What – if anything – differentiates leadership in procurement from other forms of business or, for that matter, social or political leadership?
Our attempts to answer this question are based on work to identify the particular attributes or “habits” that mark out today’s most effective procurement leaders. We’re not talking about finance or operations or marketing leaders but specifically procurement leaders. Those individuals responsible for what can go under a range of names – buying, purchasing, supply management, procurement, acquisition, and so on – but are those activities that connect an organisation to the rest of its value system.
In a previous article in 2007, we reported that many organisations lacked clarity on the strategic contribution they sought from their procurement teams and many senior purchasing and supply professionals neither already saw themselves as nor aspired to a strategic leadership role.
Well, the world has changed a lot since 2007. A more recent CIPS Leaders’ Network (CLN) study has explored how senior purchasing and supply professionals were dealing with the rapidly changing economic context for their work. This context has, for many, fundamentally changed the strategic expectations of procurement and correspondingly introduced a range of undeniably strategic leadership challenges.
Although the credit crunch inevitably framed the study, our key objective was to try and understand the notion of procurement leadership and the ongoing – almost eternal – debate: are leaders born or bred? Is management different from leadership? Is procurement leadership different from leadership in general?
We carried out interviews with senior, high-performing procurement professionals from a range of public and private-sector organisations. In addition to some general “tell us about your leadership style” type questions, we employed the Competing Values model (see Briefing, page 52, for more details and a chance to reflect on your own constituent leadership role behaviours), which details eight leadership “roles” deployed as individuals reconcile two fundamental strategic dimensions: stability versus flexibility and external versus internal focus. These findings were analysed and seven “habits” – distinct “bundles” of attributes and activities that appear to maximise the potential contribution of procurement leaders to organisational performance – were developed and refined.
What are the habits?
Some of the seven strike a chord with everyone – although we found some of them to be surprising – but it is clear that they could challenge a clichéd view of procurement and hopefully suggest a proactive way of ensuring CPOs are meeting the challenges of their profession.
1 Actively seek alignment with the wider organisation and its objectives
Highly effective procurement leaders think and talk strategy, culture, stakeholders and competitors. Naturally, they decipher business objectives and communicate them to their team and the rest of the business, including stakeholders. They link people, from building bridges across the top team and the operations of the organisation to tightening the links between the supply base and the customer base. It is also about being part of a senior team and not just running a function. An important part of this is to recognise that aligning with inner and outer contexts are a key part of the procurement leader’s task.
2 Build credibility by promoting procurement’s contribution
Highly effective procurement leaders aim to be “go to” people in their organisations. They never or rarely say “no”, but rather reply with “interesting, now how about this?” In 2008, commodity prices were soaring, shortages were widespread and hoarding was common. Yet later that year, the slump hit and the downturn reversed the price trends and brought with it tremendous volatility in currency values. Smart procurement leaders focused on the recovery in the knowledge that global demand would at some point rise again and developed sustainable supply chains with operations, finance, and sales and marketing to determine the optimal solutions. They advanced everyone’s understanding of the value that they bring. Effective procurement leaders get the attention of the right people about the important issues. The more people appreciate the role of procurement then the more likely they are to include it in their determination of what strategic changes the organisation needs to make.
3 Creatively challenge notions of value
Highly effective procurement leaders recognise the need to be creative and forensic in analysis. One of the most frequently cited procurement leadership characteristics was the innovator (ie, encouraging creative thinking, leading change and challenging the way things are). This may manifest itself as a restless dissatisfaction with the status quo – think of boundary spanning, and therefore often more fundamental, form of continuous improvement. These are the people who demonstrate a capacity to imagine bold alternatives to the management status quo. They are visionaries, provocateurs, thinkers as well as doers. Procurement leaders must be as independent as possible and always demonstrate integrity and insight.
4 Cross internal and external boundaries – rarely be in the office
Highly effective procurement leaders act as the hub for a pragmatic coalition of interests. The research highlighted the increasing significance of broker characteristics (ie, negotiating agreement and commitment, presenting a range of ideas, and developing and maintaining a power base). Effective procurement leaders readily assume responsibility for motivating people who don’t report to them. In acting as a hub for conversations about value – “honest” brokers for others’ (again internal and external) ideas – procurement leaders should be among the first to see change coming and, therefore, the first to react. Consequently, the highly effective procurement leader will be driving procurement-led business solutions within their organisation while carrying out procurement’s basics in keeping costs down, ensuring socially responsible procurement practices, reducing supply vulnerabilities, and managing the organisational interface.
5 Deliberately build an eclectic team
Highly effective procurement leaders can recognise the value of eclectic talents and embody them by combining strong quantitative and qualitative skills themselves. It is interesting to note that many of the leaders we interviewed had followed eclectic career paths. But, however they had risen to their senior position, following through on the other habits clearly requires a broad mix of skills. For example, habits three and four may necessitate a challenge to the organisation’s (and possibly the sector’s) definition of what constitutes procurement. Leaders recognise the value of this broad set of capabilities and understand that this will normally require them to build an eclectic team. Lots of specific skills and experiences will therefore be potentially relevant – especially in support the innovator and mentor roles.
6 Commit significant time to building the next generation of leaders
Highly effective procurement leaders spend a lot of time looking for and developing their eventual replacements. The role of the leader as mentor was repeatedly highlighted. Leaders will have a strong emphasis on understanding the self and others; they will communicate effectively and will be actively developing subordinates for leadership roles. This trait sits well with the notion of the leader as innovator, the other dominant attribute in the procurement leadership mix. Given the maturity of the discipline, and the mass of changes and challenges it faces, this role is significant for procurement leaders. This aspect of the procurement leaders’ make-up is aligned with habits four and five; this process can and should encourage varied career profiles. Many of the interviewees talked about looking for staff outside the function and even encouraging people to take opportunities that would lead in other directions.
7 Act with demonstrable integrity
Highly effective procurement leaders grasp that beyond boundaries of bottom lines, quarterly reports and project deliverables, they must understand their guiding principles and ethics – and bring those values to each interaction. There can seem to be a fine line between integrity and naivety – no one was denying the role of self-interest in senior career building – but given that the other habits suggest leadership requires strategic interaction and innovation, this requires a strong sense of self and repeated demonstrations of integrity: to have the courage of one’s convictions, the courage to go against traditional thinking and the courage to take risks without having to compromise on values and principles. In concluding this short summary of our work to date, it is important to stress that this is an ongoing project and we would be delighted to hear comments or contributions to this debate.
Gerard Chick (gerard.chick@cips.org) is head of business intelligence and product development at the Chartered Institute of Purchasing and Supply.
Michael Lewis (m.a.lewis@bath. ac.uk) is professor in supply strategy at the University of Bath School of Management in the UK