Status Quo bias, Services Procurement, and the most dominant rugby team in the world.

The New Zealand rugby team, also known as the “All Blacks'', is the most successful team in the history of the sport. Steve Hansen, the All Blacks Head Coach of 7 years, claims that of all his challenges as a Coach, his largest was to “ward off complacency”. With a win rate of 77.41% since 1903, it seems like they have gotten pretty good at it. So, what is the All Black's secret to staying on top of their game, and what might modern procurement functions learn from the most successful team in history?

Hansen recognised that the tendency for players to choose “familiar and safe” over “new and dangerous” represented the single biggest threat to their legacy as a team. He was referring to how they train, eat, behave and play. Hansen believed so firmly in the need to constantly evolve, that he became famous for his mantra “when you're at the top of your game, change your game”. Quite the opposite to the saying popularised in the seventies, “if it ain’t broke, don’t fix it”.

In Psychology, this aversion to embracing new ways of doing things is called “status quo bias”. It plays a significant role in any organisation’s willingness and ability to embrace change, innovate and therefore stay ahead of the competition. This is as true in business as it is in sport. Loss aversion is a powerful force. As Tversky, the famous psychologist said, “loss looms larger than gains” when making decisions about the future. But haven't we all known for some time that doing nothing is often far more disastrous than trying something new? Just ask Blockbuster what happened when they decided not to buy Netflix for $50 million in order to “preserve their success”.

As with the All Blacks, the single biggest threat to procurement functions today is the inability to explore and embrace new ways of doing things. How might Hansen approach services procurement today? Let’s explore the question using three of his most famous team mantras.

“Inconvenient facts”

Hansen once told a story of a player that expected praise for outmaneuvering an opposition player during a game. Hansen asked the player to question the extent to which his success was a result of his skill or his opponent's lack thereof. On reflection, the honest answer was the latter. The process of facing facts that are “inconvenient” nurtures a culture of honesty, accountability and therefore makes acting on opportunities to evolve more straightforward.

In Hansen’s procurement function, category leads would regularly face inconvenient facts because they are actively encouraged to face the reality of the situation. From granular operational blindspots right through to significant strategic shortcomings, inconvenient facts would be addressed. Tough questions would be posed, such as;

• How much risk are we exposing our organisation to through untracked workers accessing IT systems, poorly written SOW’s or unregistered suppliers??
• Are we maximising the value creation and value retention of every $ spent by the organisation on services??
• Are we delivering genuine competitive advantage to the organisation or are we simply facilitating sourcing exercises?

By removing the tendency to focus on self-promotion and encouraging what Hansen calls “honest eyes”, the function would spend more time asking what needs to be improved than patting each other on the back - the latter “doesn’t win games.”

As Hansen said following the loss at the 2007 world cup "...the inconvenient facts are about the stuff you can't brush over, because if you keep brushing it over you're going to fall on your face."?

“Go for the gap”

Hansen used the mantra “Go for the Gap'' to remind players of their individual and group responsibility to identify opportunities to improve - on and off the pitch. For the All Blacks, adaptation is not a reaction, it is a continual action. In other words, it isn’t something that happens occasionally, it is a continuous process of reflection and improvement baked into the very culture of the team.?

The Sigmoid curve illustrates why this is so important. It shows that typically a period of experimentation and learning is followed by success and excitement, which in turn is followed by a downward curve representing the diminishing impact of the original solution. So called “Sigmoid leaps” is what the All Blacks used to stay ahead of the competition and did so using? a three tiered continuous improvement strategy; the seasonal level (the 4 year world cup cycle), the team level (weekly team selection/tactical changes), and the individual level? (empowering players to self reflect and change the way they play/train).

Using a similar continuous improvement process, Hansen's procurement function would rethink what they are doing just as they approach the top of the Sigmoid curve - right when everything seems to be going well. He knew the inflexion point (and therefore complacency) was inevitable and that there is no such thing as a “steady state” in business in 2022.? Iterative learning and innovation in Hansen’s procurement team would shift from a “nice to have '' to a “need to have” and from a tick box exercise, to a normalised means of getting things done.

“Plant Trees you’ll never see”

For Hansen, nobody owns an All Blacks shirt. They simply look after it temporarily and are charged with leaving the legacy in a better state than when they found it. Being selected for the All Blacks means joining something bigger than any individual. For Hansen, this mindset ensures players leave their egos at the door. Combined with his infamous mantra of “sweep the sheds” (which referred to his insistence on the players “doing the basics things well” - cleaning the changing rooms after every use) this culture encourages players to shift their mindset away from “me” and “now” to “us” and “the future”.

In Hansen's procurement team, category leads would be charged with leaving the function and business in a better state than when they joined. There would be a re-balancing of priorities between short-term, tactical needs such as supporting RFP’s and long-term, strategic goals, such as addressing a lack of strategic visibility into spend and supplier performance metrics. Hansen would empower his people to replace short-term gratification with long-term strategic thinking that is focused on future-proofing capability for the organisation over the long term.

Rather than cost cutting, Hansen would focus on generating value. He would recognise that you cannot cost-cut your way to sustained success over the long term because differentiating through innovation and value generation is so critical in today’s business environment. As he did with the New Zealand All Blacks, he would build value, not destroy costs and treat Services Procurement how he treated his players - as a valuable asset to be maximised, not a cost or risk to be reduced.

In summary, how organisations maximise the return on investment of critical business services cannot be done today as it was 10 years ago. To evolve and innovate, combatting status quo bias is critical. As Hansen says, “you shouldn‘t have to lose to learn”. Losing a game of rugby can be fixed the next time you play, whilst losing at procurement can have a disastrous impact on organisations ability to generate value for customers, employees, and shareholders.?

So, why not take a leaf out of Hansen’s book and start with a vision. For Hansen, the first step on the road to combatting status quo bias is to ensure “the lure of what lies ahead is more alluring than what is today”. For Hansen and the All Blacks, the lure was to become “the most dominant team in the history of rugby”.?

What’s yours?