What does a really effective football manager do? Intriguingly, many of the world’s most successful managers work with teams of players who are much better footballers than the manager ever was (and are paid much more money!). As a result, the manager’s role is not to intervene in the detail of a player’s actions on the pitch but rather to co-ordinate and integrate their play. Of course, total team performance is only optimised when players are completely aware of both their personal and their teammates’ roles and capabilities. A team where none of the players are prepared to work together, or are aware of what each member brings to the whole, would be disastrous, a melee. And, finally, the team must share a common objective – to play to win.
Today’s chief procurement officer understands that they are part of the top team and, correspondingly, should be aware of how they can contribute to their organisation’s strategic goals. And yet, at a recent UK event run by the Chartered Institute of Purchasing and Supply’s Centre for Procurement Leadership (CPL), where a group of more than 30 senior procurement professionals and chief executives set out to explore how the procurement function could contribute to the CEO’s agenda, what became apparent was that most organisations are really not clear regarding the strategic contribution they seek from their procurement leaders. More crucially, it was not clear whether most senior procurement professionals either see, or even aspire to see, themselves in this strategic leadership role.
In many ways the details of the strategic agenda were pretty unsurprising – in the private sector it’s to make money and in the public sector to deliver efficient services – but going beyond these strategic headlines, what rapidly became clear was that truly effective functional leaders need to be more than just masters of their own discipline. In other words, gone are the days when being a technical expert would suffice. Indeed, one CEO suggested that CPOs are perhaps too ready to take on the role of “corporate goalkeeper” – definitely a key team member of any football team, but too often the anonymous player at the back whose critical but essentially reactive job is to make the save when other things have gone wrong.
This article considers whether modern procurement leaders can break out of ingrained ways of thinking and create a new future – for themselves, their functions and their organisations. It sets out to explore two big questions: first, whether an alternative procurement mindset is emerging, one that recognises the enduring need for functional legitimacy and authenticity (there is no substitute for deep procurement skills) but replaces a hierarchical “it’s not my job” or “that’s above my pay grade” attitude with a sense of ambition, accountability and self-responsibility – accepting that senior roles sometimes trade responsibility for influence. This more collaborative and inclusive personal credo needs to be aligned with specific organisational goals but, more significantly, should be actively aware of strategic issues and longer-term horizons. Second, we go on to ask in what ways this new attitude can be nurtured and how individuals can make the transition.
An alternative procurement mindset?
A mindset works like the grid lines on a map: it doesn’t determine our journey but it enables us to orient ourselves and strongly influences our direction – personal and professional. Moreover, like the layout of a map, a mindset is not just person-specific, it is derived from shared experiences and based on a number of agreed assumptions. When managers talk of commonsense decisions, for instance, they are typically basing these judgments on their own mindset, which has been influenced both by their own personality and experience but also set by their educational background, functional skillset, and organisational and societal status. Just as an inaccurately orientated map can take us in the wrong direction, our mindset can sometimes lead us astray. After all, we tend to remember the times when our gut reaction was right rather than wrong.
We can argue quite logically that procurement professionals are at the heart of shaping and developing organisational value. They help to define the boundaries of the organisation. They directly influence operating costs and manage many of the organisation’s key relationships with the outside world. But, despite this, there are many alternative perspectives asserting a more peripheral view of the value of procurement and procurement leaders. It became apparent during our CPL discussions that many CPOs’ own judgments on the strategic value of their role were clouded, in part by the typical managerial burdens of too much work and too little time (we are all capable of confusing motion with progress), but also by CEOs setting hard performance targets based on cost savings alone. When pushed a little harder it was also evident that most CPOs took real pride in the transparency and criticality of this cost-driven performance regime. It was during these discussions that one of the CEOs remarked that he felt he was “in a room full of Premier League goalkeepers, all intent on saving but thinking of little else”.
In other words, what became clear from our debate was that in many ways the CPO role seems conflicted. None of the CPL participants felt that they were in “dead-end, unattractive, nowhere” roles; yet, in subsequent discussions of the “war for talent”, several felt that they were simultaneously at a disadvantage because this was how many perceived their field. Similarly, the senior procurement professional can conceive of their skills as being technical – drawing up contracts, establishing trading rules, ensuring compliance, and so on – or they can emphasise their almost unique combination of both technical and commercial strengths. They can recognise that they have invaluable negotiation skills and often act as one of the few boundary spanners within the organisation and with the outside world. Moreover, they are well used to the kind of explicit measurement of performance that CEOs have to deal with.
This conflict over the strategic role of procurement was not limited to the CPO community. Although some of the CEOs interviewed were absolutely sure that “procurement must be strategic”, others talked about having “a first-rate procurement function that was never really drawn into the strategic debate” or that “procurement don’t contribute to these objectives, they are disconnected really”. Or, most disappointingly, “most of the top team wouldn’t even consider that procurement could be part of the solution”. Inevitably, such confusion is strategically limiting because to be truly effective in leadership roles people need to think extremely clearly about their own strengths and weaknesses.
In an effective organisation, the entire top team has a crucial role to play in strategy. Consider the following: CEO tenure in Europe is now approximately five years; CEO turnover was 15 per cent in 2006 (up from 5 per cent in 1995) and, consequently, even an extremely effective CEO may have very short-term drivers. Moreover, is it really the CEO’s job to develop detailed strategy? It can be argued that meaningful top leadership roles are primarily about developing talent, embodying organisational values, building commitment, constant (two-way) communication, and, where necessary, making the final call on big decisions. But even if your CEO doesn’t exhibit these kind of behaviours and is intimately involved in detailed strategy formulation, those CPOs wishing to have significant influence in their organisations must ask themselves the question “who am I in this organisation and what do I do?”
Self-awareness is crucial. It is important for leaders to understand their strengths and weaknesses, but self-awareness also underpins the key leadership attributes of personal authenticity and legitimacy. These are powerful characteristics for influencing people. Until procurement leaders achieve this state, they may be able to dictate through their position in the hierarchy (ie, decide what their team does), but they will always find it difficult to influence upwards and, just as critically, sideways.
Interestingly, the nature of the traditional procurement management role – specifying buying procedures and clarifying stakeholder expectations – can easily become overly control and structure orientated and gives little opportunity to learn more personal rather than process-based leadership skills. Inevitably, much of this relates to individual personalities and there was a great deal of debate at the CPL event about the type of personalities who were drawn to the procurement function and whether they had the ambition to be more strategic. A fascinating side conversation emerged around the question of why so few CPOs became or even had the ambition to be CEOs (see case study box, below).
Making the transition
Although assertiveness and ambition will necessarily be part of the mix if CPOs are to play a greater strategic role, there are also risks to consider. One CPO was very clear about what it meant to talk frankly about strategic matters, remarking that “it takes bravery to put your head up above the parapet”. Another CPO said he would “rather get a good bronze medal than fall over”. Ultimately, however, although it is important to be sensitive to circumstances where there is uncertainty about the basic value of procurement, personal risk taking is central to being a good leader. If you are unwilling to commit yourself – when you know that there are personal consequences – it is difficult to ask others to do the same. The challenge of seeking to transform procurement is the need to balance the traditional virtues of control and cost minimisation (“covering the table stakes”, as one participant called it) with a willingness to take risks to deliver innovation and strategic value. Good leaders will encourage others to develop ideas of their own; they focus on unanswered questions and unsolved problems and encourage those around them to seek answers and solutions; and they develop people who will lead (in their own right), not follow.
Although the “brave CPO” is a key part of the transition mix, it is also clear that the rest of the senior team and the CEO, in particular, have a central role to play in this transition. Several of the participating CEOs suggested that they had observed and/or encouraged changes in purchasing and supply management, but the exact degree of change is clearly dependent upon history and aspirations, as well as appropriateness. One CEO talked about “wanting to be at the leading edge of sector [procurement] practice”, but another argued that the perception of the function had moved – it was no longer seen as a group of “charlatans, rogues and penny pinchers”.
Although we read articles about the strategic contribution of supply-side management being increasingly measured not just in terms of cost savings but also increased shareholder value, how many CEOs actually believe this? Fundamentally, this means that CPOs need to foster corporate “belief” and influence others’ mindsts, not just their own.
Of course, it is not only the CEO who needs to be influenced. In fact, influencing and contributing to strategy may have less to do with the CEO than is sometimes assumed. Influencing the rest of the top team, and in turn their teams, represents its own distinct challenge. After all, just as there is a procurement sub-culture in most organisations – a blend of organisational and professional functionality – there will also be distinct sub-cultures in accountancy, production, sales and marketing. These tend to be more or less reinforced depending upon the extent to which functional groups hire and promote their own staff, but this separation means that even apparently minor differences in vocabulary can make interaction tough. A classic solution to this problem has long been the rotation of staff through multiple departments – either as initial training or, more crucially for this debate, training for the top position. However, most CPOs aren’t being prepared for the top job and therefore, once again, personal promotion and lateral influencing skills become crucial capabilities.
Concluding thoughts
By reporting an ongoing dialogue within CIPS’s Centre for Procurement Leadership community, this article is intended to provoke thought. But in the spirit of the kinds of change we have argued for, we offer two key lessons for both the CPO and CEO.
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For the CPO. First, failed strategies are, more often than not, the result of’ “sins of omission” (what has not been done) rather than “sins of commission” (what has been done). Just as it is worse to deny a truth than to accept a falsehood, few meaningful options are created by inactivity. Unfortunately, errors of omission are seldom recorded or accounted for and, as a result, a security-seeking CPO’s rational operating model will be to do as little as possible that is out of the ordinary. But herein lies a dilemma – the disinclination to change means that any opportunity for learning and showing one’s worth is missed.
- Second, the principal roadblock for CPOs (and, frankly, the procurement profession) getting to where they profess to want to be lies in the minds of the very CPOs seeking the change. The senior professional can conceive of his or her skill as being technical – drawing up contracts, establishing trading rules, ensuring compliance and so on – or they can think of their strengths as a unique combination of both technical and commercial capabilities. Likewise, it is easy to excuse oneself for not trying (“they won’t let me”), but such attributions of blame are often self-deceptions. Bravery is a prerequisite for success, but it should also be recognised that the main barrier to progress definitely lies within the CPO’s span of control
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For the CEO. First, recognise the need to involve all of your top team in strategy. When the CEO alone sets out how the organisation is going to move forward, it is more difficult for others to argue effectively – especially those, like many CPOs, who are struggling with the idea of strategic contribution. Recognise that senior people always consider themselves to be rational but have a tendency to consider their subordinates who have a different opinion or mindset to be irrational. Remember that because there are few former CPO CEOs, they may have a common goal but will come at it using different skills and mindsets.
- Second, the best CEOs have superb listening skills and are interested in finding out what their CPOs and their team think and can do for them. Accepting a possible solution to a problem depends more on the CEO’s trust of its source than the content of the recommendation or the competence of its source. So CEOs need to trust their CPOs to be competent in their field.
If CPOs are indeed goalkeepers then they should aim to be Peter Schmeichel, the former Manchester United and Danish international who ended his career with 13 goals to his name, rather than the anonymous player at the back.
CASE STUDY:
From CPO to CEO
One of the CEOs interviewed before the CPL event had been a procurement specialist, and it is interesting to reflect upon his career path when asking why so few CPOs go on to become CEOs. “Mike’s” story is an unusual one, and although he pre-empted our discussions with lots of judicious “of course, I didn’t realise I was doing this at the time” references, his experience reinforces many of the more general lessons described in this article.
Q: How and why did you make the transition from a procurement role?
A: Well, instead of just sticking to my, rather narrow, functional brief – you know the kind of thing, every time there is a contract up for renewal you get the four suppliers together in a room and negotiate a better price – I guess two things have marked out my career. First, I felt I could have a go at most things and so, for example, when an opportunity to do trading rather than buying came up I saw my skills – negotiation and relationship management, in particular – as being directly transferable. Similarly, I really wanted to be involved in everything. If I give you a specific example, the firm was involved in a series of large-scale acquisitions and I lobbied quite hard to show how interested I was in those strategic developments.
Q: How did you start on the path to a top leadership role?
A: Given my pestering, it wasn’t long before I began to get a reputation and people started saying th ings like “let’s get Mike’s take on this, he has an interesting perspective”. From a personal development point of view it allowed me to get a really strong sense of the business context, and as you become more of a generalist leader you need that above everything else.
Q: How do you think other CPOs can make this transition?
A: Well, it is clear that CPOs need strong capabilities. This doesn’t necessarily mean having a CIPS or other badge – in fact, I’ve had mixed results with hiring “fully qualified” [procurement] guys. But it does mean having the knowledge and being able to apply it in a diverse range of settings. So they need the tools but they also need to be aware – aware of who the key stakeholders are, what they want and expect, what is going on around the firm and in the sector more generally. Look, most of my career acceleration has happened with key events that were completely outside my control (buying a large rival, for example), but I was ready to take advantage of these situations as they unfolded.
BRIEFING:
Engaging senior stakeholders
In seeking to explain the apparent disconnect between individual and general perspectives on the procurement mindset, a theoretical framework developed over the past 20 years by social psychologists and consumer researchers might help.
The model suggests there are two principal challenges to overcome prior to effective communication. The first is that the content of the communication must match an audience’s level of processing. When an audience is unlikely to process information, it becomes more important to sprinkle messages with cues that will attract people and get them to like a message.
However, once they are engaged, this marketing is far less important than the strength and/or quality of arguments. In other words, it is crucial to encourage deeper processing as this evokes more enduring memory and attitudinal change.
The framework proposes that three factors determine whether people really hear a message:
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Motivation. The preparedness of an audience to focus on and process particular information.
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Opportunity. This relates to those characteristics of a message, such as exposure time, message length, the number of arguments and the absence of distractions.
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Ability. This dimension relates to the skills necessary to interpret a message. High-ability audiences are proficient at message processing because they are experts – that is, they are knowledgeable about a topic.
In other words, if CPOs wish to be more involved in strategy they must ensure that their CEO and top team audience possess sufficient motivation, ability and opportunity to engage with their proposals. The lack of strategic involvement in many organisations suggests that all parties currently exhibit low motivation.
CPOs themselves are primarily concerned with control and cost savings, and while such a concern is entirely laudable, it may have rendered the profession somewhat blind to its own potential contribution to other important areas of debate, such as strategy.
What techniques can be used to enhance motivation? One of the most important involves the creation of an attractive and interesting message that will create a positive effect (what consumer researchers have labelled the “attitude toward the ad” or “Aad”).
Messages that strike effective responses generate more attention, greater interest, more cognitive responses, higher message recognition and greater topic recall. In other words, CPOs need to market their contribution better.
Gerard Chick (gerard.chick@cips.org) is head of knowledge management at the Chartered Institute of Purchasing and Supply. Michael Lewis (m.a.lewis@bath.ac.uk) is professor of supply strategy at the University of Bath School of Management in the UK
