Our brain relies on heuristics to navigate the complexities and uncertainties of our world. Heuristics are sorts of algorithms, rapid short-cuts that we use as part of our thinking process. They help us save time, but they can create bias and mislead us.

The Pareto logic is one of these heuristics. We use it whenever we want to prioritise. It works well most of the time. This is a great way to rank multiple options and validate where we should focus our efforts. But it can be misleading.

These days I hear a lot of people adopting this logic in the digital transformation context. They say “Let’ s map what people do and rank their tasks from low value-added ones to high value-added ones. This would be a good way to channel our digitalisation efforts.”

And this is true… up to a point.

You might indeed save 15% or 20% of the time of your people by automating these low value-added tasks. But there is a bias here. We only look at what people do. Not at what they could do if they were supported by a great data accomplice.

Let me take an example. Performing an in-depth cost analysis or performing continuous risk analysis… These take quite some time to complete. You need to gather a lot of data before providing your final analyses and some recommendations.

What if 80%, 90% or even 95% of the time needed for these could be saved by automating the data collection process which is a realistic assessment.

This would mean that you can do 4 times or 10 times more of these when a productivity gain of 15% to 20% could only allow you to do 2 to 4 times more of it.

And of course, this does not even consider the outcomes. Low value-added tasks tend to be a necessary evil. You need to do them anyway, but they don’t have massive positive ripple effects on performance.  Placing orders, documenting compliance matters are good example of this. It is a must have but not a performance booster

However, performing higher value-added activities can be different in terms of impact.  An in-depth cost analysis, or real time risk scanning offer higher order outcomes. Consequently, performing more of them is very valuable.

All this should not lead us to conclude that we should not automate low value-added tasks or abandon the Pareto rule. My suggestion is simply to look at both sides of the opportunity landscape. In fact, all this is not new, the debate between automation VS augmentation between Artificial Intelligence and Intelligence Assisted has been here for some time.

What I claim, is that simple, logical automatic reasoning can help us a lot, it can also poison our reasoning.

To simplify our ways of working we should not make simplistic reasoning

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Today Open architectures, Open Hardware and Open Source Software are making progress across diverse industries where they could disrupt supply chains and bring to life open supply chains. This will not happen overnight, but it is worth understanding such developments. The present article aims at describing what open supply chains are about. It builds on the Open RAN example in the telecom sector.

Whether you look at a phone, a copier, a microprocessor, a data center or a telecom equipment, you have a box in front of you. That box is composed of multiple blocks of hardware and software (to keep things simple). Altogether this form an architecture. The architecture defines interfaces that connect the blocks. To use the box, you might also need additional services, software and complementary tools… so you can design, implement, use and maintain the box.

Some companies who have developed proprietary boxes have been able to create a dominant market position. They sell the box, the complementary tools together with the additional services as a “turnkey” solution. Today, as such market have globalised, very few actors remain, and you need to choose either one or the other.

A first step that challenge such a dominant market position is to establish an open architecture. As the interfaces become standard, this suddenly open ups the possibility to replace the provider of a proprietary box by multiple suppliers of off-the-shelf hardware and software. Any software can work on any hardware and multiple pieces of hardware  can be assembled together. Anyone who had to pay a huge amount of money for a cable will understand this easily.

The next steps could include creating blocks available as open hardware or as open source software. With open hardware, the hardware block can be manufactured by any company capable of delivering according to the needs of the customer (volume, quality, reliability…). With open source software, the code is available and can be supported by any service provider.

Doing this leads to the dis-aggregation of the supply chain. It creates an open supply chain where there is a high level of flexibility for supplier’s selection.

Achieving this is nevertheless very challenging as this requires creating and imposing on the market the interfaces and the design of the blocks. This also requires suppliers with adequate manufacturing capability and complementary software, services and tools providers. They might not be available on the market. It can also require operating the supply chain differently as the integration capabilities of proprietary box providers need to be replaced.

Over the past years, this has nevertheless been initiated in some industries. This include data centers, telecom equipment’s and microprocessors. The idea behind open source software and open data dominate the tech industry and they are now moving towards neighboring industries.

To do this, large scale collaborations have been created. They are led by foundation with specific structured governance mechanism and intellectual property guidelines. Companies that want to be part of such open supply chains have joined these foundations as members. Some of these members contributed to the design of the interfaces, of the software or of the hardware; some can provide the complementary services, tools or manufacturing capabilities needed to contribute to deliver full value proposition. The word ecosystem is used to describe such groups of organizations.

An example from the telecom sector can be used to illustrate this.

A Radio Area Networks (RAN) is one of the main building blocks of a Telecom infrastructure. With proprietary RANs provided by companies such as Nokia, Ericsson or Huawei, the software and hardware are coupled together.

Open RAN is a recent initiative under the umbrella of the Telecom Infra Project (TIP). With Open RAN the software and the open architecture allow to assemble common-off-the-shelf (COTS) hardware from diverse suppliers to build a network. This offers cost reduction opportunities; it avoids vendor lock in and allows to innovate faster by assembling the design capabilities of multiple companies.

Telecom operators such as Vodafone and Telefonica have worked with Open RAN suppliers. A few Request for Proposals have been completed and the scope of the project they initiate is increasing. This is clearly an attempt to challenge the dominance of Ericsson, Huawei and Nokia

Vodafone CEO, Nick Read, has publicly stated that the company was seeking to “actively expand” its supplier network for Open RAN. This creates an Open Supply chain for RAN.

If the benefits are obvious, this remain a challenging development. The Telecom Infra Project brings together hundreds of companies. To be successful such an ecosystem needs to adopt new ways of collaborating across companies that can challenge years of industry practice.

If you are interested in open supply chains, you can look at other project such as RISC-V for Microprocessors, Open Compute Project for Data centers. Project such as Apollo Auto for autonomous cars and Lora alliance for the Internet of things are slightly different but also of interest.

Open supply chains might become more common in the future. We therefore need to further study them.

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I have seen with great pleasure the new version of the EFQM Excellence model. Having been at the periphery of the EFQM community for ten years now, this is an interesting exercise. I believe this new version is a great step forward that builds on the foundations of the Excellence movement while addressing some contemporary challenges.

In terms of foundation, I am glad to see the word execution at the center of the new EFQM model. The Excellence movement have always focused on getting things done and on the quality and depth of execution. I am glad to see this so clearly at the center of the model. Today there are a lot of agitated people who rush from project to another and bump into glass walls. We hear a lot about the agile imperative but systematic ways of working that combine simplicity, collaboration, speed and value creation are still scarce. Too often transformation programs are piling up on each other. Instead of focusing on a few breakthrough goals for the whole organization, every department and units pursue their own transformation programs and require the contribution of others. This leads to a collaboration overload and rigidifies organizations. The revised EFQM model recognizes that multiple change can impact an organization, but it also advocates that organization should have one purpose, one vision and transform themselves accordingly. It is good to see this so clearly on the forefront of the revised EFQM model.

In terms of contemporary challenges, I believe that the extensive use of the word ecosystem within the new EFQM model is a great step forward. Thirty years ago, industries were depicted as a chain of players with sequential inputs and outputs. Industries were giant economic silos that have now merged, recombined and interpenetrated each other. Innovation is everywhere and continuously accelerating. As the result, traditional value chains are shaken. We now have dynamic ecosystems with organizations that simultaneously collaborate and compete against each other. These ecosystems are going through steady and sometime rapid evolution. All organisation tries to escape the commodity trap and to regain differentiation by harnessing open innovation and external opportunities. So, thank you EFQM for helping people reflect on ecosystems.

Finally, I might share a call to go even further in the future. A lot of change has been implemented in the revised EFQM model. This is great. But moving from an assessment to a transformation logic might require more than a gentle upgrade of the RADAR logic. RADAR is great for assessing advanced organisation. Let’s use it for this. To help organisation transform I would encourage EFQM to develop a forward looking way to use its revised model.

I have seen with great pleasure the new version of the EFQM Excellence model. Having been at the periphery of the EFQM community for ten years now, this is an interesting exercise. I believe this new version is a great step forward that builds on the foundations of the Excellence movement while addressing some contemporary challenges.

In terms of foundation, I am glad to see the word execution at the center of the new EFQM model. The Excellence movement have always focused on getting things done and on the quality and depth of execution. I am glad to see this so clearly at the center of the model. Today there are a lot of agitated people who rush from project to another and bump into glass walls. We hear a lot about the agile imperative but systematic ways of working that combine simplicity, collaboration, speed and value creation are still scarce. Too often transformation programs are piling up on each other. Instead of focusing on a few breakthrough goals for the whole organization, every department and units pursue their own transformation programs and require the contribution of others. This leads to a collaboration overload and rigidifies organizations. The revised EFQM model recognizes that multiple change can impact an organization, but it also advocates that organization should have one purpose, one vision and transform themselves accordingly. It is good to see this so clearly on the forefront of the revised EFQM model.

In terms of contemporary challenges, I believe that the extensive use of the word ecosystem within the new EFQM model is a great step forward. Thirty years ago, industries were depicted as a chain of players with sequential inputs and outputs. Industries were giant economic silos that have now merged, recombined and interpenetrated each other. Innovation is everywhere and continuously accelerating. As the result, traditional value chains are shaken. We now have dynamic ecosystems with organizations that simultaneously collaborate and compete against each other. These ecosystems are going through steady and sometime rapid evolution. All organisation tries to escape the commodity trap and to regain differentiation by harnessing open innovation and external opportunities. So, thank you EFQM for helping people reflect on ecosystems.

Finally, I might share a call to go even further in the future. A lot of change has been implemented in the revised EFQM model. This is great. But moving from an assessment to a transformation logic might require more than a gentle upgrade of the RADAR logic. RADAR is great for assessing advanced organisation. Let’s use it for this. To help organisation transform I would encourage EFQM to develop a forward looking way to use its revised model.

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Using Personas and User Journey to power Request for Solution

Many Buyers are looking for effective ways of sourcing innovative solutions. Discussion on innovation best practices often focuses on complex high-tech cases that require long, uncertainty-reduction projects where early involvement enables anticipation of a myriad of opportunities and risks. However, in fast-changing markets, we can also benefit from innovative solutions immediately available on the market. In such projects, the main challenge is to find the best fit between your internal problems and the external solution.

Today I would like to provide an overview of how you can use Personas and User Journey to power your Request for Solution.  The term Request for Solution is great way of saying that we will share our problems, so potential suppliers can focus on showing how they will help us do so. In such a request, you provide a high-level description of your problem, usage, needs and constraints and then the potential suppliers can suggest solutions and prices. This is a great way to offer them some freedom so they can suggest innovative options.

One of the challenges is to describe these problems, needs and constraints. This is where Personas and User Journey come into play.

Personas describe the users of a product or service; they help suppliers empathise with what is important for the users. The persona is imaginary, but it personifies the real-life attributes of users. It helps the supplier seize the main traits, ambitions and issues of the group of users that could use their solution.  Here is an example of a persona. I have created a fictitious example for a company looking into creating a purchasing academy. This is one persona amongst the 4 or 5 that would be needed for such a case.

The User Journey goes one step beyond by describing how the user interacts with the expected solution. For each persona, the user journey is broken into stages that describe their experience of the solution. A few elements are provided for each stage. This can include activities performed by users, questions they may have, short descriptions of what makes users happy or anxious, the “pains” they would like to get rid of and “gains” they would like to benefit from. All this should be written in the language of the user. This is not a specification.

The best way to develop a persona or a user is through workshops and interviews with real potential users. During workshops you can ask some key questions and participants can provide their personal answers using sticky notes for instance. Interviews can build on similar questions but individually administered. Interviews can be great to allow people to express their issues, problems and frustrations. Workshops are great to gather a lot of information in a short amount of time.

Personas and User Journey are sent or shared as high-level requirements and problems that can be used in a Request for solution. Instead of defining detailed specifications, Personas and User Journey are a great way of conveying what you need to your potential suppliers. This offers them the freedom to suggest some innovation or to adapt their standard offerings to you.

Sometimes you can go even further. I have coached a buyer in charge of recruitment agencies. The company was facing some difficulties to recruit people. We started to frame the problem by looking well beyond the recruitment agencies, the buyer developed personas to understand “Who are the typical candidates?” and then the buyer mapped the full candidate journey from beginning to end. This led to identify new opportunities to improve the recruitment process from beginning to end, well beyond the sole support provided by the recruitment agency.

As a summary, Personas and User Journey are great ways to share needs with suppliers and to allow them to suggest innovative solution. This is best fitted for situations where the market can offer some innovative solutions that you might be already aware of.

Dare to try? Keep us updated!

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Four years ago, for the first time I heard some people talking about cognitive procurement. I was coaching two talented people from a Telco company who were envisioning future digital solutions for their procurement team. Since that time, I have seen a continuous increase in attention and enthusiasm for the topic of digitalisation. I have also heard about many implementation challenges that reminded me of a previous one about information systems implementation.

Today, in the context of this growing attention for digital procurement opportunities, I would like to raise a key question: Considering digitalisation, where are the real opportunities for Procurement?

When I use the word digitalisation here, I consider the broadest set of technologies and business model changes currently undergoing development. They will probably be considered by future historians and economists as general-purpose technology. They are already proliferating across all economic sectors. Their impact still needs to be visible on aggregated economic measures such as productivity to gain this title.

The following pictures map the overlap around three ambitions: (1) what companies are trying to achieve through digital technologies; (2) What are the supplier ambitions are related to digitalisation and (3) What purchasing expects to achieve by using digital solutions. And not surprisingly, the three circles interact. Based on this representation I have identified three “digital zones” that will be briefly described underneath. My conclusion is quite simple. The most important opportunities for procurement do not lie in digitalising its own process, but in supporting the business with its digital transformation, by harnessing the right supplier capabilities that can make a difference for the company.

This does not mean that procurement teams should not pay attention to their own digitalisation. They clearly need it. But tomorrow this will be simply considered “as a necessary evil” like most IT solutions in the past. And what procurement should be remembered for, is its contribution to the company’s digital transformation.

The following suggestions for each zone in terms of initiatives are not exhaustive and the whole set of supporting technology is not presented either. The goal is to be illustrate the main message.

Zone A is about Digital Tooling with Purchasing digitalising its own activities for its own benefit. This is what I call “Tomorrow’s necessary evil”, you need to do it, you will gain some benefits, but you will not be remembered for this. It will quickly be taken for granted. Zone A can include taking initiatives related to implementing:

• Process automation starting with simple repetitive tasks and growing in complexity
• Demand forecasting powered by machine learning
• Real time spend management thanks to the mining of unstructured data sets
• Predictive pricing & predictive costing tools to support decision making processes
• Smart contract solutions and other automated monitoring activities after a contract is signed
• Diverse audits and compliance activities that can be supported by augmented reality and other digital tools
• And more…

Zone B is the sweet spot. This is where digital tooling is bringing value to the business. This is where you see some strong synergies between procurement and its stakeholders, or with the suppliers or even amongst all three. This is a great area as value is created for all sides. Zone B can include taking initiatives related to implementing:

• Simplified user experience for requesters
• Real time performance monitoring tools
• Real time data sharing across the supply chain
• Intelligent risk management using fragmented data sets
• Use of external data sources to optimise and enrich decision making processes
• Enhanced compliance systems
• Cybersecurity solutions across the supply chain and the extended asset base.
• Alternative sourcing and operational models (3D printing)
• Tracking solutions for goods or packaging
• IoT powered circular economy
• Platforms and configurators
• Collaboration and idea management solutions
• And more…

Zone C is where I would like to see more focus and activity. I have been documenting some case studies in this zone already. Nevertheless, we need to see more ambition from the procurement teams. This zone contains all projects where procurement supports the digital transformation of the business by harnessing supplier capabilities that will make a difference. Zone C can include initiatives related to:

• Empowering the development of new digitally enabled revenue streams through supplier collaboration
• Supporting 360° Market Intelligence right from the early stages of the innovation process
• Sourcing data sets for digital business solutions
• Managing the integration of suppliers in the development of digital solutions
• Supporting and facilitating the adoption and integration of external technology and solutions across all key business processes
• Sourcing of software, experts and digital tools
• Enabling access to start-ups and innovation partners for critical business projects
• And more….

So, balance your effort across Zone A, Zone B and Zone C. All of them will deliver benefits. But please never ignore zone C. This is where procurement will show its real worth!

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Attracting Innovation from Suppliers: The People Motivation Factor

I had planned to write an article next on factors that help companies attract innovation from suppliers. I was ready to describe how intellectual property matters, reputation, transfer of knowledge, trust and fairness can make a company a customer of choice for innovation. This is critical to innovation as it is easier to obtain a good price than to be the first exposed to breakthrough innovation from suppliers.

However, I ended up focusing on only one factor: The motivation of key people on the supplier side. In a nutshell, to be the customer of choice for innovation, the innovation elite from your suppliers need to favour you over other clients. I saw this in action a few months ago when I was working on a research project with one of the leading companies in the field of robotics. I interviewed a young engineer working for one of their suppliers who was very enthusiastic and put all his energy into making the project a success. I asked him why he was so enthusiastic? His answer was “I get to work with the Gods of Robotics”. For him, a simple walk in the corridor, discussing with lead engineers from his client was a very gratifying experience. Listening about past technical wizardry and future ideas was for him the most motivating experience one could have at work. And this is not an exception. I have seen this time and time again. Key people in a company compete to work for a specific client. It can be important for their career; it is also important for their motivation and their personal contentment at work. So being a customer of choice for innovation is a people game.

Now let me introduce a simple framework presented by Lindsay McGregor and Neel Doshi in their book  “Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation” (2015) These authors show that motivation comes from three key motives: Purpose, Play & Potential. And motivation generates a higher performance in terms of creativity, innovation and problem-solving capabilities. So, let’s look at each of them individually

Purpose: Purpose is how a person values the outcome and impact of her/his work. We might not enjoy everything we have to do in our daily work, but if we value its outcome and impact, motivation will be on the high. For instance, by inviting key representatives from your suppliers to meet with some of your clients. By showing how their work contributes to make your client or employee satisfied, by showing them how their work helps to deliver your company’s mission and vision, you are contributing to create a sense of achievement and motivation that can help you realise the best from them and secure access to innovation.

Play: Play is about curiosity and experimentation. It’s not about organising funny games and team building activities. The best engineers working for your suppliers often enjoy solving complex technical problems. It makes their work playful, enjoyable and motivating. If the key people working for your suppliers are told how to do things and if they receive as performance report spreadsheets with traffic lights flashing in red, it is unlikely that they’ll come to you with their innovative ideas first. The great thing about play and innovation is that innovation needs play and play brings motivation; so, you can really create a positive virtuous cycle here. If you positively challenge innovation leaders from your suppliers, if you encourage them to experiment, if you organise innovation workshops with them and if you use their input; you will capture both innovation and motivation.

Potential: Potential is about people achieving their personal work aspirations and advancing towards their next career steps. For key people working on the supplier side, it might include providing them with access to industry knowledge, working with a well-established industry player or about giving them visibility within their own company. If many companies have created awards for some of their suppliers, the best performing purchasing organisations pay attention to recognising the key individuals on the supplier side who make a difference. Often, following an award… they deliver more value than ever before.

To conclude, to earn innovation from suppliers we need to motivate their key people; this can be achieved by thinking systematically about Purpose, Play and Potential as motivation factors.

Finally, we also need to remember that motivation and trust can be quickly destroyed:

If we say we have no time to listen to new ideas coming from suppliers,

If we consult them on an interesting project only to get a price benchmark,

If we tell them that five other companies are waiting to do their work,

We put the motivation of their key people at risk. So, it is not about being nice and friendly all the time, but to gain access to more innovation from suppliers we need to be particularly careful about the impact of our own communication and acts.

Hence the EIPM Motto: Values for Value!

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Procurement goes design thinking

I have been teaching Design Thinking to buyers as part of my innovation class for a few years now. I always conclude my sessions by emphasising that, when you look for innovative solutions, Design Thinking can easily be used as a procurement process.

Design Thinking is often described as a human-centred, exploratory and iterative approach of innovation. We can look at this in more detail:

Design Thinking is human centred. Design Thinking encourages innovators to bring people in a convivial environment and to demonstrate empathy towards them, so they can share their experience and express freely what is truly important for them. Design Thinking focuses on expressing user needs as stories and pain points.

Design Thinking is exploratory. Instead of coming up with a single solution and then spending ages making it work, Design Thinking encourages innovators to come up with multiple solutions. These can be sketches or prototypes that help gather further views and feedback from users. Prototypes used with the right mindset are a great way to learn. They help to come up with valid solutions, both from a value and a cost perspective.

Design Thinking is iterative. When you innovate, the prototypes will not be perfect. To innovate you need to go through a series of loops. By rapidly creating sketches and prototypes, hypotheses can be quickly validated or discarded. And then you can you loop till the best solution is found.

I typically use the following image to draw a parallel between Procurement and Design Thinking.

So if you are interested to power your procurement process with Design Thinking the following suggestions outlined underneath could help you:

Step 1: Needs analysis. Instead of working with long lists of technical requirements, solutions need to be derived from Stories and Pain Points. There are plenty of ways to do this. Typically, Users can be interviewed or involved in workshops where they feel comfortable to share their views and express what matters to them.

Ideally you would bring potential suppliers so they can talk to users directly and hear straight from the horse’s mouth what users care for. You need the right mindset, attitude and confidence on both sides to do this. There are a lot of benefits in operating this way during the tender phase, but some could see this as a risky move. Therefore, you can also document the stories and share all of them with the potential supplier.

To do this you need to provide different profiles of users which can include their role and background. Then for each of them you can express their needs as user stories. This is done by outlining for the different users’ WHAT outcome is needed and WHY it is needed.  The following format can be used to do this:

As a < who is the user? >, I want to < what goals this user wants to achieve? > so that < why this is important to the user >.

Step 2: Development of solutions. Instead of asking suppliers to come up with one solution fully described within a lengthy written proposal, you can ask them for options based on user stories provided. Such options can be described using sketches and prototypes. By doing this you will have opportunities to both understand the capabilities of the potential suppliers and you will have some unique opportunities to refine your own expectation of what success can look like. Such a process needs to remain simple, engaging and fast. You could for instance remotely share user stories in the morning and look at a first set of prototypes at the end of the day. You can also give a full week to the supplier, but It is essential to maintain a good pace so everyone is kept engaged.

Step 3: Loop rapidly till you have something of value: As you aim to learn rapidly instead of seeking first time perfection, you will go through multiple iterations. Such loops enable progressive refinement of the solution that will fit your expectations best. I often describe this as the gardener’s way of doing things: You plant multiple seeds; you see how they grow and then you pick the ones that really provide the best value for money.  By doing this, you will be moving swiftly towards implementation as a lot of learning has already taken place.

So to conclude, Design Thinking can really power the procurement process and help generate more innovation out of suppliers’ capabilities. There is no single recipe on how to do this. And of course, this cannot be applied to everything. In any case, as you experiment with this, you need to translate the key principles of Design Thinking into something that works for your situation. But it must be human centred, exploratory and iterative. There is no shortcut.

I have seen companies moving in this direction over the past years. It has been very interesting to observe the evolution. And I would be glad to see more cases. So, don’t hesitate to contact me if you have accomplished something similar.

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