Tag Archives: AEIOU

What Major Risks are Facing Our Community?

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The Mpower Group NPXAt a recent planning call with some of the members of the Next Practices Xchange for their upcoming conference, I was asked to come up with the list of concerns that leaders in the community (Procurement, Strategic Sourcing, Supply Chain, etc. etc.) had.  This was to identify the major risks that are facing the community so that a relevant agenda could be developed.  I pushed back at the members and got them to acknowledge that we would be talking about only those issues that they knew about or had identified.  What about all those that they had not?  Based on some of the research that we have done and the various venues we speak at, here is the list that I gave them as the Top 10 list of risks that they should be focused on.  I also told them that we would crowdsource the prioritization of this list and give them some help in picking the top 2 or 3 for their next conference.

Please pick your top three risks!

View Results

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So go ahead and provide your input and then check back and see what others said. This information will be used to plan our next conference, so stay tuned.

Regards,

Dalip

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Law Firms – Welcome to the World of Strategic Sourcing

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Often referred to as a “sacred cow” of Sourcing, law firms are finally feeling the squeeze felt by every other business that supplies goods or services to clients.  It took the recent recession for companies to realize that “everything is negotiable”, even the legal fees charged by their outside legal counsel.  According to an article by Jennifer Smith in the Wall Street Journal entitled “Companies Reset Legal Costs” now that the recession is over (is it??) . . . “clients who won concessions on their legal bills when law firms were scrambling for business still are calling the shots when it comes to paying by the hour”.   Finally!!  Welcome to the conversation!!  Could this mean that including legal fees as part of sourceable spend is finally happening?

I remember venturing into the world of Strategic Sourcing 15 years ago and being told that legal fees were out of scope.  We were able to get it done all those years ago BUT it took a lot of selling AND it was painful.  Still, today, as we work with client organizations, legal will end up in Wave 5 where all the most difficult categories are placed.  Not because it is so difficult to actually source legal spend but because the internal resistance is so great.  I believe this is primarily due to the fact that most Strategic Sourcing is cost focused and this particular category of spend really requires a Value-based approach.  In addition, most general counsel do not want any part of negotiating with their external partners even though they are supposed to be the “experts” at negotiating.  Talk to the Chief Legal Officer about outsourcing legal research to India and you can literally see the bow tie unravel.  If you look at legal services as being similar to other professional services such as accounting, finance, IT, HR, management consulting. etc., it’s a wonder that legal has been able to fly under the Sourcing radar for so long.  Or could it be that those well-honed negotiating skills have been used to justify why Sourcing is not applicable.

According to Ms. Smith  . . . “the number of companies seeking novel arrangements is on the rise and expected to grow further.  In 2011, 61% of U.S. general counsel in a Fulbright & Jaworski survey of 405 companies said they used alternative-fee arrangements, up from 48% in 2009.

So, it appears that the veil has been lifted.  When I read this article, I felt like I was in a time warp.  It addition to alternative billing structures, it discusses things like clients demanding visibility into what they are paying for, detail plans on how law firms will execute the work, questions around the number of partners required to sit through a deposition? Really, these are basic sourcing strategies that have been around for well over 20 years – they are not NEW, people!!

While companies are still trying to find ways to save money, now may be the time to jump on the bandwagon.  Legal departments may now be more amenable to exploring the Sourcing process, particularly now that it is becoming more mainstream.  Like every change though, develop your business case, brush off your selling document, let them know “what’s in it for them” and realize that it will not be easy.  Once the sourcing process is complete you need to ensure that the solutions are adopted (our AEIOU model) within the legal department or there will be no actual business benefit.  And if you are really brave and also want to have a little fun just mention outsourcing to India and watch the bow ties unravel . . . . . . . .

Join in the conversation and tell us about your experience in what appears to STILL be uncharted territory.

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Mind the Gap – Training vs Competencies

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In our previous posts we talked about designing your talent management program and implementing a recruiting plan. However, these are only parts of a larger Competency Based Talent Management (CBTM) program. You have hired the people you needed. So what? How can you make sure they are integrated into your organization and are able to hit the ground running, creating the optimum amount of impact? Not only do you need to look at training your existing team, you need to create a training program for new recruits as well.

This sounds well and good (and perhaps a bit easy). However, it is not as easy as it sounds. We have heard from many of our Sourcing / Supply Chain peers, particularly at our last NPX, that they are struggling with their training efforts. Training is completed, but the learning is never adopted. So what can they do to change the results?

Adoption brings us back to our vowels (AEIOU). In the past we have talked about the importance of Adoption, Execution, Implementation, Optimization and Utilization in any organizational effort. However, training is just not about the act of learning (a consonant); it is about adopting and implementing that learning to drive business results. Using the vowels ensures that the people being trained start applying what they learned. Implementing the vowels is the key difference between training people and developing competency.

To effectively turn a training program into competency development, you must have a good understanding of your desired needs. This requires that you start with the strategic direction and objectives of the company and what role your organization will play. This will show you which organizational competencies you need and will give you an understanding of the gaps you have within your organization. Now, the closure of those gaps can be tied directly to the company’s strategic direction and the role your organization will play, adding value not just for individuals, but for the company as a whole. Sending 2-3 people at a time to some public seminar designed for the masses may develop individual competency but it is never going to develop organizational competency.

Your gap closure strategies must follow a multi-faceted approach (coaching / mentoring etc.). Make sure your entire approach is rooted in Adult Learning Theory and has experiential learning as its basic tenet. Making people sit through day long lectures with no ability to actually practice the new behaviors and competencies in a safe learning environment is of little value. In addition, the curriculum must include the strategic competencies found during the initial gap assessment. A program consisting of functional or process skills alone is doomed. The strategic competencies must also be integrated into the core process modules so that people know how to actually deploy the new process.

Your training strategies must look beyond the technical skills and focus on the strategic skills needed to be successful like change management, communication, collaboration, and decision making. Oftentimes these skills are overlooked when training, although they are the most important to organizational success. Anyone can learn to use any process and those are the skills most organizations worry about when hiring and training. However, developing strategic skills can take your team to the next level and have more lasting effects on the group. It takes your group from Best Practices to Next Practices.

Developing the right competencies within your organization is not easy. It takes a lot of thought and energy to train and develop your team. Sometimes closing the gap can make you feel like you are trying to build a bridge across the Grand Canyon. If you start by looking at competency development in terms of AEIOU and strategic alignment, you will no longer need to build a bridge across the gap. You will find that your organization will soar.

In our upcoming posts we will continue to address Next Practices associated with the Competency Based Talent Management lifecycle.

If you are interested in getting involved or would like to follow this topic further, here are a series of critical activities coming up:

  • Release of the results of the Executive Forum we just facilitated at the IACCM Global Forum for Contracting & Commercial Excellence on Talent Management.
  • A major research project to not identify the problem one more time but to identify Next Practices to solve the problems.
  • A webinar with IACCM on CBTM.
  • A White Paper to focus on Next Practices in CBTM.

Regards,

Crystal

Reposted on Sourcing Innovation.

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Hitting a Strategic Sourcing Home Run

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I’m not a huge baseball fan, but my daughter gave me the book Moneyball (used at many leading business schools) by Michael Lewis and I was eager to see the movie.  Brad Pitt takes a break from his jet-setting life with Angelina Jolie to play Billy Beane, the General Manager of the Oakland Athletics baseball team. Billy Beane is well-known for fundamentally redefining the way baseball teams make decisions and challenging the way teams had been managed for over a century.  He essentially changes the decision criteria used to select players to a much more fact-based model, which focuses on the real value the players bring toward the Intended Consequences (getting a win).  Once he redesigns the consonants (People, Process, Technology), he quickly realizes that getting to the expected results is still far away. It’s not until he focuses on the vowels (Adoption, Execution, Implementation, Optimization and Utilization) that the results start showing up.  The constraints he faces should sound very, very familiar to everyone.  Follow the trail and tell me if you agree that we all need to be a Brad Pitt (no that does not come with Angelina Jolie).

  • Faces resource constraints in terms of total budget available – SIGNIFICANTLY less than the competition
  • Entrenched resistance
    • Scouts who still evaluate talent the way it’s been for decades (decision models and processes)
    • Salaries of players based on old metrics (reward system)
    • Players who define their roles based on those metrics
    • Middle management (Manager) a TOTAL barrier to change
    • Players totally fighting the change
    • An organizational attitude that accepts failure
  • An environment (the entire sport of baseball) that is openly hostile to every move he makes
  • Changing the entire Value Chain and redefining the way value is created(getting on base leads to wins)
  • Dealing with early losses and still getting the organization to stay committed
  • Getting rid of some of the players to set an example
  • Create value from a supply market (players) that has been sourced by the competition already

The parallels continue.  By the way, those of you not familiar with this particular story or baseball in general, a parallel might be what Lionel Messi and Barcelona have done in terms of redefining soccer away from long kicks and passes to short passes and a possession game.  Even though they have clearly proven that it is far superior to the competition, others have been very slow to adopt.  This concept is why you need Next Practices as a way to create an advantage while others chase Best Practices.

The more interesting question is what you do to stay on top while others adopt the same style and strategy.  And if you think I’m stretching the argument, you will find that since a large portion of baseball has adopted Billy Beane’s vision, his old techniques no longer provide the leverage.  In fact, he cannot compete because he does not have the resources that the other teams do.  And since they are sourcing the same pool of players using the same techniques, his leverage (exploiting market inefficiency) is gone.  This is no different than Supply Chain/Sourcing organizations going back into the supplier market using the same techniques that everyone else is using (Best Practices).  In fact, the best model of that are now the Milwaukee Brewers, not the Oakland A’s.  And even they have had to continuously adapt because everyone has adopted the same tools.  And oh by the way, we all assume in the Supply Chain world that the supply market has not adjusted to the techniques that we have been using?  If you think of it as a system that seeks equilibrium, that assumption just does not hold true.  If you would like a more detailed presentation on this, let us know.

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Value in Marketing – Are We Missing the Point?

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According to the American Marketing Association (AMA), marketing is defined as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”  As I read this definition the word value stands out to me. Adding value is key to effective marketing, yet why is it that we seem to forget that fact in our everyday work life?

I have always seen marketing as a service-oriented business function. With marketing touching on so many different aspects of the business, marketing professionals are constantly interacting with many stakeholders, each with very different needs. Because these stakeholders both exist external (customers) and internal (sales) to the organization, it is important for marketing professionals to show the maximum amount of value to each stakeholder. This makes the job of a marketer particularly challenging as it can be difficult to prioritize and see the larger organizational picture. When we add to this situation the rise of Social Media and Internet Marketing (among other areas); marketers can easily and quickly put themselves at a disadvantage.

With many marketing departments and budgets shrinking, efforts need to be more streamlined and effective. Marketers need to work hard to gain trust among their internal customers and create value beyond return on marketing investment (ROMI). This means that they need to remain educated on the company, new marketing tools, and many times put egos aside. It is never an option to say “this is not a marketing function.”  Bridges need to be built between marketing and the rest of the departments. In my experience, there is often a feeling that marketing lives in a bubble with little understanding of sales needs and customer wants. This is not always true, but perception is reality.

The simple fact of the matter is that value is subjective. Marketers need to work hard to make sure they are providing the best service possible to their company. The days of sitting back and waiting for results and praise are over. Marketing is now a fully interactive science with many moving parts. Don’t just brand your company; brand your profession and yourself. For marketing to truly move to the next level, professionals need to ask themselves, what value have I provided today?

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