Meetings to Make Decisions

I recently caught up with a Chief Procurement Officer who finds himself in the early part of a procurement transformation journey. He’s not a career procurement pro, but rather, a seasoned “Ops” (operations) guy and a well-respected (and tenured) company man who has led many high-profile, internal projects across a host of functions and now finds himself at the helm of the procurement department of one of the largest companies in its industry. With the team on track to meet its annual performance metrics, our talk turned to the four objectives that this Chief Procurement Officer had established for the procurement team in his first year:

• To establish a common operating model for procurement operations globally
• To improve the risk profile of the company by improving supply risk management
• To improve overall vendor management (good news: they have a budget for this)
• To establish a Procurement Advisory Council of business leaders

The last objective, the establishment of an Advisory Council is almost the inverse of the embedding strategy introduced here, discussed in more detail here, and presented in a two-part case study here and here. I love the idea. But I love almost any idea that opens the line of communication and fosters collaboration.

This CPO was able to establish the Council in quick fashion based upon his strong internal network of corporate executives. While other CPOs may not be so well-positioned or lucky, it is a worthwhile pursuit. What is interesting about this CPO’s approach is not how the Council is structured or even who is on it. What is interesting about this CPO’s approach is that this Council only conducts “meetings to make decisions.”

It is an interesting approach and one this CPO has used for other internal projects. In the place of the standing monthly meeting, where teams sometimes find themselves struggling in the eleventh hour to pull together an agenda AND appropriate filler, is an ad-hoc meeting that never exceeds one hour in time and has an agenda that only presents issues and makes decisions on them. The CPO believes that Council meeting participation is much higher because the executives understand that decisions really are being made. From a practical standpoint, this approach opens up a whole host of other questions – Is this approach feasible within your enterprise? How could you see this working? are but two – What do you think? is a third.

On Winning

Speaking of decisions, those made in battle or under duress often fail to generate their expected outcome. We see evidence of this on a daily basis in politics, business, and sport. Emotionally-charged decisions face the same challenges; and then there are the unintended consequences of those decisions which can drain future resources and spirits. Sure, business can be tough. No news here. Sometimes you need to play hardball (win-lose). But even if a true “win-win negotiation” is as rare as an Orioles pennant run, there’s usually a vast expanse of land between win-win and win-lose that can work for all parties. Knowing “thyself” and understanding your counterpart(s) are vital to developing the right approach and figuring out the best place to land.

In the fevered pitch of the run-up to a negotiation (or the deployment of a strategy or business tactic or any ‘run-up’ for that matter) conviction can trump reason, emotion can blur larger objectives. What seems certain might not be. Perception of the counterpart can be skewed. Context, if it existed, can be lost. Be careful, reputations can be quickly cemented (or reestablished as the case may be) in the marketplace – we all want to be remembered in our finest hour, not in the frenzy of a win-at-all-cost pursuit. This type of decision-making environment, in and of itself, can justify the pursuit of a victory, even when it will almost certainly be a Pyrrhic one – “That’s ok; we’re sending a message” or “That’s ok; the short-term results outweigh the long-term impact.” Be careful, seemingly certain victory rarely is (certain, that is), and your ability to control how the “message” is viewed by outsiders is more limited than you might think…… and then there are the unintended consequences. The abuse of reverse auctions in the early days comes to mind; so does the unsustainable margin squeeze that certain companies demand each year of their most “strategic” suppliers. But this problem is not one for procurement alone – it can extend across and beyond the enterprise, to employees, partners, and customers from the past, present and future.

Who or what mechanism do you have in place to check those extremes and balance them in the bigger picture of what you, your organization, and your enterprise are trying to accomplish?

Business can be tough and sometimes you need to play hardball. But, Sun Tzu’s Don Corleone’s strategy to “keep your friends close and your enemies closer” only works if you can distinguish between the two and then, there are the unintended consequences.

Tagged in: Chief Procurement Officer, Collaboration, CPO, CPO Shop Talk, People, Strategy, Supplier Relationship Management