CPO Crunch: Stories > Numbers

A few years ago, I had a conversation with Gregoire Letort, the then CPO of Electrolux, who talked about how, when it comes to justifying investment in supplier innovation programmes, success comes down to storytelling rather than building robust business cases.

His argument made sense for a number of reasons. First, supplier innovation is a no-brainer if you start with a reminder that the capability, knowledge and intellectual property that exists within the supply base far outstrips that of any single buying organisation.

Second, even with the best will in the world, trying to put a number on the return on investment of a supplier innovation programme is notoriously difficult.

Rather, the risks of not taking supplier innovation and supplier capabilities seriously should be seen as too great – and there are more than enough examples of how an OEM has gained significant market share by locking in supplier IP before the competition.

Of course, this doesn’t mean a CPO should be expecting to throw millions of dollars at supplier innovation without a plan, or without an expectation of return. But the CFO and CEO should be bought in and supportive conceptually very early on. The best way to achieve this is by illustrating examples of success.

I was reminded of my conversation with Gregoire just last week when catching up a senior exec from a major electronics company who has been tasked with a significant transformation effort. One priority is to focus on getting procurement involved much earlier in strategic initiatives while, by extension, including key suppliers, too.

Naturally, this would mean investing time, resource and cash. “I have worked for hours and hours with consulting firms in the past to come up with financial models to justify investment,” she told me, before adding that her CFO had said something similar with neither of them believing any of these figures anymore. Rather, investment cases are based on opportunity and risk – not metrics and returns.

While no executive worth their salt, whether procurement, finance or the CEO, would willingly agree to an investment that didn’t promise a return of some sort – not always financial, by the way – sometimes decisions must be made when the data simply isn’t available.

And at times like this, the skills of influencing at senior levels, of storytelling and of creating a vision are crucial.

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