Stories are everywhere. We create, share and feature in them, using them as sources of information that shape our behaviour and our perception. They play a similarly crucial role in helping to shape organisational behaviour. Consider how busy senior managers pick up vital competitive information: flicking through the latest issue of CPO Agenda, listening to a supplier presentation or chatting with business or professional colleagues. Stories and storytelling feature heavily.
Some stories offer valuable insights into organisational life, but others can be misleading and potentially damaging. In the 1990s, for instance, retail chain the Body Shop used its “fair trading” principles to develop an ethical brand that became a powerful source of competitive advantage. It also became a potential source of vulnerability, and when a story started to circulate about one of the firm’s suppliers using animal product testing (albeit without any meaningful evidence), the media and industry rivals eagerly circulated the story. To try to prevent this kind of problem from emerging again, the company was forced to introduce a detailed and expensive auditing process.
Widely discussed bad news stories can obviously have a negative impact on a firm, but consider the true impact of “best practice” tales. Regardless of the sector, most senior managers spend a lot of their time thinking about their rivals (the popularity of benchmarking provides strong evidence of this). Similarly, if a company in an entirely different sector does something interesting with its purchasing and supply function, there is a whole industry dedicated to circulating the information. Sometimes these stories can offer great insight and guidance for another organisation, but often they can create entirely inappropriate responses.
Procuring new technology is of great interest in this respect. If a technology is available on the open market, simply copying a rival’s investment may not bring competitive advantage, but it is unlikely to bring disadvantage either. The cliché “no-one got fired for buying IBM” is alive and well – even if it is not associated with Big Blue any more. The past decade has seen enterprise resource planning systems being adopted by entire sectors. Although the technology can address fundamental business needs, their true costs (ie, more expensive) and benefits (ie, less functionality than promised) confirm that the pressure added by stories of others adopting the same technology played a significant part in many board-level decisions.
Understanding how stories are used and abused in organisational life is relevant for CPOs because this group acts as a co-ordinating node for both intra- and inter-organisational information flows. They are also involved in the most senior group decisions, which are the types of situation in which the use of stories become more influential. As a direct result of this it can be argued that there is an over-reliance on stories in the procurement arena. This article sets out to achieve two goals: first, using the “tipping point” concept to explain why only certain stories have impact; and second, to offer guidance for senior managers seeking to make positive use, and prevent the possible abuse, of stories and storytelling.
In many of the research projects carried out by the University of Bath Centre for Research into Strategic Purchasing and Supply, we have found that, in addition to the judicious use of data and reports, most managers will also tell us stories to help explain why they manage, say, their supplier relations in a certain way. Consider the following examples.
Story 1: ‘We don’t do contracts here’
The recently recruited head of buying at a bicycle manufacturing plant, who, although very experienced in the industry, had only recently joined the company, told us that it did not use contracts with any of its suppliers. She went on to tell us the story of how “this can all be traced back to the influence of our most important [frame] supplier with whom we have a very long-term relationship. From the outset, 20 or so years ago, they did not want to work with contracts. This Asian-based firm felt this showed a lack of trust and, as the supplier was the ‘one we wanted’, no contracts were signed. This has worked extremely well over the years and the model has eventually been applied across the supply base.”
Story 2: ‘Always use at least two suppliers for every purchase’
The procurement manager for a multinational domestic appliances firm told us that it always sourced every purchase from at least two suppliers. He explained the rationale for this strategy by telling us the story of how “years ago a fire burnt down one of our in-house production sites and, although the company as a whole had some safety stock, not enough products could be manufactured at other plants. The firm ran into problems supplying its customers and people in the firm started to realise that something similar could happen with the supply base, with correspondingly catastrophic effects. From then on, the dual sourcing principle was thought to be the solution to minimise this risk and it is still in use today.”
Story 3: ‘Partnerships are impossible’
Interviews at the same firm revealed a perception that partnerships were only possible when the supplying and buying firms were of a similar size or when the buyer was very big (and hence had the power to demand a partnership). One senior procurement specialist offered the following story as a way of explaining: “I thought we had a partnership with the moulds supplier, who is very important for production. We had agreed on openness and sharing of insights into each other’s problems. However, when real problems actually occurred the supplier did not notify us, we found out when it was too late and this happened several times, even after talking about the necessity not to let this happen again. Because we invested in the moulds, we could not easily switch to another supplier, but I learnt that we did not have a partnership, will possibly never have any partnerships (with anyone), and that when people say they have partnerships, this is often just rhetoric, a buzz word.”
Story 4: ‘Never propose solutions to supplier problems’
The purchasing director of an infrastructure business unit in a multinational construction company revealed how he never got involved in supplier problems, even if the supplier claimed they might have a problem in delivering what was promised. He said: “I once got involved with a subcontractor that did not know how to deal with a certain technical construction challenge, so I suggested a possible solution. But when the supplier adopted my suggestion, I found out that there were much cheaper alternative solutions available. This meant that we (or I) spent more money than necessary, affecting the project result. I will never do this again; suppliers have to deal with their own problems.”
In each of these four examples, the story provided a “rational” justification for managerial action. In some cases this meant diverting from apparently “best practice” ways of doing things and, in one case, diverging from explicit operating policies. The examples also highlight how a story doesn’t just have an impact on the behaviour of the original storyteller, but also influences others to whom the story is told. Yet these examples do not help to explain how one story becomes part of organisational culture and procurement behaviour, while another does not.
How stories become influential
Although generating and applying robust quantitative data (parts per million defects, stock levels, inventory turns, GPS location tracking, and so on) remains a critical success factor for senior procurement executives, the nature of inter-organisational supply, and management more broadly, is such that qualitative information (opinions, past experiences, value judgments) will always remain central to decision-making. We have established that stories are important, but for them to be useful it is important to gauge the extent to which they represent a valid and reliable representation of “reality”. As a guide through this process, Malcolm Gladwell’s idea of the “tipping point” provides a useful structure for understanding why particular stories are diffused and why some become particularly influential in shaping purchasing and supply behaviour.
The concept refers to the point at which a small idea or initiative (or story) tips over into becoming a trend (or organisational routine or war story), and becomes part of the organisational culture, helping to condition new members (“this is how we do it here and this is why”). Gladwell highlights three key ingredients in the process and these in turn provide us with some initial lessons for the recipient of any story.
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Connectors, mavens and salespeople. Some personalities turn more readily to stories, but here we are more interested in those critical groups of people who together help “spread the word”, by virtue of their personalities and social positions. There are the “connectors” – people with unusually large social and professional networks who provide the distribution mechanism. They are perhaps more likely to be found among senior procurement professionals than in the general population because of the organisational context, the nature of the work and the corresponding skills required. There are also “mavens” and “salespeople”: those, respectively, who legitimise certain stories by apparently knowing more than others and those who can effectively communicate, convince, and/or persuade others, of a story’s significance. In a procurement setting, senior experienced staff, management consultants and, of course, business school academics all potentially combine in this group.
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Sticky stories. Certain stories are remembered and others are not. Gladwell calls this their “stickiness”. For stories to stick, repetition helps, and they should not be too complicated or hold more than one message. They have to fit with people’s imagination, concerns and needs, and have to be “packaged” correctly. Often a sticky story will reduce uncertainty by showing what lies ahead (for example, a warning of potential fire risk), what can be expected (a new purchasing employee needs to know quickly how to manage suppliers) and/or offer the consolidation and reassurance of universal solutions (as in the use of dual sourcing lowers out-of-stock risks).
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Context. The uptake of a story is influenced by the context in which it takes place. This is to distinguish the context in the story (fire, expensive interventions, etc) from the context around the story. It is this context that helps to explain why a story is remembered, told and used. The micro-context around the “no-contracts” story mentioned earlier, for instance, involves a relatively new purchasing executive being told a story by another board member she trusted. Similarly, the micro-context to the “twin suppliers” story was a senior manager new to that particular firm who, as he did not have any significant sector-specific experience, had to learn the ropes.
During this transitional period he was assigned to work with a predecessor who “trained” him by telling war stories. The macro-context of a story has a significant impact. Take the sporting goods firm Nike. The company’s widely admired procurement strategy was to outsource more than 95 per cent of its manufacturing activity to sub-contractors, mostly in South-East Asia. In 1996, it became the target of campaigns aimed at improving conditions in clothing “sweatshops”.
It was highlighted how only $1.66 of the typical $70 purchase price went on labour costs – without much discussion of relative incomes. Nike was no different from its rivals in taking advantage of lower costs, but its market-leading position made the story the most interesting.
The tipping point and lean production
To illustrate the application of the tipping point model in the round, consider the lean production phenomenon. The concept emerged from a study into the performance of the global automotive industry that revealed a 2:1 difference in productivity between car assembly plants in Japan and in the West.
The performance differential was ascribed to lean production practices that improved productivity through reduced lead times, material and staff costs, increased quality, and so on.
Given the creation of such strong levels of motivation, it is no surprise that these findings led to industry soul-searching and lean production practices aroused such intense and enduring interest. These ideas are useful and have led to value creation, but, using the tipping point idea, it is also possible to highlight a story-based explanation for the impact of the message.
First, in terms of influencers, the data was collected using collaborative research with most of the automotive industry firms, involving lots of academics and consultants in multiple locations. This meant that key players in the distribution mechanism were “on-board” before publication.
Second, in terms of “stickiness”, the three named academic authors on the book The Machine That Changed the World (James Womack, Daniel Jones and Daniel Roos) actually collaborated with a fourth, Donna Carpenter, named only on the inside copy-right sheet) who, as a professional writer, radically improved the readability of the text. Unlike most academic texts, seminars and events coincided with its launch and have continued in various guises.
Ever since the original report came out, high-profile journal articles, books and annual “Global Lean Summits” have continued the portrayal of lean production as a more or less universal set of management principles.
And third, in terms of context, the research emerged towards the end of a period of sustained interest in manufacturing-related issues that had initially been triggered by Japanese industrial expansion. It is worth remembering that during the 1980s, successive US administrations commissioned large-scale investigations into the relative decline of US industry and the power of Japan.
These discussions should remind us that we all use and abuse stories and that they are, at best, only partially true. However, if one understands their limitations, telling stories remains one of the most effective mechanisms for building and communicating a consensus for change.
Senior managers have a great deal of authority, but most of their job is about influencing rather than directing others. Given this, a story that “tips” offers an invaluable medium via which top management – in even the largest organisations – can widely disseminate lessons that should lead to better purchasing and supply-related decisions and actions.
CHECKLIST: Top tips about stories
When listening to a story that has ‘tipped’:
1. Be a critic, even – perhaps especially – if the story is told to you by someone you admire. Equally, just because someone is a well-known expert in a field, and has proven reliable in the past, this does not mean that they will always be right.
2. Always ask why a story is being told. In other words, try to get behind the motivation and remember that the “money trail” (ie, who benefits?) generates great insight into why a certain story is told.
3. Don’t buy a story just because you have heard it many times. Demand precise explanations for any buzz words and jargon.
4. Are the causal connections in the story correct, or are there other competing explanations? Is the story based on false or overly simplified assumptions and/or generalisations (for example, “fire always causes stock shortages”). Is any blame or credit plausible?
5. No matter how striking the apparent costs or benefits of a story, never forget your specific situation and seek out the contextual industry factors that might skew the appropriateness of any lessons for other situations.
When telling a story that you want to ‘tip’:
1. Think about the fit between the story and the audience.
2. Consider the simplicity and focus of any messages contained in the story.
3. Seek out appropriate delivery modes and think about timing and context.
Further reading
Yiannis Gabriel, Storytelling in Organizations: Facts, Fictions, and Fantasies (Oxford University
Press, 2000)
Malcolm Gladwell, The Tipping Point (Little, Brown and Company, 2000)
Camille James and William Minnis, ”Organizational storytelling: it makes sense”, Business Horizons, vol 47, issue 4 (July-August 2004), pp23-32
Professor Mike Lewis (m.a.lewis@bath.ac.uk) is chair in operations and supply, and Elmer Bakker is a research officer at the University of Bath School of Management. The authors would be delighted to hear about any purchasing and supply stories that readers have heard of, or told. Please send them via e-mail to crisps@management.bath.ac.uk
