Tag Archives: cpo roundtable

Redefining Corporate Purpose – Is It Time For Boards To Adopt ‘Total StakeHolder Value’?

Major challenges such as spiralling inequality and climate breakdown are putting corporations under pressure to rethink their very purpose. The Maturity Institute has developed a ‘responsible business model’ that puts people at the heart of business and produces best value for stakeholders as well as shareholders.

Is your company facing an existential crisis?

To provoke discussion at a recent Procurious CPO roundtable, I suggested that each participant was working for a company that was already in the midst of one.

Why did I say this? From the London Financial Times calling for a re-setting of capitalism to US CEOs shattering the prevailing paradigm of profit maximization, to investment firms in the City of London calling for a renewal of stakeholder-focused value creation, the purpose of corporations is under intense scrutiny – and facing pressure to change.

The questioning of corporate purpose is putting firms into a state of flux.

If shareholders (or owners) are no longer to be accorded primacy in setting strategies designed to deliver the best financial returns, then what else should be driving them? 

How, and for whom, a firm creates value has become a boardroom conundrum like no other.

Text Box: “This topic blew my mind…my question is now – which organizations are going to take the big leap forward on this?” 
Procurious CPO Roundtable participant, November 2019

A Host Of Challenges

Environmental and human problems arising from business and economic activity have continued to surface at an alarming rate. Poverty, human rights, slavery and growing inequality have become more acute.

Climate breakdown is now impacting all around us. Polluting plastic swirls around in our oceans, contaminating marine life, while toxic pesticides find their way into our bodies via food systems, and poisonous air may be undermining our health every day.

Customers, investors and workers are not just asking questions about their involvement with firms that do not seek to address and resolve these problems, they are increasingly avoiding them altogether.

Governments and regulators are also under growing pressure to restrict or revoke licenses where firms do not work to address such issues or fail to provide real benefit to local communities. 

So what should your own company do to meet these challenges?

It is evident that firms that understand how to simultaneously serve society and perform financially will be the ones that can survive and thrive.

Shareholders And Stakeholders: A Common Purpose

Since 2012, the Maturity Institute (MI) has been building a responsible business model that shows how companies can produce the very best stakeholder and shareholder value by putting people at their heart.

By aligning management systems to leverage and realize the potential value of all their human stakeholders, companies can competitively differentiate themselves from their peers.

For procurement heads, this specifically includes suppliers. This is an area in which value-based relationships (as opposed to those driven more by cost parameters), together with appropriate system design, should lead to superior outcomes.

Moving from a ‘shareholder’ to a ‘stakeholder’ business system requires an understanding of what this entails across an organization’s whole system – including workers, customers, investors, suppliers and wider society.

It also requires engaging everyone in the pursuit of a common purpose.

Total Stakeholder Value

Our work is designed to act as a practical guide, to set out a way forward for boards, C-suites and managers to pursue a goal focused on creating healthy organizations through what we call Total Stakeholder Value (TSV).

This is not based on a theoretical perspective but on existing, exemplary ‘mature’ organizations.

At MI, we teach the invisible factors that have enabled organizations like Toyota, Handelsbanken and Mercadona to lead the world in a direction that is in everyone’s interests. These are companies that have a central purpose rooted in serving society.

Alongside financial outperformance, they have consistently delivered the best-quality products and customer service ahead of peers.

In achieving this, they have deliberately designed high-value management systems, including supplier relationships, and have also led others on managing out harm, in either environmental or human terms.

Organisational maturity

To help companies identify how these factors play out within their own organization, we deploy Organizational Maturity Ratings (OMR) to uncover the intrinsic value and risk arising from the company’s whole human ‘ecosystem’.

Our open-source OM30 diagnostic looks at 32 inter-related questions and is able to identify and predict the likelihood of material human value and risk arising from critical causal drivers, such as:

  • Formulating and articulating a corporate purpose of Total Stakeholder Value (TSV) maximization
  • Identifying whether an organization’s business strategy and operating model are predicated on reconciling its (market) value with changing societal values
  • Checking the extent of trust placed in the leadership and management team by customers, employees and other key stakeholders
  • Determining whether the organization is planning to maximize the value it generates from all of its human capital value (both internal and external, e.g. supply chain)
  • Considering the evidence of any never-ending, continuous improvement philosophy being operationalized.

By examining these factors across their whole system, companies can, at last, gauge a baseline of true corporate responsibility and how it affects total value generation.

Strategies For Transition

This also enables executives and managers to identify key strategies that will help the transition to a corporate purpose of TSV – one that drives financial, human and environmental performance that can also be measured and monitored.

For CPOs, the OM30 also has a specific additional application – in helping to assess the suitability of suppliers. Here it acts as a measure of alignment with parent-company culture and human systems, and can be used to determine levels of supplier responsibility and fit, above and beyond any compliance requirements.  

MI is using its methodology and building its evidence base by working with corporations, investment managers and academic institutions to help them understand the relationship between the OM30 and a range of value and risk outcomes.

Recent academic testing of our data has shown:

“…the benefits to shareholders and stakeholders are not mutually exclusive; in other words, the value to business, shareholders, stakeholders and society are aligned. A company can maximize profits and create wealth for shareholders mainly by establishing a mature institution that enhances well-being for all legitimate stakeholders as well as create positive externalities to the environment and the wider society. 

Cambridge Judge Business School, March, 2019 

We can all participate in encouraging, demanding, designing, building and facilitating the process of change that is now necessary; to help create many more mature, exemplary firms that can lead others.

MI is actively helping stakeholders to play their part.

Stuart Woollard is Council Member at the Maturity Institute. The Mature Corporation – A Model of Responsible Capitalism, co-authored with Paul Kearns, is available with a 20% discount using code Corporation20 from Cambridge Scholars Publishing https://www.cambridgescholars.com/the-mature-corporation.

Four Reasons Why Value Is the New Procurement Normal

We’re all talking about delivering value these days in procurement, aren’t we? But with so many definitions around, how do we maximise its impact?

value
Photo by Riccardo Annandale on Unsplash

We’re all talking about delivering value these days in procurement, aren’t we?  Value is now the new normal.  And everyone has their own take on what delivering value for the business really means.  There’s no single definition.

So Procurious were delighted when our November Roundtable sponsor Ivalua asked us to use value as our theme. Here are some of the great insights that speakers shared with attending CPOs on the day.

Stakeholder Value – an idea whose time has come?

In August, Business Roundtable CEOs made the announcement that value is about more than just shareholders. It’s this idea that we should be focusing on going forward.

And they were clear that value, rather than maximising return to shareholders, is now “the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.” 

But what does this mean in practice for procurement? And how can we demonstrate stakeholder value? Stuart Woollard has been at the forefront of pioneering work in this field for many years, assessing the measurement of factors beyond cost. 

Stuart had a warning for the CPOs too that, “being purpose driven is not enough”. He urged a move away from a focus solely on output metrics, and encouraged them to take a balanced multi-faceted approach. 

Stuart and his organisation, The Maturity Institute, has a tool that they’ve been using to achieve this balance for many years. But just because there’s a method of measuring value doesn’t mean this shift will be easy.

Finally, Stuart reminded the CPOs that, “Without support from the CEO and your Board, you may not achieve the shift to value that you need”, bringing home the point that buy-in is needed across the leadership team and beyond, in order to ensure success.

The value in your supply chain comes from people

If changing to a value-based model will require a mindset change at the top is there anything CPOs and their teams can do right now?

Nadia Youds, from UK retailer John Lewis & Partners, told our CPOs that an approach targeting employees is a great way to deliver value back to the business. “Job design in our supply chain is as much about the business relationships procurement has put in place as it is about the suppliers themselves.”

Nadia is clear about the connection between the buying organisation and the way employees in the supply chain are treated, and the work they’re expected to deliver. 

Although Nadia and her team have developed an assessment process that moves away from the standard suppler audit, she was keen to stress that the process needs to move away from compliance as a ‘tick box exercise’.

Using an approach that focuses on people and jobs, particularly in the manufacturing industry, can help suppliers develop and retain their workforce. This will lead to them ultimately being more competitive in the market.

Winning the war for talent – could value be the key?

Many CPOs are facing huge challenges in talent recruitment and retention. Procurement is still keen to learn from the best. And so a chance to see what the Tech industry does to source and retain the right people was an eagerly anticipated agenda item. Andrew MacAskill, from Career Jump and Finlay James was the person for the job (as it were!).

“We’ve still got a long way to go to attract the brightest minds in the industry,” Andrew mused. He reminded CPOs we can learn a lot from the Tech industry where “talent has become the customer”.

One tactic Andrew urged CPOs to consider is to build their own online personal brand. Many of his candidates select roles based on a leader, not a brand. “They’re asking themselves the question – do I trust this person to take my career forward?”

The issue of whether the talent wants to work for us led Andrew to suggest a reverse interview process:

  1. Sell your vision to the candidate – why should they want to work for you;
  2. Conduct a balanced interview – make sure the process and discussion is equal between recruiter and candidate;
  3. Open up the floor – give the candidate the chance to sell themselves to you.

Andrew shared that testing for the candidate’s attitude, cognitive aptitude and habits is the norm in tech recruitment processes. He urged CPOs to consider this when they’re recruiting team members to help them deliver their vision for value.

Value remains the same throughout history

Looking back through history shows that data gives procurement a head start when it comes to delivering value. Ivalua’s Stephen Carter has studied the impact from medieval times right up to the present day.

“There’s a lot we can learn from history about how we can exceed our stakeholder expectations” explained Stephen, “and a good overview of your data can provide the key.”

Even in the late 17th Century, procurement used data to provide insight into what their stakeholders needed. Looking at past spending trends, conditions and requirements, military campaigns were won due to the foresight of procurement in providing equipment not in the client’s original scope of requirements.

From history to the modern day, the value that procurement can deliver comes from insights that organisational data provides. It’s clear that whether our focus is strategic or operational, within our team or in our supply chains, delivering value is fully embedded as the new procurement normal. 

And as we set ourselves a new target to deliver value, there are no better words than those of the final speaker on the day, adventurer George Bullard.

“Research your goal, make sure you are prepared and fix a time to start.” Words to live and work by.

In 2020, we will be holding CPO Roundtable events in London and Edinburgh. If you are interested in attending one of these events, please contact Laura Hine by clicking here.

Driving Change The Procurement Way

At yesterday’s London CPO Roundtable we explored how procurement teams can drive big change in their organisations whether it’s through Brexit policy, implementing cognitive technology or smart hiring…

When was the last time you took a wild punt in your hiring process?

Is your procurement team under more pressure than ever to cut costs?

How can CPOs make the business case for cognitive technology to their CFO?

Will there be a second EU Referendum?

These are just some of the questions we discussed when we gathered a dozen procurement leaders in London yesterday for a CPO roundtable sponsored by IBM.

We discussed the implications of Brexit and how procurement professionals are preparing, how procurement can make sure its cognitive projects come out on top in the battle for capital and  why employers need to be far more open minded when hiring new talent.

Surviving the Perfect Storm

Nick Ford, Co-founder – Odesma gave us an overview of his organisation’s latest Brexit survey; Surviving a Perfect Storm.

Many would argue that Brexit is the biggest negotiation to ever  take place in UK, but the path ahead is still very unclear. And that’s presenting some major challenges for procurement teams.

Indeed, 45 per cent of Odesma’s survey respondents (300+ procurement executives primarily from the UK/EU ) admitted that Brexit was hampering their procurement strategy and 82 per cent claim that they have felt under more pressure to reduce costs for third party good and services.

Nick highlighted some of the changes procurement departments are attempting to implement in order to prepare for life post-Brexit:

  • Contingency Planning – including managing an mitigating risk, moving supply chain out of Europe etc. : 27 per cent
  • Investigating new suppliers:  9 per cent
  • Re-negotiating contracts with existing suppliers: 9 per cent
  • Reviewing country location for procurement operation: 6 per cent
  • Re-evaluating inbound supply chain: 6 per cent 
  • No changes to supplier base: 15 per cent

On a positive note, 73 per cent of procurement professionals believe their organisation sees procurement as an important part of its post-Brexit preparation process. As Nick highlighted, it is a fantastic opportunity for re-negotiation of supplier contracts, a chance to do a thorough supplier clean- up or develop new suppliers entirely and it gives your organisation a competitive advantage if your procurement team is in good shape – given that only 40 per cent of businesses have  started putting plans in place to prepare for brexit.

Read more from Nick Ford on how procurement can prepare for a post-Brexit world.  

The Battle For Capital

In the battle for capital, how does procurement ensure its cognitive projects come out on top?

Amit Sharma, Global Procurement Practice Leader for Cognitive Process Services (CPS) -IBM addressed how difficult it is for procurement leaders to communicate the need for, and value of, cognitive technology to their business.

“The problem for procurement” he argued “is that the CPO doesn’t always have the authority to drive transformation. It depend on lots of other people and that stops them from driving change.”

“For procurement, maintaining our relevance to the organisation beyond cost savings is imperative. [procurement pros] need to embed the latest in technology as best practise into the business as it will free up our time and help us to move from transactional to strategic management.”

The logic is unquestionable.  We know the sophistication of AI is going to come. It’s a question of when, not if. But when it comes to making the leap to cognitive, which can do a world of good for analytical and predictive analysis, organisations are still hesitant.

The CPOs in attendance were in agreement; citing short-termism, lack of buy-in from the CFO and a limited understanding in the business about cognitive technology.

Procurement needs to make the business case for how cognitive can add long-term value and, as Amit reminded us, “If you’re not convinced, you can’t convince someone else”

Brexit: What Happens Now?

Professor Anand Menon, Professor of European Politics and Foreign Affairs, Kings College led a session discussing the long-term causes of Brexit and their future implications.

“Hand on heart I don’t know [what’ going to happen] – if i could answer that I’d be rich and famous!”

It’s the most uncertain moment in British politics since World War Two and what’s striking is that,  two years on from the referendum, nothing has been decided.

A key reason for such uncertainty  is the nature of the referendum itself.  As Anand explained, the referendum packaged so many different options and outcomes  into a binary choice; leave or remain.  No one understood quite what they were signing up for and since the results Brexit has largely been defined by whichever adjective most aptly applies to specific people or groups; black brexit; white brexit; hard brexit; soft brexit; white red and blue brexit… the list goes on.

Does the UK want to establish a relationship with the EU like Norway, like North Korea or will they define something wholly new.

Anand admits that due to the Brexit process being so complex and all-consuming, there is no avoiding a messy process. What goes on throughout the next couple of years will largely be determined by politics.

  1. Theresa May

The UK Prime Minister relatively quickly defined what she meant by Brexit (leave cutoms market,end free movement etc) and her position has remained relatively unchanged since. Whilst she is unpopular with many in her party, it is unlikely her critics will choose to get rid of her yet. As long as she in place, she is a powerful force for stability.

2. The Conservative Government

There is a significant number of Tory MPs who want a much softer Brexit than the Prime Minister is proposing so it’s possible they will vote against May’s Brexit deal. However, if May loses this vote there is no question that she has to go; after all, her whole mission as Prime Minister is Brexit. If that happens, the Conservative Party will either elect a new leader or the UK will face a new general election. And the one thing no Tories want is another general election.

3. The Labour Government 

In the last general election, Labour picked up votes from both remainers and leavers. As such, the party have been careful to keep their Brexit policies ambiguous. Whenever Corbyn speaks about Brexit, he speaks in ambiguities.

Ultimately the real danger for the UK’s economy, Anand warns, is that the negotiations go pear shaped, the UK crashes out of the EU in March 2019 and they end up with no wiggle room to extend the UK’s transition period.

His advice to procurement organisations trying to prepare? Plan for a World Trade Organisation outcome from 2021 – “That, I think, is the most likely outcome.”

The Drive Project

The Drive Project is an award-winning, creative social enterprise. They work alongside charities and businesses to inspire and empower people with creative projects, training and talks. We were joined by one of their speakers Darren Swift (“Swifty”).

On 25th May 1991 Swifty was injured by a terrorist attack that resulted in him losing both his legs above the knee.

Within seconds of being hit by an IRA coffee jar bomb he went, he jokes, from being 6 foot 2 to 4 foot 6; his left leg completely gone and his right hanging on by a thread.

During his extensive rehab, when he was forced to confront his new reality, Swifty made the decision to not let his injury affect his life or career going forward.

Since then Swifty has gone on to achieve a huge amount including taking up skydiving, becoming the first ever double above knee amputee snowboarder and taking up a career as an actor. Swifty’s unique and inspiring story reminded us that employers need to be far more open minded when hiring new talent.

When it comes to hiring our organisations need to be ‘blinkers off’ people; asking ‘why not?’, rather than having a ‘you can’t’ attitude. You don’t know what’s possible with a potential hire until you take a punt and give them a chance.

Without this outlook employers could miss an extraordinary talent.

As Emily Shaw, Director- The Drive Project,  pointed out “[We should] give people a chance not to be a victim – because they can achieve so much more.”

Find out more about The Drive Project and the amazing work they do here.