Innovation and Procurement ... Hire the right profile !

Before diving in, let me tell you why I started structuring my thoughts, wrote a book about it - still available in Amazon :o - and ended up building a YouTube channel to share expertise more widely.

Well, It all started with a failure !

Everything was lined up: a great idea, a dynamic start- up, our internal expert, development went well … and boom on the market. Well, the team missed the fact that the potential opportunity was much smaller than expected. So, the triumviri investment / revenue / profitability was just not working. So, decision was made to disengage; and, it is at that moment that procurement got brought in as the relationship got sour: lousy contract and no proper assessment done initially. Month of work and a financial settlement costing far too much …

 So, I really wanted to make sure we learned from it and built a proper engagement process…

 Let’s go back one step… why do you need to innovate by the way ?

The average lifespan of a successful S&P 500 company today is 15 years. The largest company in the world today and acquired or bankrupt in 15 years from now… What's the difference in between the one who failed and the one who survived?

Long-standing companies have in common their ability to adapt to an ever -changing world. They can drive innovation, to develop a new business model and keep reinventing themselves.

"No Matter who you are, most of the smartest people work for someone else," said Sun Microsystems co-founder Bill Joy more than 25 years ago…

Many companies already have complex, collaborative relationships with their suppliers. They routinely outsource certain R&D activities, engage in joint cost reduction, or design optimization projects. Partnerships take many forms, from loose collaborations to formal alliances, joint ventures, minority investments, or even full acquisitions. Supplier innovation can lead to different outcomes. Some supplier-innovation efforts are transient, focusing only on a specific problem or opportunity. Others may evolve into life-long relationships between organizations. Participants may agree to share all the intellectual property generated in a project, or only part of it. Supplier innovation is one part of an organization’s overall supplier collaboration strategy, but to really empower them, it requires a different kind of partnership.

One of the primary headaches is, for most senior leaders, to understand how Procurement can shape product and process innovation. Procurement procedures may present roadblocks. Its objectives focus on cost and risk. Procurement’s people skills and expertise may be the right ones to deliver savings but to drive revenue growth. Procurement functions are great at attracting negotiation experts and $ focused employees but could you really drive innovation and strong partnership with those people ?

How do you set up your procurement function the right away? And, how do you put your suppliers onto the innovation driving seat?

It is time to go beyond suppliers’ day and few exchanges a year. It is time to open your doors, share your challenges and truly host your suppliers. Obviously, you can’t do that with all of them. You must first identify potential markets, your customers’ unanswered needs, the inefficiency of your business. It’s not done without effort and some internal challenges needs to be overcame.

How Procurement should lead the charge?

Surprisingly, suppliers do not always take their innovation first to their largest or even their most profitable customers. They target customers with whom they have the closest relationships and see the best longer-term growth opportunities. So, it is where it’s important to have the right Procurement lead focusing on those relationship and spending 100% of their time on suppliers’ innovation.

You need to dedicate senior resources. Procurement business aware leaders to set that up ! People make innovation happen. Getting the right people on board is critical. Innovation processes and systems can only be as good as the people participating in them. So don’t put your most junior resources but the next stars, the people who are talented…

The most important when you build your innovation team is the attitude and behaviors, the soft skills.

You need leaders

·      Who are: Open-Minded- You cannot isolate innovation and innovator. Open-mindedness enables companies to be on the lookout for new practices, ideas, experiences and embrace change.

·      Who are: Risk takers – Is it so easy to say “no” and stay in the comfort of small incremental adjustment to product and services or worst just manage the existing. You need people who are ready to take the risk. There is no innovation without risk taking.

·      Who are: Thought leaders – Procurement leaders working on innovation need to have the ability to articulate the vision and position longer-term company strategic objectives.

·      Who are: Comfortable with ambiguity – the ability to cope with uncertainty and risk, to adapt to change, to decide with the information you have (even if it is not the whole picture).

·      Who are Market “aware” – a person, having his/her finger on the pulse of industry trends and a good network of external partners will have the ability to leverage relationship to the benefit of the company and spot trends and up comers earlier than you competitors.

Having the right person aligned with the vision, understanding the strategy, the unmet needs and with the right objectives is the first step. Then, it is time to open up and start bringing suppliers in !