of wins or gains in order to produce bigger results.
  • Institute: Incorporating new and better changes in the workplace culture.

Kurt Lewin – Force Field Analysis

This is a tool used to understand what’s needed for change in both corporate and personal environments. Typically used in the change part of his Freeze, Change, Refreeze model.

Lewin wrote that “An issue is held in balance by the interaction of two opposing sets of forces – those seeking to promote change (driving forces) and those attempting to maintain the status quo (restraining forces)”.

Essentially you brainstorm what would drive change or what would stop it, and the scale of each of the forces. You then identify what you can do to affect those forces; i.e increase driving, decrease restraining, eliminate restraining, add new driving, or turn a restraining into a driving force.

Summary

The common point about change is dealing with people as individuals and recognising that everyone reacts to change differently, its critically important therefore not to tell people to shake it off, or tell them they are overreacting, people deal with change differently and if we don’t acknowledge the issue, people won’t really change and will find more passive ways to resist, when the ideal is to accept and even drive the change though.

Remember people are the most important asset for change, so as David Bowie said…”Ch-ch-changes, Don’t tell them to grow up and out of it”.

“Because In A Split Second, It’s Gone”: Lessons Learnt From Formula 1

ayrton-senna

Can you remember where you were on 1 May 1994? I know I was at home, my parents’ house, and I was sat in the front room watching, the San Marino Grand prix. The reason that I remember, is that this was the day that Ayrton Senna, one of the greatest racing drivers ever, died when he crashed at Tamburello corner. The reason that I start with this is two-fold.

1) Lewis Hamilton has recently equalled Ayrton’s win total and pole position total, and 2) recently I attended a training course called Performance at the Limit; it was delivered by a facilitator called Richard West. Richard has been a senior figure within the Formula One sport for a number of years and the program was about identifying the common traits of high performing teams set in the context of the high performing teams within F1.

It was an excellent program – there were lots of transferable learning points that I wanted to share with you so here goes… (I’ll point you to the books and TV programme at the embedded links below).

Focus on…

Richard described the safety record in F1, specifically with regard to the death of his friend (and one of my favourite drivers) Ayrton Senna. Richard was working with Williams at the time, and if you have seen the film Senna, there are some references to him in it. Flashback a few years previously to the same corner at Monza, and Nelson Piquet crashes and car stops at the same place that Senna fatally crashes. Flash forward a number of years after Piquet and Gerhard Berger crashes and suffers burns as a result of the crash at the same corner.

The point here is that on each occasion, indeed after Senna’s crash also, racing resumed with a focus on performance and going faster, rather than looking at the bigger picture. The big takeaway for me is that too much focus on one area will lead to the ignoring of some critical issues (safety etc.)

With our internal and external relationships, are we guilty of too much focus on a particular area at the expense of something else?

Group v Team

What’s the difference? One of the activities on this training course was called the pit stop challenge. Essentially, the “group” was challenged to change the tyres on a F1 car during a pit stop. We used a real F1 car from 2009 and we were split into teams for each of the wheels. Great learning point here is that whilst you may be quick at your particular activity, it’s the whole team that counts, and what’s the best way to ensure cooperation?

pitcar

…It reminds me of something I read a while ago;

A group is a gathering of people, each with their own established roles. As companies grow large, practicality dictates that responsibilities must be divided up. But this is the point at which many employees begin to think that their job is just fulfilling their own individual roles. Some even go so far as to think that stepping outside their established roles is wrong. This is not a team. This is group. Indeed, this is a herd of sheep. It will never be successful.

To be a team, each individual in the organization must act beyond their own responsibility and in the furtherance of others. For each individual on a team, every job is a kind of war, every job is a competition. Unless you win, nothing has meaning. To be successful, each member of the organization must cultivate the mindset that they alone hold the fate of the organization in their own hands.

Only a group of people sharing that mindset can be a team.

Hiroshi Mikitani – CEO, Rakuten Inc

So what type of relationship do you want, one where you act as one team, or two groups both vying for the best outcome for themselves?

Change starts with why

During the program we discussed leadership and the need for employees to feel motivated to work for the organisation and to understand why they were being asked to do something. In other words any change must start with why the change. This immediately made me think of Simon Sinek and his remarkable Ted talk that I had recently seen.

Do we communicate well with our team members and our suppliers to demonstrate why we need to change and what the end goal must look like, do we lead effectively (e.g. Inspire others to be high performing, or do we lead efficiently (e.g. inspiring others through objectives and KPIsI)

There is no silver bullet

Richard described visiting Mercedes team garage and he found that there wasn’t one thing that they were doing differently than anyone else, but it was a whole lot of little things just done better. In other words there was no silver bullet. Sometimes we try and focus on doing one thing to make things better. An example of this is development. How many times have we either conducted or been in our reviews with team members and asked about development, then immediately focussed upon training?

What about all the other learning opportunities? At the CIPS Australasia conference, I attended a session where Craig Lardner said that “mistakes are an investment in getting better”, in other words, learn from mistakes, not just yours but others. Do we share lessons learned amongst ourselves.

You may be aware of the 70/20/10 learning principle. Essentially this suggests balancing learning through the following;

  • 70 – Experiential/Experience – learning and developing through day-today tasks, challenges and practice
  • 20 – Social/Exposure – learning and developing with and through others from coaching, exploiting personal networks and other collaborative and co-operative actions
  • 10 – Formal/Education – learning and developing through structured courses and programs

I encourage everyone (managers and team members) to look at this model as a way of developing themselves and their teams. The better outcomes take a little of everything and just do it a little bit better.

I will leave the last words to Senna.

My biggest error? Something that is to happen yet.

What does it mean to “be commercial”?

What does it mean to be commercial?

I was once in a meeting with a former manager where I was urged to be more commercial in my outlook. When I asked for a definition, the answer I got was along the lines of just be more commercial…

I contrast this with an episode earlier in my career where I was said to be too commercial in my outlook. This word “Commercial” is a word that gets thrown around with abandon, yet do we truly appreciate what it means to be commercial?

There are companies that adopt a commercial approach, as procurement professionals we are urged to be “more commercial”. I have met with people who need their Contract managers to be more commercially aware and people even have it in their titles whilst doing utterly different roles. Roads have been named after it and even whole districts!

So what does being commercial mean?

The dictionary definition of commercial has the following explanations:

  1. concerned with or engaged in commerce: “a commercial agreement”
  1. making or intended to make a profit: “commercial products”

having profit rather than artistic or other value as a primary aim:

“their work is too commercial”

  1. (of television or radio) funded by the revenue from broadcast advertisements.
  2. (of chemicals) supplied in bulk and not of the highest purity

Ignoring the last 2 (for purposes of this article), I think the more applicable definitions are concerned with commerce (i.e. all the comings and goings in a supply market) and making a profit.

But perhaps the biggest question is: How can we translate this into actionable items for us to consider?

Commerce is the activity of buying and selling. Therefore in order to be commercial in this aspect we need to have:

  • An understanding of our business and the wider business environment in which it sits.
  • Familiarity with the end product or service that we buy or manage.
  • How it fits into our organisations service provision and ultimately its Value Proposition to the wider market (those of you playing consultant bingo can cross that word off).
  • A grasp of the activities of our organisation and how your role impacts this.

We also need to have an understanding of the wider marketplaces where we interact daily and be able to:

  • Know how the major players in this particular market are performing at present.
  • Find out who is dealing with whom, and which companies have won important contracts.
  • Think about what the future will bring and what it means to you, your category and your organisation.

Profit is central to any business and should also be for those not solely engaged in the activity of making profit (i.e. public sector or not for profit). As someone in the not for profit sector once said to me, “whilst we are not for profit, we are not for loss either”.

Understanding profit and how organisations make profit should be central to any sustainable procurement strategy. Will these suppliers still be around next year, the year after etc, what are the sources of profit and how do changes in the global market place affect them (commodity pricing, changes in labour force, legislation, global catastrophes and competition).

Commercial awareness then, could be summed up as:

  • An interest in business and an understanding of the wider environment in which an organisation operates: its customers, competitors and suppliers.
  • Understanding of the economics of the business and understanding the business benefits and realities from both the organisation’s and the customer’s perspectives.
  • The need for efficiency, cost-effectiveness, customer care and knowledge of the market place in which the company operates (current economic climate and major competitors).

So how do we actually become commercially aware? Here is a 5 point plan to become more commercially aware:

  1. Keep up to date with what is happening about the future for your organisation, and the markets in which your organisation operates. Check your organisations business plan and strategic vision for clues on this.
  2. Understand the nature and structure of external supply markets, list out the things that affects them and keep a track on when they occur. (See earlier article on scenario planning).
  3. Understand any historical patterns which will help us to predict future trends. It’s particularly useful to be aware of any typical cyclical patterns, such as how wider economic conditions tend to affect a particular industry. On a smaller scale, it could be helpful to be aware of the cycle of the financial year and the effect it can have. For example, organisations may be spending up their budgets and this will have an impact on supply.
  4. Understand and map out the key strategic relationships you have with your suppliers. What is their strategic vision and do you feature? Gather data on the suppliers and supply market/s you serve and are served by and pay attention to the trends.
  5. For any piece of analysis you do, remember to ask SO WHAT!

So why is this important? I think for a number of reasons depending on where you are in your career…

According to Association of Graduate Recruiters “Skills for Graduates in the 21st Century” commercial awareness is the number one skill shortage amongst graduates.

Most “future of procurement” documents talk about the need for more commercial awareness in procurement activities and professionals.

A key deliverable of contract management (i.e. actually delivering the benefits found in sourcing) is to be commercially aware of their actions during the contract lifecycle.

So consider the 5 point plan to be more commercial and ask how you could apply it to your environment and the next time your manager asks you to be more commercial ( or less) you will have a handle on where to start.

Scenario Planning: A Field Guide (Back) To The Future?

Back To The Future

A flash of light as the time machine lands outside Marty’s house, it crashes into the trashcans and out steps a futuristic looking Doc Brown looking panicked as he reveals part of the future to Marty.

“It’s your kids Marty, something has to be done about your kids.”

If only we could see the future we could be better prepared. If I had known that was going to happen I would have made a different decision. Refrains you may have heard (or even said) but fear not, there is hope, there is a thing called Scenario Planning.

Scenario Planning (sometimes called “scenario and contingency planning”) is a structured way for organisations to think about the future. These scenarios are meant to help us recognise and adapt to changing aspects of our present environment. They form a method for articulating the different pathways that might exist for you tomorrow, and finding your appropriate movements down each of those possible paths. (The Art of the Long View – Peter Schwartz).

In procurement we have access to a wealth of information about what may happen in the future, we get this from regular meetings with our suppliers and total supply chain. So we have access to lots of information (or can do if we schedule the above) but what do we do with it?

The concept of Scenario Planning is not new, Shell has been using scenarios for over 40 years and here is a link to what they think may happen to 2025.

So how should we start putting these plans together? We first need to understand the different types of uncertainty that there are and how these relate to our organisation so we can identify and prioritise the critical uncertainties (business, industry, environmental etc.)

KPMG outlined their Scenario Planning process a report called mapping the future and Jay Ogilvy writing in Forbes magazine has also suggested a process. I have summarised and tried to give some specific practical suggestions of how to conduct below:

1. Scan your external and internal environment for emerging trends and issues

  • Meet with incumbent and non-incumbent suppliers regularly to understand trends and what their strategic plans are.
  • Meet with key internal stakeholders are regularly to understand the future business needs. It’s also imperative to identify which issues to focus on (i.e. the ones that will have the most impact).

2. Select the most realistic alternatives and develop deep responses

  • By focusing on the critical uncertainties, achieved by the group discussing and agreeing which of the issues need more attention this allows for a matrix to be developed and the potential scenarios to be placed within them. This will then give you focus on the areas that are most likely.

3. Build scenarios of the future using one or more of the quantitative multi-dimensional tools

  • PESTLE and Porters five forces are excellent tools that you can use to help build profiles and give you a framework for data collection.

4. Identify the early indicators

  • What are the attributes of the scenario?
  • What are the catalysts that would indicate that one of the scenarios is likely to happen?

5. Update and constantly review based on the early indicators

  • This isn’t a static model. It’s constantly evolving and therefore the need to update your scenarios with more information as it becomes evident is imperative. Consider:
    • What RSS feeds do you subscribe to?
    • What meetings do you have set up
    • How are you collecting information?
    • What social media sites are you using for information?

Mckinsey identified some great tips and tricks for the use of Scenario plans, which also contains some cautionary advice about them namely:

  • Analysis Paralysis
  • Poor internal communication
  • Too narrow an outcome
  • Consider the more outlandish ones as well as the ones relatively close to the “norm”
  • Know when to use and when not to

To get you started here are some examples around future thinking:

As an example of future thinking the Faculty in 2013 produced future ready white paper which identified the following areas and conducted in depth reviews of them.

Geopolitical uncertainty will impact how we look at and calculate risk; shifting demographics will change the way we look at talent; digital revolution will change the way connect and social awareness will impact and change the supply chain.

Scenario planning is important to us and our organisation as we can’t all rely on a friendly scientist coming back from the future to tell us what is going to happen.

Great Scott Marty, this is heavy…

Behind the supply chain curtain: 5 questions procurement needs to ask

The five questions Procurement need to ask to avoid a Nanna’s frozen berry issue

Lessons that procurement needs to learn to avoid a Nanna Berry issue

It’s a tense moment in the Emerald City. Dorothy, Tin Man, Lion and Scarecrow stand trembling before the giant visage of The Great and Powerful Oz as he thunders and roars, complete with jets of flame and billowing green smoke. Toto, Dorothy’s little black terrier, slips away unnoticed to the side of the room and pulls back a curtain to reveal that the terrible Oz is in fact a short, grey-haired gentleman frantically manipulating a control panel and speaking into a microphone.  

We’ve all been guilty of accepting the facts presented to us by an organisation without pulling back the curtain to confirm them ourselves. As customers, our powers of investigation are often limited – there’s only so much you can glean from scrutinising the ingredients and country of origin labelling on a box of cereal and you’re unlikely to get very far by interrogating a uniformed teenager stacking the shelves at Woolworths or Coles. A business, however, has the opportunity to gain a great deal of visibility and control over its supply chain, but only if we are willing to do the hard work and get to know their supplier.

The recent product recall of Nanna’s frozen berries across Australia was a very public demonstration of how badly things can go wrong in the supply chain. In mid-February this year, over a dozen cases of Hepatitis A were reported by people who had consumed frozen berries sourced from China via Chile. The company immediately issued a recall but the impacts were enormous: financially, the parent company Patties Foods suffered a 12 per cent fall in share price, while $1.7 million worth of unsaleable inventory sat in their warehouses. The blow to the company’s reputation and customer trust was even more serious, with daily headlines, a class action being threatened and furious comments flooding social media. Red Cross even voiced concerns over potentially infected blood donors.

In January 2013, UK supermarkets including Tesco, Iceland and Lidl were engulfed with a similar supply chain scandal involving meat. Frozen burgers and frozen ready meals labelled as beef sourced from Romania and Poland were found to contain horse and pig meat, leading to a huge customer backlash that saw Tesco drop €360 million in market value, burger sales tumble by 41 per cent and ready meals fall by 15 per cent.

In fact a snapshot of a recent 30 day period identified 47 product recalls in Australia alone. So why did these companies make such poor sourcing decisions that left them vulnerable to risk?

Well firstly, the evaluation team may have put factors such as price and availability above equally-important factors like reputational risk. In an environment where every dollar is a prisoner to its owner, snap price decisions are made without thought to total cost, including risk. The leading procurement managers measure risk by how much it would cost the business if the worst happened, making the total cost argument even more persuasive.

Secondly, have we accepted the Oz-like visage presented by the supplier without taking the important next step of delving a little deeper? Who supplies your supplier? And, in turn, who supplies your supplier’s supplier? Investigating your supplier’s suppliers can be a courageous decision – in many cases, a company may be justifiably worried by what they might find.

So, how can businesses both large and small ensure that a frozen berry or horsemeat-type scandal doesn’t happen to them? The answer lies in taking the well-known financial services compliance mantra of “know your customer” and adapting it into “know our supplier”.

Procurement professionals need to be able to confidently trace the elements used to create their product back to its source, secure in the knowledge that risk mitigation and regular auditing is in place to protect the company’s profits and reputation.

Some typical due diligence questions might include;

  • How financially stable is the supplier?
  • What quality systems are in place to ensure the products or services supplied are of a consistent and high quality?
  • Who owns the supplier?
  • Where does the supplier obtain their goods from?

The first three are typical questions to ask, and ask them we do, but it’s the last one that we need to spend more time and to “look behind the curtain” to find out more about the supply chain. So when we do draw back the curtain what do we need to find out? A good place to start is;

  • Has your supplier done the same amount of due diligence with their suppliers as you have done on them

The walk free foundation http://www.walkfreefoundation.org/ discusses the obligation and opportunity for procurement and supply chain to eradicate modern slavery, a huge and noble venture. One of the ways it advocates this is to audit continuously your supply chain to ensure its slave free. This should be part and parcel of what we do and whilst we are ensuring it is slave free, we should check that the suppliers through the supply chain can actually deliver what the value that each stage brings

To summarise, here are the five vital questions that procurement should be able to answer:

  1. Who, exactly, is the supplier?
  2. Who are the supplier’s suppliers? And who are the supplier’s suppliers’ suppliers (and so on)?
  3. What are the risk factors associated with using this supplier?
  4. What systems are in place to minimise or eliminate risk?
  5. What systems are in place to ensure the product or service is of a consistent and high quality?

So don’t wait for Toto to pull back the curtain, get to know your supplier and pull back the curtain yourself. 

Unfortunately the threat of risk looms large over our profession… In 2015 we’re facing ongoing political instability, increasingly extreme weather conditions, as well as newfound threats from hackers in the digital landscape. We’ll be expanding on these at our Big ideas Summit held in London on 30 April (and digitally – on Procurious, for those wanting to join the discussion online).

We’ll be tackling all the Big Ideas that are set to shape procurement now and in the future with a goal to inspiring a new generation of business intrapreneurs – people who can think outside the box – to drive innovation and lead change in large organisations. For all of the details, to see who’s speaking and how to get involved head to www.bigideassummit.com – don’t forget to RSVP on Procurious here.

What can board games teach us about procurement?

I was listening to a HBR podcast a couple of weeks ago and it highlighted several parallels between games and business strategy

What can board games teach us about procurement?

We have probably all played Monopoly at one time or another (it was a Christmas staple in my household)… Well, when it was first designed it was meant to be a teaching tool to teach players about the evils of monopolies and private land ownership (property is theft?!). As such this article discusses what can we learn from the modern version of Monopoly…

The article also suggests that other board games centre on creativity, innovation, teamwork, empathy, and resource management but also emphasize outcomes more closely resembling the collaborative wins that have become so desirable within and between organizations.

  • Pictionary comes to mind as clearly requiring observational and empathy-based skills
  • Cluedo (or whodunit) helps sharpen our deductive-reasoning skills.
  • Trivial Pursuit, especially when played with teams, can teach us the value of diverse knowledge sets

Next I want to talk about Game theory. We teach game theory on our advanced negotiation programs and one of the takeaways is to understand the type of game for negotiation you are in. From a business point of view companies can succeed spectacularly without requiring others to fail. And they can fail miserably no matter how well they play if they make the mistake of playing the wrong game.

The game of business is all about value: creating it and capturing it, at the Faculty we take our clients through the value matrix, a tool designed to help business and procurement speak the same language, HBR talked about a value net to identify customers and who the players are. There is a tinge of Porter’s 5 Forces (unsurprisingly really) to it but it’s worth a read. Take a step back, consider who the players are in your procurement or organisation, and then decide on the type of game you want to play.

Talking of strategy, according to My Purchasing Centre: Over 95% of purchasing or supply management organizations do not have a long-term strategic plan

Many of the plans that are completed are done once, and then put away in a ring binder or on a hard drive – never to be referenced again. My Purchasing Centre provides some tips on creating and living the strategy:

  • Create a vision and mission statement that aligns with the organization’s vision and mission
  • Be bold and make sure people realize that you are aiming for supply management not traditional bureaucratic purchasing.
  • Try to gain a broad consensus and gather input from surveys, one-on – one meetings, research and as many employees, suppliers and customers as possible
  • Keep it dynamic, up to date and a living document

Finally, I’d like to draw your attention to this particular article that examines the strategic decisions surrounding extending the scope of procurement. It suggests that there are three main questions that need to be asked:

  • How will your customers and procurement staff collaborate?
  • Do your procurement professionals have sufficient category expertise to add value?
  • Are there enough skilled procurement professionals within the team to handle the volume of buying?

The article goes onto say that until recently the answers to these questions have been routine: policy, process, technology, hiring, and training. However, the reality of execution is more complex.

However some of the learnings can be applied into designing our internal strategies for greater collaboration with the business. For example, it mentions that strategy documents comprising more than 50 pages in length rarely resonate with the internal stakeholder.

I think the key thing with all strategies is applicability; rarely does one size fit all. In today’s volatile environment where economic, political and technological change runs rife, greater flexibility and agility is required in our strategic choices – making the games we decide to play and enter into all the more important.

Thanks for reading. You can subscribe directly to the sources I have identified here and nothing is my copyright. If you wanted to discuss more, please feel free to contact me via Procurious, or follow me on Twitter @gdonovan1971.