All posts by Stuart Brocklehurst

Making the Final Ascent from CPO to CEO

Taking the final step from CPO to CEO appears to elude many procurement leaders. So, why does Procurement so often lose out to Finance?

ceo to cpo

At the eWorld procurement conference last month Tania Seary interviewed me about leadership as part of Procurious’ Career Boot Camp series. After we finished she said, “there’s one question we ran out of time for: why do so few CPOs become CEOs?”

This set me thinking on my flight home. There are well known examples of the supply chain providing the key to the executive washroom. Tim Cook at Apple, and Sam Walsh at Rio Tinto are just two of the more well-known.

Famously, though, the best trodden route to the top is via the Finance function. 52 per cent of FTSE100 CEOs and 30 per cent of Fortune 500 CEOs have a financial background. So why do the accountants win out?

Show Me the Money!

There’s a Dilbert cartoon where the boss informs his staff: “you know we said ‘people are our most valuable asset? Turns out we were wrong. Money is our most valuable asset.”

dilbert-assets
Courtesy of Scott Adams (dilbert.com)

Given the paucity of HR directors making it to the hot seat, it seems boards tend to agree. CPOs should score well here: at the core of the role, after all, is to maximise the effectiveness of the company’s expenditure.

“Much travell’d in the realms of Gold”

Peter Smith’s eWorld workshop inspired me to quote Shelley, so it may be time to turn to Keats.

The other great advantage possessed by Finance Directors is that they see the entirety of the organisation: from wide expanses to western islands, no corner is hidden from their view nor beyond their reach.

This is critical. The board relies on the FD as one of the few people, other than the CEO, who has a grasp on how the totality of the business fits together. Not only does she or he have knowledge of what’s going on in each part, but they also appreciate the interlinkages between them.

How do CPOs fare against this measure? Well, if we’re frank, variably. In some organisations, CPOs see the complete cost base and fully understand how the company’s capital is deployed – and why.

In others, they may only influence part of applicable spend – KPMG’s survey suggested the average is around 60 per cent. Without that comprehensive view, the nominations committee may not consider a candidate ready to take overall leadership.

I suspect this is the most critical factor holding CPOs back. Ascending to greater height affords – but may also in the corporate world, require – a broader view.

Then like stout Cortez, with eagle eyes, may the CPO take that final step to become a CEO, and survey the scene, silent, on a peak in Darien.

To hear more from Stuart, catch up with his Career Boot Camp podcast here. You can also read more from Stuart on the impact of maverick purchasing on procurement, and download the latest Applegate whitepaper on the subject.

Defining & Defeating Maverick Spend

Is maverick spend an issue for the UK public sector? Is local government adhering to procurement practices when spending taxpayers’ money?

maverick spend

It’s not uncommon for businesses to suffer from high levels of uncontrolled procurement, often known as maverick spend. These levels can often reach 80 per cent of total spend, a figure likely to send shivers down the spine of any procurement professional.

To elevate its role within an organisation, procurement must extend its reach. A CEO is unlikely to take a function seriously that only influences 60 per cent of the activity for which it’s responsible.

Yet that is the situation of the average procurement team. No other function would allow this: Legal, HR, Finance, Compliance, Public Affairs – all insist their writ runs broad.

Maverick spend is a major obstacle to extending procurement’s influence. However, decades of setting policies and rolling out enterprise systems have had limited impact in reducing it.

Maverick Spend in the Public Sector

While it’s often easy to see the figures in an individual organisation, actively tackling this spend is another matter. Solutions range from improving reporting to enabling other functions to see the benefits proper procurement processes bring.

Today, Applegate PRO has released a whitepaper on maverick spend via Procurious. The paper will showcase data on procurement practices gained via a Freedom of Information (FOI) request to all local councils in the UK.

This is one of the largest FOI requests relating to procurement processes that has ever been conducted in the UK.

We hope that this research will provide a valuable snapshot of how local councils weigh up in the use of their allocated budgets on a national scale.

Applegate PRO are exploring further areas of research to analyse the maverick spend in public sector bodies, including the Ministry of Defence and NHS.

What the Whitepaper Offers

This white paper uses a case study of local government procurement to explore the varying levels of maverick spend across a set of comparable organisations. It reveals startling differences in levels of uncontrolled expenditure and explores the ramifications for this.

Findings from the 276 councils that responded from across the UK include:

  • Definition of maverick spend.
  • The top three councils that reduced levels of maverick spend between the financial years of 2012 and 2016.
  • The councils whose maverick spend increased the most between the financial years of 2012 and 2016.
  • Local council with the most maverick spend.
  • Local council with the least maverick spend.
  • The percentage of maverick spend undertaken in their council from each financial year from 2012 to the present day.
  • The sanction systems in place for non-compliance to procurement practices.
  • The percentages of transactions that require a purchase order.
  • The number of procurement professionals that have a CIPS or other professional procurement qualification and how many are currently undergoing procurement training.

If you are interested in reading the full report, you can sign up to receive your copy here.

Applegate PRO is a free-to-use eProcurement system that streamlines request for quotation and purchase order processes, enabling buyers to submit a request, receive up to ten competitive quotes and raise a PO in a matter of hours.

Submit your request for quotation today with no obligation to buy at http://www.applegatepro.com/

Winning Popularity Contests Doesn’t Make a Great Manager

A great manager isn’t out to win any popularity contests. They want to win your trust and respect – and this is how they do it.

stuart-brocklehurst great manager

Scott Adams, creator of the Dilbert comic strip satirising office life, has observed that people frequently tell him how their manager is exactly like the incompetent Pointy Haired Boss. But no one ever sees any similarity to themselves.

Good leadership is a hard, and rock-strewn, path to take. It’s clichéd to state that management is not a popularity contest. Yet too many are more concerned with being liked by their staff within the present moment. And by failing to take and keep to tough decisions, they fail to win the respect and trust of their teams over time.

What Makes A Great Manager?

A great manager inspires our support and commitment, while not backing away from hard choices and difficult conversations. They are fair and consistent so their staff know they will be treated equally. They recognise achievement and celebrate individual improvement.

A great leader cares about each individual’s personal development and invests in it. Financially, perhaps, but far more importantly, invests their time, knowing that the return in greater productivity, in the time handed back as team members increase their capability, is invaluable.

Teams will back a manager who listens to them. They don’t expect the answer to every suggestion or request to be ‘yes’, but they – we – need to know that we’ll be heard, and paid the respect of a clear explanation of whatever path is chosen.

Empowerment is not abdication. It’s not dumping your problems on someone else’s plate. Empowerment is structured delegation, being clear on what you expect, keeping close to progress and being available to support through the difficulties which are encountered in any worthwhile endeavour.

It’s Not About How Much You Know

To be the leader of a team does not require you to have greater knowledge or skills than the members of that team – were that the case, it would be a pretty severe limitation on promotion.

What CEO knows more about finance than their CFO, more about HR than the HR Director and more about procurement than the CPO? Leadership requires comfort that each member of your team may – will, if you’re lucky – be better at their job than you.

And your job is to help them to perform to their very best.

Leadership is about inspiration. A leader must have a clear vision of where they’re going, whether it’s a small team, a department or a whole company they need to take with them. They must believe that vision.

They must articulate it clearly in a manner which is authentic to them, whether that is quietly one by one or loudly from the conference stage.

Do this, and your team will believe and engage with your vision, as you embark on a common journey together.

The Procurious Boot Camp will increase your stamina, get you in the best career shape of your life and help you to punch above your weight.

It’s not too late to sign up. Enlist here and get access to our 15 free podcasts from some of the best career coaches around. Don’t miss out – your career will thank you for it!

Extreme Procurement

With growing focus on emerging markets, ‘extreme procurement’ will become more common.

camo-business-suit-640x533I was at an airbase in the desert when the call came in on my satellite phone: my regular security detail was stranded in Northern Iraq and wouldn’t be able to meet me when I arrived in Baghdad. My firm had won a tender to re-establish banking systems after the war – a great opportunity for us, a great contribution to rebuilding the country – but dangerous work. Western contractors like me were being kidnapped, tortured and beheaded on a regular basis. To travel without security would be suicidal.

Fortunately, a quick call to another of our suppliers established that they had a team available that could stand up at short notice to meet me on arrival. All that was left to do was to call the office in London to have the work order put through…which I did, to be told by a purchasing manager that as I hadn’t followed the firm’s required processes, that couldn’t possibly be done.

On that occasion, a fairly direct suggestion that he join me on the trip and see if he felt the same resolved the matter. With the anaemic performance of Western economies driving more and more businesses to seek growth in increasingly exotic locations, however, the challenges of what might be termed ‘extreme procurement’ are being faced more frequently by the profession and line staff alike.

In extreme environments, procurement is more important than ever

So should procurement butt-out and leave the people on the ground to get on with it? Far from it. In the more exotic emerging markets, procurement is more important than ever:

  • The reputational – and legal – risk from engaging with suppliers who don’t meet the right standards, for example of workforce welfare, is significant, and this can be more common in less developed economies;
  • Strict transnational laws on bribery and corruption require supply chain assurance – you need to know not only that your staff are not involved, but also that no one acting on your behalf is either;
  • Costs can be far higher, and much more varied: the potential for savings is greater than in more settled supply chains;
  • The rate of economic growth may require your business to move fast to capture the opportunity, in a fast developing market vital materials may be in short supply – effective procurement can make the difference between failure and success.

Rules are still needed – but they may need to be different rules

The requirements behind your organisation’s policies and procedures – compliance with law, good governance etc. – will remain. If it hasn’t operated extensively in emerging markets before, however, the way those principles are applied may need to adapt.

Reviewing the supplier landscape at an early stage will provide the best sense of this. If you make exceptions to some requirements due to, say, there being only one appropriate supplier in a category, make sure to insert a ‘sunset’ clause so the exception is revisited as the market develops. 

Check the practicality of your procedures

Having defined policies suitable for the circumstances, double check their practicality. If costs are significantly higher than in your home market, approval levels may need raising. If you have an exceptions policy, make sure those who can grant them will be readily available when needed – bearing in mind both time zones, and that Saturday and Sunday may be working days.

Get familiar with different cultures 

Understanding different cultural norms is crucial to understanding how business gets done – and how you can do business effectively. This isn’t just about the new countries with which you may be dealing: expats can also be a breed apart, those who open up the riskiest locations especially. Spend some time getting a handle on how all involved think and act – and you’ll be able to work out the most effective ways to get them on side.

There’s no substitute for first-hand experience

To be truly effective – especially if this is to be a major part of your business – you need to experience the markets involved for yourself. It may be a hard sell to your boss, the finance department and even the frontline staff to fly a ‘back office’ person out, but the case should be clear: procurement is more important than ever in these markets, for you to understand the supply landscape, you need to see it for yourself.

Exotic emerging markets are challenging, difficult, often dangerous and invariably highly demanding. Both for you and for your business, they can also offer unparalleled opportunities: for growth, for profit, for developing skills fast and for demonstrating your worth.

Now, where did I leave my flak jacket…

Brockle

Stuart Brocklehurst is Chief Executive of Applegate Marketplace. His past roles have included Group Communications Director of Amadeus IT Group SA and Senior Vice President for External Relations at Visa International CEMEA.

5 Ways Social Media Can Help Your Procurement Career

Post your way to success!

2014-01-socialmedia-jobstage A while ago I posted about the career-limiting bear traps to avoid when using social media for business. It’s good to be conscious of those, but they shouldn’t scare anyone away from making the most of these great communication tools: the one bear trap I forgot to mention last time would be to ignore social media altogether.

But how are we supposed to use them for business? It’s clear enough how Facebook can keep us in touch with friends’ culinary exploits and their kids’ school projects, how Twitter can crowd-source a thousand puns and how LinkedIn can be invaluable when job-hunting – but none of that helps us in the day to day of doing the job you’re in.

1. The Boundless Network

Anyone doing a job with an ounce of stimulation or challenge to it will face questions they can’t perfectly answer on a daily basis. What’s the best technique to manage that auction, who can supply the parts we’ll need in that new market we’ve entered, what’s the best training course for my new team member?

The web gifts you a boundless network of people who can – and overwhelmingly, want to – help. Place the question on a discussion board, detailed, intelligent answers often flood in from around the world; complete strangers happily take time to help you out. If the issue can’t be aired publicly, send a connection request to another customer of that supplier you’re evaluating, a CPO who does business in that country, and more often than not they’ll be happy to help.

We have access to huge amounts of data – and many videos of cats – via the Internet, which often turns out to be less helpful than one might hope (especially the cats). Being able to tap into real experience, however, is priceless.

2. Inspiration saves perspiration

Wondering how your colleague effortlessly develops brilliant strategies and is always ready with a great new idea? Well, it could be they’re just smarter than you, but maybe they’re keeping on top of the latest trends via blogs, Procurious and LinkedIn Pulse.

Social media are great tools to keep yourself up to date with the latest thinking. A quick scan of the latest articles, posts and discussions keeps you current and will often provide ideas you could use in your own role.

3. Colleagues might actually listen…

Comms professionals have long since known that the best way to get colleagues to read an announcement is often to get it covered in the press – for some reason we pay more attention to external sources than we do to those infernal internal memos. Most of us don’t have newspaper editors on speed-dial, but we can all now be our own publishers.

Post an article about an initiative you’re undertaking, file an update when you’ve completed a major achievement. It can be striking how others’ opinions of you can be moulded by the mood music you create through social media.

4. Check out the competition, keep close to suppliers

 At a previous company, we spotted that our main competitor’s Twitter account had been hacked and that over several weeks, they – a big company – didn’t even notice. We thought we should let them know, but the lawyers told us we couldn’t talk to anyone there directly – so in the end we helpfully mentioned it to a journalist who covered our sector, knowing the news would then soon reach them…

Anything that egregious is unusual, but it’s amazing what you can pick up about both your suppliers and your competitors. A worrying number of staff from Company X seem to be moving on – could it be unstable? People at Company Y keep asking about a new market – do they have plans you don’t know about? 

5. Amaze your colleagues and astound your friends

Social media is fundamentally meritocratic. Anyone can build a network, we’re all free to create content, and it’s then shared in the same style whoever we are. It gives you an opportunity to show yourself as a leader in your profession, to your peers, your colleagues – and, of course, your bosses.

For this reason, it’s especially important for procurement professionals. In a discipline where your company may not have any benchmark of how good you are, it gives you an opportunity to demonstrate your abilities. As the saying goes, you don’t necessarily need to blow your own trumpet, but at least let people know you have one.

Stuart Brocklehurst is Chief Executive of Applegate Marketplace. His past roles have included Group Communications Director of Amadeus IT Group SA and Senior Vice President for External Relations at Visa International CEMEA.

Watch Your Step! Pitfalls In Social Media To Avoid

Career bear-traps to avoid… 

Pitfalls in social media to avoid

It’s a major crisis for the company – the phones are ringing off the hook as the comms team is bombarded with furious questions from journalists, customers, shareholders, regulators. Announcements, FAQs, press briefings need preparing at lightning speed, and frustratingly every single one has to be approved by the lawyers before they go out. The pressure is on: this could cost the company business, there may be lawsuits – and anything said right now will be cited in those – the share price may come under pressure.

And into the midst of this, a colleague completely uninvolved in what’s going on decides to Tweet their personal view of the crisis. 

Procurious ran an excellent workshop at eWorld last week, talking about how procurement people might get more involved in social media. It’s a great subject, the profession has definitely been slower than some other disciplines in embracing these great communication channels. It was suggested though, that the comms department might get leery – having sat on the other side of that particular desk, here’s why.

Journalists, customers and the world at large don’t distinguish that much between official corporate statements and things that employees of a company happen to say. Especially in a crisis, any quotable quote or accidental off-hand comment will get used and repeated over and over – especially if the ‘proper channels’ have been locked down to repeating very limited information. As a fair few people have discovered in recent years, that can be career limiting – or, indeed, career terminating.

Here are five suggested rules to live (or at least, post) by, all from real life experience:

This isn’t personal

Our social media channels are our own personal domains. Right? Wrong. If you’ve chosen to use them to talk about your work then they’re properly of interest to your employer, too. Your contract and HR handbook will have blurb about confidentiality and not bringing the company into disrepute, and there’ll probably be a social media policy somewhere as well.

Our highly valued customer is useless!

So, you’ve read the policy and placed the disclaimer, ‘all views expressed only my own’ – so you can say what you like now, surely? Not quite. As a consumer, you may want to vent about the terrible service you received from some company: if they happen to be one of your firm’s biggest customers (and if your social media identifies you with your employer) you can expect an awkward conversation the next morning. If nothing else, it’s plain courtesy to your colleagues trying to renew that account not to make their job harder. 

A Tweet is for life, not just for Christmas

That was a witty comment about your big competitor, wasn’t it? So good it went viral, ended up all over the web. And on the desk of the grumpy interviewer when you apply for a job there three years later…

I probably shouldn’t say this, but 

You’re right, you shouldn’t say it. If you feel the need to write – as in the recent LinkedIn photo debacle – ‘this is probably horrendously politically incorrect’, then you can be pretty certain you shouldn’t go any further.

Crisis? What crisis? 

When your company is going through a crisis, let the team appointed to handle it, handle it. They may do a great job, they may make a mess of it, but sticking your oar in isn’t going to help. So your tweet was nothing to do with the crisis, it was just a photo of staff having a great time at a party. Oddly, that’s still not going to help the company’s reputation when the comms director has just reassured the world that every sinew is being strained to fix the problem.

Social media are great – there’s a whole other post in that. But tread carefully – or you may have that long and uncomfortable walk to the comms director’s office. Trust me, neither of us want you to be there.

Stuart Brocklehurst is Chief Executive of Applegate Marketplace. His past roles have included Group Communications Director of Amadeus IT Group SA and Senior Vice President for External Relations at Visa International CEMEA.