All posts by Hugo Britt

Reusability – Getting to Space Just Got a Whole Lot Cheaper

Take a fresh look at the consumables in your supply chain.

SpaceX Falcon9

On December 21, 2015, SpaceX’s Falcon 9 made history. After successfully delivering 11 communications satellites into low-Earth orbit, the nine-engine booster rocket returned safely to Cape Canaveral, landing dramatically on a jet of fire.

Less than a week later, SpaceX founder Elon Musk tweeted that the Falcon 9 was “back in the hanger … no damage found, ready to fire again”.

Reusability the Key

Placing satellites into orbit is no mean feat, but the astounding, history-making part of this operation was landing the booster. It’s all about reusability. Until now, putting a rocket into space has been prohibitively expensive due to the single-use aspect of launching. In his detailed explanation of Musk’s vision, Tim Urban of the website Waitbutwhy compares single-use spacecraft to air travel:

“Imagine the current air travel industry with one key difference: an airplane works for one flight only. Each flight is on a brand new plane, and after the flight, passengers exit into the terminal and the plane is broken down into scrap metal and possibly-reusable parts that are sent off to be refurbished for use in a future plane.

An airplane costs around $300 million to build. So in this new model, in addition to paying for the crew’s time and fuel, airlines have to spend $300 million extra each flight to build a plane. How would that change things?

First, there would be very few flights available—the schedule would be limited by the pace of plane production. Second, the price of a round-trip ticket between Chicago and San Francisco would now cost about $1.5 million per person. For economy.”[1]

Musk himself has stressed that reusability is the key to making human life multi-planetary:

“If one can figure out how to effectively reuse rockets just like airplanes, the cost of access to space will be reduced by as much as a factor of a hundred.  A fully reusable vehicle has never been done before. That really is the fundamental breakthrough needed to revolutionize access to space.”[2]

Here’s how they did it: https://youtu.be/sSF81yjVbJE.

Reducing the Costs

So how will SpaceX’s achievement affect the costs of getting to space? With a human mission to Mars as the ultimate goal, back in 1989 NASA estimated it would cost $450 billion to send 4-6 astronauts, about $100 billion a seat. This was upgraded in 2004 to $50 billion, or $10 billion a seat. Musk has a per-seat goal of $500,000, 20,000 times less than NASA.[3] That’s less money than an average home loan in Australia.

The huge reduction in costs will be brought about through a combination of revolutionary improvements, including low-cost propellant, making the return propellant on Mars,[4] and having approximately 100 paying passengers per flight. The biggest saving, however, will be through the rapid reusability of rockets, where the only costs involved are maintenance, life-support and refuelling.

The closest NASA has come to reusability was through the now-retired Space Shuttle program, which was able to land the spacecraft itself but not the booster, costing over $200 million per astronaut.

What About Your Supply Chain?

The Falcon 9 story is inspirational in the sense that SpaceX has achieved something that the world’s best aeronautical engineers said could never be done. The single-usage problem has been unsurmountable for decades, but SpaceX solved the puzzle and other organisations will soon follow suit.

The message here for procurement professionals is to take a fresh look at the consumables in your supply chain that could possibly be reusable. Whether the article is as expensive as a rocket booster or as cheap as office paper, it’s worth reconsidering whether items really are only suitable for a single use. Reusability is good for the bottom line, good for the planet, and will help put humans on Mars sooner than we think.

[1] http://waitbutwhy.com/2015/08/how-and-why-spacex-will-colonize-mars.html/4#phase2

[2] http://www.spacex.com/news/2013/03/31/reusability-key-making-human-life-multi-planetary

[3] http://waitbutwhy.com/2015/08/how-and-why-spacex-will-colonize-mars.html/4#phase2

[4] Propellant can be created using Mars’ CO2 atmosphere and the H2O frozen in the soil.

Stories from The Source – Part one: Tony Megally

The Source General Manager Tony Megally speaks with Hugo Britt about how to get yourself noticed by a top recruitment firm.

Albert Street

As with most 21st-century offices, we have an open-plan layout here at The Faculty. The team is spread across the first floor of a sun-filled, goldrush-era building in the heart of Melbourne. We have minimal partitions and senior management sits right in amongst their teams. One notable exception to this layout, however, is The Faculty’s sister organisation – The Source.

The Source is a boutique recruitment firm specialising in procurement and, due to the intriguingly confidential nature of their work, sits in a corner of the building separated from the rest of us by a glass partition. The small team beyond the wall always look incredibly busy, and when they do emerge, it’s usually with a phone glued to the ear, carrying out intense-sounding conversations in hushed tones as they pass my desk.

What goes on behind that mysterious portal? What are the particular challenges involved with recruiting for procurement? I interviewed three members of The Source team to find out, beginning with its new General Manager, Tony Megally.

So, Tony, tell me about yourself. How long have you been in recruitment?

My career in recruitment kicked off in 1999, and let me tell you, things were very different back then. We didn’t have smartphones, barely had email, no voicemail to reach people, and you were very lucky if you had any kind of database to work with. I remember the majority of my time being spent faxing resumes through to clients.

What’s “faxing”?

I’m going to assume you’re joking. Recruitment back then was nowhere near as proactive or strategic as it is nowadays – it was highly reactive and transactional. I initially worked in a volume market with the focus on recruiting for short-term, temporary assignments. I’d get a call from a client on a Friday night, for example, asking for 10 temps by the following Monday. Not easy.

What exactly has changed in recruitment over the past 15 years?

Recruitment has become a more sophisticated industry. It’s no longer so transactional and is now highly relationship-focused. We support clients to build their businesses through great talent and increasingly act as guides to candidates throughout their entire careers. That’s the beauty of recruitment – you get to follow people’s careers and watch them grow. I placed graduates back in 1999 that have now become senior and executive leaders, and in the best cases they’ve become clients themselves.

What about changes in the procurement space?

Just like recruitment itself, the procurement profession has moved away from its traditionally transactional function and is increasingly commercial-focused and strategically positioned. Things are evolving fast – the challenge for us at The Source is to keep ahead of the ever-changing expectations that organisations have in regard to the role of their procurement functions.

What levels of seniority do you recruit for at The Source?

We recruit from CPO down to the specialist level, but personally I look after the senior to executive space. This involves a broad salary range: about $150k to $350k (AUD). Clients work with us typically when it’s a hard-to-fill role, or when there’s a confidential restructuring going on and they can’t advertise. We’re in the mix – we’re searching for and networking with procurement talent all the time. Basically, clients want to partner with us to gain access to our talent pool.

How can candidates get the best out of their relationship with a recruiter?

It’s important for both sides to be as transparent and upfront about their expectations. We’ll share all the details about the client’s brief to help you secure the perfect role, but we need candidates to share as much as possible to help us promote them. It’s good to be aware that recruitment takes time. While an analyst-level could be placed within one to two months, executive placements can take six to twelve months.

Do you work mainly with advertised roles, or “headhunting” top talent?

Most of our time is dedicated to nurturing what we call “passive talent”. That means we get in touch with professionals who may not necessarily be active in the job search but are open to considering opportunities in the near future. It’s all about developing and maintaining relationships – we take a very long term view.

What makes a stand-out candidate in your view?

I look for evidence of commercial acumen, strategic agility, a relationship focus and of course a strong people focus. These soft skills make people stand out. Candidates need to be good networkers (through organisations such as The Faculty) and be able to demonstrate strong business partnering both internally and externally.

Stability is important, for example in Category Management you’ll need to prove you’ve been through an end-to-end strategic procurement lifecycle or in the case of Senior Leaders, you’ll talk to your strengths in change management and business transformation. Both of which usually take about two to three years.

So two to three years is the minimum period you should stay in an organisation?

In my view, yes. But the flipside of that is when we see someone who has sat in a role for ten years and hasn’t progressed their career, that doesn’t usually suggest drive and ambition.

Got any tips for preparing a CV and attending an interview?

The best CVs are kept simple and list stand-out quantifiable achievements. Keep track of the things you’ve accomplished.

You can never do enough research before an interview. Read everything on the company website, search for key individuals on LinkedIn, review company financial statements (easy to access for publicly listed organisations), reach out to networks. There’s no excuse for not being prepared for the “what do you know about us” question. Interview preparedness is an indication of how organised you will be on the job.

Thanks Tony. It sounds like you’re a key person to know in the Australian procurement profession.

I’d encourage anyone who’s interested in a confidential career discussion to get in touch with The Source, whether you’re actively seeking a new role or would just like to start the conversation about your career future.

The Source is a boutique mid to senior and executive recruitment and search consultancy with national reach specialising in the procurement market. For more details, visit The Source.

The Procurement Professional Twelve Days of Christmas

What do you want from your suppliers for Christmas?  12-days-of-christmas-thumb1-f

In the spirit of the season, here’s a Procurement professional’s Twelve Days of Christmas:

On the twelfth day of Christmas, my suppliers gave to me:

Twelve new-signed contracts

Eleven costs avoided

Ten tenders pending

Nine on-time deliveries

Eight service improvements

Seven ways of working

Six demand reductions

Five innovative ideas!

Four value-ads

Three free pens

Two risks assessed

And a brand new SRM strategy!

Merry Christmas!

Five Gems from Eva Wimmers’ Innovation Workshop – Part 2

The Faculty’s Hugo Britt recently attended a one-day workshop with Eva Wimmers, former CPO of Deutsche Telekom, on innovation in Procurement.productivity-innovation

Last week I shared the first two of five ‘gems’ I took away from Eva Wimmers’ thought-provoking working on Innovation in Procurement. Read on for the remaining three insights from this world-class CPO:

  1. Make time to discuss innovation with your “ideas suppliers”

As part of her “dialogue rich” approach to Procurement, Eva recommends that category managers make the time with suppliers to talk exclusively about innovation. That means there’s no talk about contracts or pricing; just ideas and brainstorming. Visit your suppliers and make an effort to personally meet the brains of the operation.

This means you’ll be making valuable direct contact with engineers, programmers and other boffins and can chat with them directly about their ideas. Importantly, making this contact will start them thinking about what they can do for you. The key, Eva tells us, is to think of your vendors as “ideas suppliers”, make time to discuss innovation, and always be willing to listen and learn.

  1. Diversify your supply base to include SMEs and startups

Deutsche Telekom is an enormous organisation, and before Eva’s tenure as CPO it had fallen into the same trap as many similar-sized companies: big only deals with big. This mindset is driven by concerns that only large organisations have the capacity to meet your needs, while risk-mitigation policies around team size and insurance are often put in place that limits Procurement’s ability to engage with smaller organisations.

Eva reversed this mindset at DT by declaring that innovation Procurement requires vendors of every size and shape. The benefits of working with SMEs and startups include:

  • faster provision of products and solutions
  • new idea generation (“ideas suppliers”)
  • customised and specialised solutions
  • getting a glimpse of future disruptive technologies
  • app solutions to fix your legacy IT problems
  • cost control and cost savings
  • savings in personnel costs
  • relationships with individuals at the supplier.

In Eva’s words, “We do not care how big an organisation is, as long as both the solution and the organisation are scalable and financially solid’”. She uses Dropbox.com as an example of a small organisation with less than 50 staff that wouldn’t even have shown up on many organisations’ radar, yet now it has world-wide take-up.

  1. There are risks, but they can be managed

We know that small vendors are often faster, more flexible and more cost-effective, but what are the risks? Eva says that CPOs need to equip their teams to work with SMEs and startups to overcome the following negatives:

  • Higher financial risk than big suppliers
  • Risk of takeover slowing down the process
  • Smaller account teams
  • Often no international linked account team and support
  • Under-developed processes
  • Lack of scalability
  • Increased risk of bankruptcy through illiquidity
  • Change of key people endangers product
  • Continuity of solution depending on engineers and programmers/individuals.

Eva worked with her team to mitigate the risks of interacting with SMEs and startups at DT by implementing the following:

  • Requesting financial due diligence including detailed revenue overview. Invite the CFO to explain the finances in detail to ensure full transparency.
  • Requesting an overview of concurrent projects with other customers.
  • Using incentives rather than penalties to ensure you don’t cripple your suppliers.
  • Spending significant time on explaining your product needs and definitions as SMEs may be unused to the needs of large organisations.
  • Requesting counter-proposals from vendors, such as “What would you change to save 30 per cent on cost? What would you change to gain speed?”
  • Locking-in the availability of key individuals from the vendor teams by name in the contract.
  • Contractually requesting key engineers’ availability by name.
  • Including a first right of refusal to buy company (in case of bankruptcy) – sometimes buying is cheaper than migration to any supplier (talk to your legal team about insolvency law).
  • Defining termination rights in case of a supplier takeover.
  • Reducing the amount of interfaces at the supplier.
  • Defining one overall point of escalation at the supplier.

In summary, Eva argues that CPOs can’t afford to limit their supply base to large organisations if they wish to drive innovation. Use risk mitigation strategies to protect your operation and focus on having the right level of contractual protection for each innovative supplier. Make the time to convince your risk-averse stakeholders of the benefits of working with smaller suppliers of products, solutions and disruptive ideas.

Procuring innovative products and profiting from the ideas of innovative companies requires behavioural change in your Procurement teams. Concentrate on driving early involvement, deeper knowledge of your products and vendor landscape, closer alignment with business stakeholders, and true dialogue where you see eye-to-eye rather than just pressing for the best price.

Innovation needs to be driven with and by smaller new companies as much as by larger incumbent organisations. In short, it’s about having “an idea that pays”.

Five Gems from Eva Wimmers’ Innovation Workshop – Part 1

The Faculty’s Hugo Britt recently attended a one-day workshop with Eva Wimmers, former CPO of Deutsche Telekom, on innovation in Procurement.

Innovation1

How many of the CPOs you know would you describe as ‘glamourous’? Not many, I bet. That’s because Procurement still isn’t seen as a particularly glamorous career, despite having all the ingredients that should make it so: world travel, high-stakes negotiations, and rubbing shoulders with C-level decision-makers.

Procurement’s understated profile is most likely a legacy of its back-office beginnings, but things are starting to change. Eva Wimmers, the confident, sharp-dressing, eminently capable former CPO of Deutsche Telekom, is glamour personified. She’s a striking departure from the stereotypical ‘back office’ CPO, and in my opinion the profession needs more leaders like her if it’s going to attract talented Gen-Y professionals looking for an exciting and fulfilling career.

Innovation in Demand

It’s a cool spring morning at The Faculty HQ in Melbourne, and I’m balancing a cup of coffee in one hand and a muffin in the other while chatting with fellow attendees at Eva’s workshop on innovation in Procurement. I’ve met senior and mid-level professionals from National Australia Bank, Realestate.com.au and even from Perth-based Rio Tinto, who have flown an impressive 2700km to join us today.

Why make the trip during one of the busiest times of the year? I’m told there are two main reasons – firstly, insights from the stellar career of someone like Eva are not to be missed, and secondly, Australia’s largest organisations are increasingly turning their attention to innovation in Procurement.

Eva is a knowledgeable and highly successful modern Procurement leader. During her time at Deutsche Telekom, she was responsible for overseeing €27 billion in purchasing value and managed 1500 employees across 50 countries. The workshop today came about as a result of a unique opportunity – Eva is finishing up at DT and moving into an exciting new role (currently hush-hush), meaning she had a rare gap in her calendar.

This is very good news for Procurement professionals in Australia – normally we have to travel overseas to hear from international Procurement stars of Eva’s calibre, and the prospect of an entire day with Eva generated a lot of excitement amongst Australian CPOs and their teams.

In this two-part blog post, I’ll cover five gems that I’ve taken away from Eva’s workshop, namely:

  1. Innovation is an idea that pays
  2. Procurement innovation is both a philosophy and a program
  3. Make time to discuss innovation with your “ideas suppliers”
  4. Diversify your supplier base to include SMEs and startups
  5. There are risks in working with startups, but they can be managed.
  1. “Innovation is an idea that pays”

This quote was the catch-cry of the day. It’s the basis of Eva’s philosophy around Procurement innovation, and it should be the foundation of every CPO’s business-case to invest in startups.

Eva illustrates how Procurement professionals work on the frontlines of innovation. We talk to vendors all the time, and if we know how to listen, this means that we are exposed to a constant flow of new ideas. Other functions, such as IT or even R&D, will only go looking for innovation when they start a new project.

Eva makes the distinction between incremental and disruptive innovation, or “evolutionary” versus “quantum leap” ideas. She illustrates the difference with a description of tall ships; with a millennium of incremental innovation behind them, early nineteenth-century sailing ships were the epitome of luxury and humankind’s harnessing of wind and weather – but they were made obsolete within a few decades by the disruptive technology that led to ocean-going steamships. Our challenge is to keep as informed as possible to try to predict the next big disruption steaming towards us over the horizon.

Eva’s message is to seek out “ideas suppliers” in the form of SMEs and startups. Even if 80 per cent of their innovations are irrelevant to you, the 20 per cent could be absolutely crucial to your business’ competitive advantage.

  1. Innovation in Procurement is both a philosophy and a program

Eva describes her two-tiered approach to driving innovation at DT through changing both the culture and the process. She created cultural buy-in through:

  • Introducing the tandem system – procurement staff are partnered with someone from the functional side (such as an engineer) to encourage the sharing of ideas, leading in turn to innovative thinking.
  • Cross-functionalising by having a variety of functional expertise, professions, backgrounds, disciplines, hierarchies, nationalities and cultures working in self-directed teams.
  • Encouraging Dialogue-rich Procurement – Eva encouraged her staff to greatly increase their communication with both internal stakeholders and with vendors. You’ll find that vendors in particular are eager to share their ideas if you are willing to listen and learn.
  • Celebrating accomplishments – if someone in the team has an innovative idea that leads to a positive change, publish it in a newsletter and share it with your whole team. This will help people realise “I can be innovative too”.

Eva changed the existing process to encourage innovation through:

  • Having vendor meetings to discuss innovation exclusively.
  • Holding regular internal meetings on innovation to plan three years ahead.
  • Diversifying the supply base to include SMEs and startups.
  • Introducing an innovation review panel.
  • Creating an ‘Easy Department’ program by cutting new contracts down to a 5 pages.
  • Incentivising Procurement-driven innovation through a suite of KPIs.

Stay tuned for Part Two of this article on Eva Wimmers’ Procurement innovation workshop.

5 Key Findings from the ‘Making It Stick’ Research Literature Review – Part 2

Have you read The Faculty’s Making it Stick report yet?

Sticky-Glue-Works-in-Space-Too-2

Our researchers undertook a literature review to understand the present state of play for CPOs worldwide. This is the second part of The Faculty’s article on the key findings from the literature review.

In the previous article, we discussed:

  • How benefits realisation levels are poor and remain an enduring challenge for CPOs around the globe.
  • The need for organisation-wide change management programs to address poor benefits realisation.

To wrap up the final three findings:

3. Business alignment and shared goals are integral to winning stakeholder support for identified benefits

As mentioned above, Procurement can’t drive savings all the way to the bottom line in isolation from the rest of the business. Shared goals across the organisation are absolutely essential for stamping out the culture of “somebody else’s problem” when it comes to poor benefits realisation.

Noah Costelloe (Ernst & Young) wrote in 2014: “The procurement team should not be the ‘sole owners’ of savings. Instead the focus of the team should be on facilitating and driving initiatives. They should also be accountable for the governance function through recording, measuring and reporting savings.”[1]

So, what’s the first step to creating shared goals? The answer is to ensure Procurement’s targets are aligned to those of the wider business. A report from Proxima (2015) stated that “Success in the procurement field … is a nebulous concept [because] procurement’s objectives aren’t usually clearly defined. Or perhaps, more accurately, it’s because procurement’s objectives are defined quite differently by its practitioners and the business leaders they serve.”[2]

The Managing successful programmes report already quoted above gives excellent guidance on alignment: “[Procurement must] provide alignment and clear links between the programme [benefit], its vision and desired outcomes, and the strategic objectives of the organisation involved.”[3]

4. Procurement teams are expanding their strategic footprint beyond costs through the identification and realisation of additional value opportunities.

What do additional value opportunities have to do with benefits realisation? Everything. In the Making it Stick report, “costs” are identified as the base of the pyramid, or the essential piece that must be in place before the function can move beyond transactional benefits, through commercial to strategic benefits.

If you can’t make savings stick, you won’t have the base necessary to successfully expand the value you contribute to the organisation. In ProcureCon Europe’s 2014 survey of 2,000 procurement professionals, “Total Cost Savings” still retains its place as the most popular metric for measuring the value of procurement (85%).[4]

KPMG’s The Power of Procurement (2012) reports: “Significant opportunities still remain to drive sustainable bottom line and top line value …. Procurement will need to stretch beyond savings to become a centre of value creation throughout the organisation. Executives will also need to play a part.”[5]

5. Clear definitions and categorisation of savings and other benefit types drive cross-functional understanding, shared measurements and realisation.

Without rigorous benefits definitions in place, other parts of the business with dispute Procurement’s wins. Benefits should be:

  • categorised by type
  • agreed upon with Finance
  • clear and concise
  • in plain English (not “Procurement lingo”)
  • aligned to business targets
  • linked to a clear set of measurement and validation methodologies.

To illustrate the importance of a set of definitions, consider the term ‘savings’. If you were to tell a roomful of colleagues from various departments that Procurement is focused on savings as its primary benefit, it’s more than likely that there will be multiple interpretations of what a ‘saving’ actually involves. Andrew Bartolini wrote in 2014 that “Savings [is] an inherently complex metric [with] greater disparity among the definitions used by procurement teams today”.

A 2006 report from CAPS Research found that, “Crucial to [Procurement’s] mission is the proper categorisation of the various types of cost reduction and their application to the company’s operating budgets and profit and loss measures.”[6]

The Making it Stick report contains sample definitions and measurements employed by participating organisations. Reproduced to give readers a broad set of examples to adapt for their own organisations. A concise set of definitions aids cross-functional understanding and should be developed in partnership with the wider business.

If you haven’t done so already, you can download the ‘Making It Stick’ research report here.

[1] Costelloe, Noah. Five things: getting the basics right in Procurement. Ernst & Young, 2014, p.4.

[2] Cooper-Bagnall, Jonathan, “Defining procurement success”, Proxima, June 2015

[3] Great Britain Office of Government Commerce, Managing successful programmes, Norwich, The Stationary Office, 2003, p.32.

[4] ProcureCon Europe 2014 Benchmarking Survey.

[5] KPMG. The Power of Procurement: A global survey of Procurement functions. KPMG, 2012, p.14.

[6] Ashenbaum, Bryan. “Defining cost reduction and cost avoidance”, CAPS Research Critical Issues Report 2006, p.2.

5 Key Findings From The ‘Making It Stick’ Research Literature Review

Making it Stick

Have you read The Faculty’s Making it Stick report yet? As part of the investigation into the challenges and opportunities presented by benefits realisation, our researchers undertook a literature review to understand the present state of play for CPOs worldwide.

There’s some excellent material out there on benefits realisation, predominantly in the IT space where organisations want to ensure they extract the full value from significant investment in technology and systems. The amount of literature confirmed that this topic is front-of-mind for CEOs, CFOs and CPOs in procurement functions all over the world.

Boiling down the literature review to a handful of key findings produced the following five recurring themes:

  1. Globally, benefits realisation levels are poor and remain an enduring challenge for organisations.

Four years ago, Aberdeen produced a stand-out piece of research that contained an assessment of benefits realisation levels across 130 organisations.[1] The Aberdeen Worldwide CPO survey found that the industry average (middle 50 per cent of aggregate performance scorers) achieved an average of only 8 per cent realised contract savings. The best-in-class (top 20 per cent) organisations had an average of 17 per cent, while “laggards” (the bottom 30 per cent) realised only 4 per cent of contract savings.

Eight per cent is a truly alarming figure and by all rights should have sent the procurement profession into a panic. To illustrate, imagine you have a staff member who works hard, seems extremely productive, yet at the end of the year, someone from Finance taps you on the shoulder and informs you that only 8 per cent of the staff member’s claimed achievements have actually made their way to the bottom line. You’d be furious, and that person’s job would be on the line. The same applies to procurement teams as a whole – this statistic brings the effectiveness and credibility of the function into question.

Findings from an earlier survey published by Gerald Bradley (UK, 2006) estimated that 10 per cent to 25 per cent of potential benefits are achieved from investment in change, costing the UK over £50bn per annum.[2] The Faculty’s own 2015 survey found an average of 50 per cent in unrealised savings across our research participants [3] – an improvement on Aberdeen’s 2011 figures, but still representing a lot of money being left on the table.

  1. Benefits realisation is inextricable from change management

The Making it Stick report makes the point that there’s no quick fix to improve benefits realisation. It requires an organisation-wide change management program to encourage shared ownership of procurement’s targets, drive cross-functional collaboration, improve end-user compliance and build a cost-conscious culture. C-level support is integral to this process to mandate change from the top.

A report from the Great Britain Office of Government Commerce entitled Managing successful programmes (2003) defined the necessity for change very succinctly: “The fundamental reason for beginning a programme is to realise benefits through change”, [4] while Gerald Bradley also framed his definition of benefits around change: “A benefit is an outcome of change which is perceived as positive by a stakeholder.”[5]

Stay tuned for part two of this article, and be sure to download Making it Stick if you haven’t already.

[1] Limberakis, Constantine G. Procurement Contract Lifecycle Management: Assessing the value of contract automation, Aberdeen Group, December 2011.

[2] Bradley, Gerald. “Why more CEOs are turning to Benefit Realisation Management”, CEO Magazine, August 2006.

[3] The higher figure is likely to be due to the relatively small number of research participants drawn from The Faculty Roundtable, with higher-than-average functional maturity across the group.

[4] Great Britain Office of Government Commerce, Managing successful programmes, Norwich, The Stationary Office, 2003.

[5] Bradley, Gerald. Benefits Realisation Management: A practical guide to achieving benefits through change, Hampshire, Gower Publishing, 2006, p.102.

Paul Dobing of NSW Procurement – Moving The Profession Into A Complex Future

Paul Dobing NSW

One of the highlights of last week’s CIPS Australasia conference was, without doubt, Paul Dobing. The Executive Director of NSW Procurement at the Office of Finance & Services is a familiar figure to those of us involved with The Faculty Roundtable Program, of which he’s a very active member.

Paul’s bursting with energy, and strides up and down the stage rather than standing behind the podium to deliver his insights. He has recently been motivated and inspired (and tanned) by a trip to the Garma Festival in far north-east Arnhem Land and is passionate about Indigenous constitutional recognition.

Paul’s on stage to talk about the future of the profession. He takes the audience through a list of CSIRO’s “Global Megatrends”, including planetary pushback, the pivot to Asia, longer life expectancy and digital immersion. Each of these topics could generate enough material for a conference in themselves, but Paul is making the point that to create competitive advantage for your procurement organisation, these are the sorts of longer-term “horizon themes” you’ll need to be engaged with to support your push into the future. CPOs need to think about what these Megatrends mean for procurement, how we can redesign our models for the future and importantly, what capabilities we’ll need to meet these challenges. Paul points out that just about every audience member is in the midst of some kind of change/transformation program, and asks how we can operate in an increasingly “VUCA” world (volatile, uncertain, complex and ambiguous).

On his own journey to bring his procurement function into the future, Paul has:

  • created a consulting advisory practice for the wider sector
  • created a data and analytics team.
  • introduced a research capability for longer-term thinking, and

None of these reflect “traditional’ procurement functions, but Paul believes they’ll be integral to providing ongoing support to the public sector into the future.

Emerging models:

Rather they viewing change with suspicion, Paul’s enthusiastic about emerging organisations that are disrupting traditional business practises. CPOs, he says for example should be embracing the sharing/collaborative economy and seizing upon the opportunities it creates in this space he has recently been working with Tu Share and Sendle CEO James Chin Moody to identify new models of service a delivery supporting government. We should keep ourselves informed of future trends, work out how we can start to engage with them and make sure we’re well-positioned in that conversation to drive competitive advantage. His advice:

  • Think ahead to the next wave of disruption.
  • Think about how procurement can tap into disruptive models of supply.
  • Build the capability required to embrace change.
  • Shift the risk-averse, rules-based culture traditionally found in procurement teams to a flexible, interpretive culture that can engage with new opportunities.

Hiring the next generation of procurement professionals:

Hiring is increasingly about the values and behaviour rather than technical skills. Members of Generation Procurement, as we like to call Gen-Y here on Procurious, and going to be:

  • Purpose driven
  • Values aligned
  • Diverse
  • Connected
  • Agile
  • Disruptive, and
  • Adaptive

What are you doing to move your procurement function into the complex future?

What Can Art History Teach Procurement Pros About Executive Presence?

Power poses and swagger portraits…

Louis_XIV_of_France

After Karen Morley’s great presentation at last week’s CIPS Australasia conference, I was inspired by her words on how “power poses” can be used to increase your executive presence. Investigation into the topic led me to the authority on this topic, social psychologist Amy Cuddy, whose 2012 Ted Talk entitled “Your Body Language Shapes Who You Are” launched awareness of the importance of power poses onto the world stage.

Cuddy talks about how body language, or “non-verbals” govern not only how other people feel about us, but can affect how we think and feel about ourselves. Mirroring behaviour seen in the animal kingdom, humans make themselves bigger and stretch out when they feel powerful, and make themselves smaller by closing up when they feel powerless. Cuddy takes the audience through a range of high-power and low-power poses, including this great pose dubbed “The Wonder Woman”.

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Body language is inextricably linked to power dynamics (or power dominance) and is, unsurprisingly, an important part of gender dynamics. Unconfident, shy, “powerless” people can practice high-power poses until they feel more powerful, with the ultimate goal of faking it until you become it.

A Google Image search of “power poses” makes for entertaining viewing. Alongside Lynda Carter’s Wonder Woman, there’s Frank Underwood from House of Cards leaning forwards with both palms flat on a table, IMF’s Christine Lagarde physically dominating ex-Greek PM Lucas Papademos at a Euro Conference in Brussels, and Beyonce striking a high-power pose on stage.

Power posing isn’t new. As an art history buff, the concept immediately brought to mind the “swagger portrait”, an artwork commissioned by powerful patrons to emphasis their status and dominance. I wanted to share a few of these historic power poses with you on Procurious so you can learn from some of the greatest swaggerers in history, who were predominantly clustered in the flamboyant 16th century. At the top of this article we have King Louis XIV of France (a la “The Sun King”) who isn’t afraid to awe his detractors into submission with the cut of his stockings. He’s joined by…

Henry VIII (1491 – 1547)

Check out that swagger:

Henry_VIII_Ditchley_Portrait_after_Holbein

Elizabeth I (1533 – 1603)

Emulating her father’s swagger with an enormous neck ruff and none-too-subtly dominating the entire globe with her right hand:

800px-Elizabeth_I_(Armada_Portrait)

Richard Sackville, 3rd Earl of Dorset (1589 – 1624)

Proving that shoe pom-poms were back in fashion…

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George Clifford, 3rd Earl of Cumberland (1558 – 1605)

His lance is longer than yours…

418px-Nicholas_Hilliard_-_Portrait_of_George_Clifford_Earl_of_Cumberland_-_WGA11421

So, if you’re feeling powerless or need a bit of confidence before an important meeting, why not take some inspiration from the 16th century and add a bit of swagger to your power pose.

 

Member Exclusive – Make Your Savings Stick

The Faculty’s Research Consultant, Hugo Britt, announces the release of ground-breaking procurement research exclusively to Procurious members.  

Download the exclusive report on Procurious

Astoundingly, more than 50 per cent of contracted savings are not making their way to the bottom line of Australia’s leading organisations. This troubling disconnect between contracted and realised savings has the potential to undermine the very credibility of the procurement function.

The Faculty’s latest research paper ‘Making it Stick’, is a call to action for procurement teams, CEOs and CFOs to address the fundamental shortfalls that are costing organisations hundreds of millions in unrealised savings.

You can access ‘Making it Stick’ from the  Procurious community feed.

Our report highlights exactly where organisations are coming unstuck in the process of realising savings and provides actionable pragmatic steps that can be followed to ensure contracted savings hit the bottom line.

What we uncovered

Our research, currently available exclusively on Procurious, identified that:

  • 29 per cent of organisations have no defined benefits realisation program for tracking savings
  • 58 per cent of interviewees were unable to estimate the precent of negotiated savings that actually reached the businesses bottom line
  • Only 20 per cent of organisations incentivise their staff on savings delivery beyond contract execution
  • Weaknesses in benefits tracking programs are shared across public and private organisations
  • Significant change management needs to occur before organisations can fully realise the savings they have negotiated
  • There is a lack of definitions and measurements around savings tracking and benefits realisation that undermines procurements efforts in this area

Why you should download “Making it Stick”

This timely and practical research report will enable you to:

  • Understand why organisations fail to deliver on contracted savings
  • Access a roadmap to ensure that your contracted savings hit the bottom line
  • Hear from industry-leading organisations that have got it right
  • Access checklists, tools and measurements in order to define and validate your success in this area

Download our latest research from the Procurious Community feed www.procurious.com/community and make your savings stick.