Steering Procurement Innovation: Converting BUZZwords into Objective Decisions with a First Principles Approach

Are you buying value or a 'dead parrot'? How many times have procurement leaders found themselves grappling with statements like:

• "The platform does not do what we thought it would."
• "Employees do not want to use it."
• "We use a reputable data management solution but we still spot costly human error"

All the above beg the question: are solutions adopted based on informed decision-making or being allured by the combination of a reputable brand and trendy buzzwords? In this article, we explore the role of a first principles mindset in transforming buzzwords into objective questions, empowering you to 'buy smart' when it comes to procurement analytics.

What is a buzzword?

Any definition that lacks specific thresholds is unscientific. Add a marketing component to a 'somewhat meaningful but still ambiguous definition' and you got yourself a buzzword. Buzzwords are repeated all the time by media and service providers to create familiarity and a sense of being hip and at the forefronts of your industry.

I do it, you do it, everyone does it; at a different extend. We can't escape buzzwords even if we want to. That's because buzzwords relate to the very core of human nature; they signal 'a common language' and thus create -if not enforce- tribes and communities of professionals...and buyers.

Now, not all professional tribes have equally good skills or noble intentions and buzzwords are known for carrying a negative connotation: more often than not, these linguistic shortcuts are used for their popularity and as persuasion tools, rather than for their substantive content.

Buzzwords such as BIG data, AI, Thought leadership e.t.c are used to induce emotions of achieving something BIG, Intelligent, Leading, Innovative and so forth.

To navigate this fuzzy landscape effectively, we need to convert buzzwords into meaningful discussions by asking objective questions—a task made possible through the application of a first principles mindset.

Thinking from first principles

The first principles mindset involves creating solutions by first deconstructing concepts into their fundamental building blocks

In our case, we want to understand what questions to ask in order to convert buzzwords to a meaningful discussion. So what we need to do first, is to break down the negative connotation of buzzwords to its fundamental components. This will then lead us to understanding the fundamental/objective questions we need to ask in order to counter and convert linguistic creativity to a business case.

The nasty side of buzzwords: why the negative connotation?

Here's my breakdown of the interrelated reasons that make up the dark side of buzzwords:

• Selling Novelty: All buzzwords aim to signal 'the latest trend' and according to psychology, the novelty effect is observed when individuals show heightened interest, curiosity, or enthusiasm in response to something new.
• Rationalising Emotional Connection: The vagueness of buzzwords helps marketeers and salespeople invoke imagination and acceptance by enabling prospects to connect the dots 'using a really thick marker'. As long as people create trust e.g through emotional connection, buzzwords will help rationalise emotions by creating some sort of logical alignment hence a vague business case.
• Abusing Information asymmetry: Buzzwords are used to withhold crucial details about a product or service by being vague instead of specific, preventing the buyer from making an informed decision. An 'AI-powered blockchain solution' might not ensure 'unparalleled transparency and security' in the way you think. Information Asymmetry is typically accompanied by high-pressure sales tactics, creating a sense of urgency or scarcity and using technical or industry-specific language to create confusion while signaling value; in other words invoke heuristic processing
• Abusing Heuristic Processing to Signal Uniqueness: When you lack domain knowledge or genuine interest to 'find out how', your willingness and ability to judge critically is blocked; hence you evaluate situations based on heuristic arguments e.g. aesthetics or perceived uniqueness as described by buzzwords.

The Remedy: Ask objective questions

To understand if you do have alignment, the key is to ask objective questions that require specific answers thus countering all the above 4 factors. Additionally, having a clear goal, such as achieving savings, enables you to cut through the buzzword haze. Some examples of objective questions include:

• What do you mean big data? Which is the least amount of data you 'd need to prove the business case?
• Which features exactly make your service intelligent or novel?
• What are the tangible benefits of these features? Why are they relevant to my case?
• Can you show me an example to backup the above

• What are the limitations and drawbacks of your service?
• Do you offer a way to reduce my risk? Is there a trial period?
• Clearly state the assumptions you made about the service/product and ask details about the implementation. Here are some examples:

a) Service or Product Clarification: "Is this offering primarily a platform that we need to integrate, or is it a service that you provide? Could you elaborate on the nature of the engagement?"

b) Integration with Existing Systems: "I assume this is a platform that requires integration with our current systems. Could you provide more details on how seamless this integration process is, potential challenges, and the support you offer during this phase?"

c) AI and Data Processing:"Regarding the AI aspect, is it fully automated? Do we have any involvement in shaping or fine-tuning the outcomes? What if the data quality is not up to standards?"

d) Data Security and Privacy:"How is data security and privacy handled in your solution? Are there measures in place to ensure the confidentiality and integrity of our information?"

e) Customization and Adaptability:"Considering our specific needs, how customisable is the platform or service? Can it be tailored to our unique requirements, and what level of flexibility does it offer?"

f) Implementation Timeline:"What is the typical timeline for implementing this solution? Are there any dependencies or factors that might affect the timeline, and how do you handle unforeseen challenges during the implementation phase?"

Conclusion by chatGPT - it's pretty buzzy :)

By embracing a first principles mindset and asking objective questions, you can navigate the world of buzzwords and make procurement decisions based on substance rather than superficial appeal. Decoding buzzwords is the key to unlocking the true value behind the hype, ensuring that your investments lead to tangible benefits and sustainable success.

Any questions or objections? Reach out for a chat: Dr. Kyriakos Christodoulides