All posts by Richa Singh

7 Ways For Procurement To Drive Innovation 

How can procurement professionals drive innovation within their organisation, by working closely under the CEO.

By jamesteohart/ Shutterstock

 “Conformity to the present is invisibility to the future.”  

Stefan Molyneux

Innovation is anything but business as usual. As procurement professionals, we are responsible for thinking of new ways of creating value, thereby bringing innovation into our organisations. We also have access to the most internal functional stakeholder teams and often act as a bridge between different departments on communicating key strategies. We have access to the outside world via our external supplier database. This puts us in a unique position to drive innovation even for new product development or ideas, in addition to bringing in supplier driven innovation

Have you read the fascinating fable centered around innovation called “How Stella saved the farm”? It is loosely inspired by the George Orwell classic, ‘Animal Farm’. It illustrates a framework of not just thinking about innovation, but also implementing it. Innovation is not a person or a department. It is a mindset. The approach outlined in the book can be replicated across any organisation that is willing to learn by doing.  In the book, the CEO, Dierdre appoints a horse called Mav as the ‘Innovation Leader’. As per a recent data from Entrepreneur magazine, 61 per cent of CEOs consider innovation a top priority and describe a lack of resources and a structured process as top challenges. I could not help but wonder if procurement can help organisations overcome these challenges due to the extended role we play as a “harbinger of innovation”.

The fable is about a mare called Dierdre who inherits her father’s profitable animal farm as the CEO and must find breakthrough new business idea to survive beyond the next few years. She is chosen to run the farm by her father over “The Bull” who learnt everything from her father and worked exactly like him. The Bull is naturally dissatisfied at not being chosen to run the farm. Stella is the bright, young sheep who travels the world and brings a new idea of running luxury wool (derived from Peruvian alpaca) business to the farm. Thus, begins the journey of implementing this idea with the help and expertise of all animals in the farm.

Here is my hypothesis on how Procurement can drive this process in the organisation, by working closely under the organisation’s CEO.

1) Need for Innovation:  In the words of Albert Einstein,” If you always do what you always did, you will always get what you always got.” The first step in the process of implementing innovation is the realization and honest acceptance that you need it. This understanding must be reflected unanimously across the organization.

2) Process for getting a breakthrough idea: The second stage is obviously pitching for “breakthrough” ideas to unleash creativity without defining restricted metrics. And what better way to get it than from your team and key internal stakeholders who know what a breakthrough can be, with the least effort and investment. Here, it can be procurement’s job to engage all departments. This exercise should lead to a creative dialogue to evaluate the ideas holistically and end with the selection of the right best idea to focus collective organisation energy on.

3) Communication to the right channels at the right time: As they say, ‘Finding the right idea is only the beginning’, so an organisation working on a new idea would allocate resources towards it and communicate the priorities to the different departments and across the hierarchy. This is easier said than done, as many changes will occur during the project and the communication on changed priorities will often end up making teams confused on what roles they need to play for the idea. Procurement can ensure that changes are articulated clearly and explained to everyone throughout the idea execution so that everyone is involved in playing their roles. Thus, leveraging our project management skills and providing stewardship.

4) Flexible organisation structure to facilitate new areas: During innovation, it becomes important that organisation structure is not set in stone and can change as you discover the bottlenecks in the implementation. Procurement can be proactive in identifying these bottlenecks by working across departments and suggesting corrective changes. 

5) Facing Reality of what the customer wants: Sounds like the most obvious one, though it could be an acid test to know if you are producing what you can, or are you producing exactly what the customer wants you to produce. At the time of idea testing, procurement can engage its external resources to do a deep dive on the customer need and provide concrete data on the idea. If the data suggests that the idea should be modified or changed to meet market requirement, then procurement would need to influence a change in strategy in line with customer needs.

6) Organisation culture issues: These are bound to happen for an organisation trying to embrace change. It would involve “letting go of control” for some team members and it is one of the most difficult tasks to do in the way of change to make an inclusive environment. Procurement’s role could be to team up closely with CEO and HR to resolve these issues timely.

7) Measuring the Innovation:  Procurement pros need to work on defining metrics for measuring innovation such as defining a clear hypothesis, identifying most critical unknowns while planning, analysing results and deciphering the lessons learnt. These will help drive innovation culture within the organisation in the long term.

Organisations can reflect on below questions more objectively during a new idea development or innovation process- 

Is our idea a breakthrough idea? Are we making something that the customer wants? Do we have the right team structure? Are we communicating enough and well? Are we learning to innovate? Are we measuring innovation in the right way?

They would often discover that what they assume to be a fault with the idea, is sometimes more a fault with the execution. This is where giving clear ownership to procurement as ‘Innovation Leaders’ would help as procurement brings in its existing skills and develops further its skills of cross-company collaboration, communication and influence.  

What do you think about procurement playing the role of ‘Innovation Leaders’ for new products or ideas in your organisations?  What could be the challenges we face if we take up this role? How do you think we can overcome those challenges?

Motivating Procurement for the next level of evolution

How do you motivate your procurement team to reach peak performance? Start by asking the right questions.

Procurement is a highly specialized field in most organizations, one that develops leaders as change agents creating value in literally every space that they touch. With the advent of the digital era, there is a greater need to understand and implement technology to foray into unconventional territories and look for hidden value. Thus, motivating the Procurement teams to look for new ways of creating and driving innovation becomes critical in present times.

As we look at motivating Procurement teams, it is important to analyze how the professionals working in different Procurement jobs think about their roles. The recent Procurement 2030 report, courtesy Procurious & Michael Page pointed out the insight that most Procurement CPOs consider talent development and retention as a key focus area for future. Thus, it is safe to say that motivating teams would be a top priority for talent retention in Procurement. This report also highlighted that the buyers and category managers consider almost half of their work as tactical vs strategic, and that almost half of the work can be automated i.e. it consists of repeatable tasks. These are useful considerations in understanding the current scenario before thinking about the next-level progress.

So what could be the ways of motivating Procurement teams into peak performance?

Organisational structures

Based on my discussion with Procurement colleagues across industries, I have come to believe that the right organizational structure in Procurement is a critical first step towards having a productive and engaged workplace. We have seen many waves of changes in Procurement structure across industries over the last few years. First, there were location focused roles, then the category management roles came into the picture. Slowly, the buyer roles also became more globalized versus being local or regional over time. Thus, the Procurement organization has kept evolving.

(1) Evolution of global category management: Most buyers today realize that category management is the way to be and global structures provide maximum visibility to drive change, thereby it is a welcome change to most of us. However, due to many continuous changes, it seems like there is a tendency for some ambiguity structure wise in many workplaces. I recall a peer from a mid-sized organization who had remarked in a forum that he liked building expertise in the global category manager role but at many times, he felt that he was doing the work which was distracting him from his core priorities of understanding business needs and finding creative solutions with the help of his supply base. It is certainly true that organizational structures were not intended to be a barrier when they were put in place. However, often the buyers at entry and mid-level spend valuable time looking for clarity about what they are supposed to do, as core priorities seem not so core when laden with structural challenges.

(2) One size does not fit all: Some organizations follow one structure strictly i.e. they have either the category management specific or location specific Procurement roles, while some have a mixed structure depending on business and country-specific supply needs. Depending on the size of the organization, there could also be a matrix or a hierarchical structure. It is often noticed that layers of hierarchy also lead to slower alignment and execution, thereby affecting creativity. In the face of further change, it would be good if leaders re-assess the current organizational structure that they have and analyze if it is set up for maximum effectiveness. We think about factors such as our business needs and supply needs while setting up roles, but with time as things change, it is good to re-assess design by deep diving internally into Procurement desk responsibilities.

(3) Internal feedback and self assessment to rescue: In the quest to motivate teams and help them deliver with effectiveness, it would be paramount to see where the teams spend most of their time and make changes that help simplify the structure while driving quicker actions. So look internally and ask yourself- Are your organisational structures distracting your teams? Do your teams think they are spending valuable time and energy on tasks which they should not be doing as they do not add value? Is your organizational complexity weighing them down, rather than helping them focus on business needs and external market evolution? A deep self-assessment and appropriate internal feedback could help provide the right design for the future. This could also be the way to get buyers to go deeper on building internal and external stakeholder relationships and removing some tactical tasks to drive efficacy.

Employee Coaching

The current digital era is the era of employee engagement. We have come a long way from the factory age where work was repeatable and top-down approach worked. Now, the best organizations are the ones where employees can feel understood, valued and trusted. Hence, the role of managers as coaches becomes all the more important.

(1) Coaching by asking right questions: I have often thought that buyers are prone to considering some strategic tasks as tactical because that is how these appear superficially. For example, an area new to Procurement where no one has evaluated the scale before could appear so in some cases. Then, for some time the buyer would only manage it as a low priority tactical item, not realizing the full value it can bring to the table if its potential is realized. When I was buying Facilities for Middle-East and Africa region, it was considered a tactical area until we saw the benefit of leveraging full scale by engaging competitive new players in the changing market landscape. Had we not analyzed this area internally and externally, it would continue to be labeled ‘tactical’. The key thus, is getting the right coaching and input, and being asked the right questions to look deeper rather than scratch the surface.

(2) Coaching by internalizing Maslow’s Hierarchy of needs: Good coaches have an understanding of human behavior and motivation. The oldest model known in understanding human behavior is Abraham Maslow’s hierarchy of needs. This can help managers to understand human behavior in office settings also. Usually, people have basic physiological, safety and belonging needs that would require fulfilment before they can reach self-esteem and finally the self-actualization stage. Of course, the peak performance is something that happens at uppermost levels of Maslow’s hierarchy of needs. This model can help both the coach and the coachee to assess themselves. Moreover, it provides the coach with a framework to understand the team first so that they can find ways to motivate people positively. A good coach can notice performance variations in the light of this model for themselves and the team, and use it to point them in the right direction.

(3) Coaching by understanding Losada line: Losada line is also an interesting principle in organizational behavior which measures the positivity to negativity in a system. What it states is that for any positive change to happen, a ratio of 3 to 6 is required. Lower than 3 would not be optimum for a good performance. To give you an estimate, successful marriages usually have a Losada ratio of 5 or above. This can be used by coaches to provide feedback and nudge the teams towards high performances.

In conclusion, as organizations get serious about leading with purpose and boosting positive collaboration for their employees, coaching and re-assessing organizational structures, on top of the existing mechanisms of training and rewards, could help unearth valuable insights paramount for their transformation into more evolved workplaces. While this happens, all of us in Procurement would need to be open to learning new things and adopting a growth mindset. In the words of Satya Nadella, as stated in his book Hit Refresh – “After all, how we experience the world is through communications and collaboration. If we are interested in machines that work with us, then we can’t ignore the humanistic approach.” We need to continue to bring humans closer by embracing collaboration and removing barriers. Do you think this could apply to your organization? What other strategies have helped in your journey?A