Why Maturity Matters . . . . . .

maturitysmallJust about every functional organization (e.g. IT, HR, Finance, Procurement, Legal, Marketing, etc.) can be measured against a maturity model.  The use of a maturity model allows an organization to have its processes and practices assessed against a set of external benchmarks, best practices or even next practices. Maturity is indicated by evaluating an organization across a number of domains and across a number of “maturity levels”. 

Here is a sample of a Procurement / Strategic Sourcing Maturity Model:

maturitysmall

The idea behind this model is to understand where you are today so that you can start moving your organization to the right.  Why should this be of interest to you or your organization?  Why do you care where you are today as long as you know where you are going?  Here is why!  Maturity MATTERS!  Where you are today does determine the time, effort, resources and change required to get to that “Best Practice” / Value Creating level. By the way, as you start to get close as an organization, that Value Creating level will evolve as well.  There are lots of consultants (present company excluded) trying to sell the latest “best practice” – years ago it was Procurement, then Strategic Sourcing, now it is Category Management.  Many of them (the consultants) sell the Value Creating level to executives without explaining what it takes to get there.  They also neglect to point out that you can’t move from Level 1 to Level 5 without reaching the levels in between and each level requires an investment.

As an organization, as you start to move to the right, it is not as simple as swapping out people, process and technology.  The “context” under which a Value Creating organization works as compared to a Basic Sourcing organization is vastly different and requires changing more than just the Procurement/Sourcing organization itself.  It requires the entire organization to think differently about the Purchasing function and this is a monumental change. For those of you who are about to make the journey, it requires the following:

creating valuesmall

Educate is required for both the Purchasing organization and the rest of the company. If you are starting at Level 2, the education process for Purchasing can be akin to teaching a basketball team how to play football.  Moving to the right will require a very different skill set and therefore the people that you have today (playing basketball) may not be capable of or even want to play football.  In other words, the “educate” process even within Purchasing could be significant.  Then the rest of the organization needs to be educated on the change as well.  ating Align may be the hardest part of the journey but also the most important.  Getting everyone (the whole organization) to agree on where Purchasing is going and how to get there is no small task.  Everyone needs to understand that the change will require new roles, decision making processes, skills, organization and governance structures, etc. and needs to be on board and supportive of the change.  Only after educate and align are complete, should you Execute Unfortunately many companies do not have the patience to wait, so they jump to execution and it is a disaster OR they try to skip from Level 2 to Level 5 and it is also a disaster.  By the way, throwing more money or resource into the mix may help accelerate the journey but only marginally.  Moving from one level to the next requires you to go thru educate, align, execute, evolve again but it does get easierJ!

Where you start does matter – so know what your level of maturity is before you begin the journey.  While Level 5 should be your long term vision (remember by the time you get there it will have evolved) moving up the maturity curve in general can yield significant benefits.

Let us know what you think and join in the conversation . . . . . .    

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Thanks, but we will not be responding to your RFP…..

We have always felt that the goal of any sourcing process MUST be to select the best  supplier  possible and develop a relationship that will drive mutual value creation – it’s not to find the cheapest supplier.  Unfortunately, most sourcing processes and related technologies absolutely reverse the priorities.  We were recently invited to respond to an RFP to create  a Global Competency Development program for a large global organization and after much deliberation (and pain for our business development person :) ), we decided not to respond. 

There were many reasons for us to make that choice but the primary one was that we did not think that the sourcing process had aligned the expected business benefits with the requirements that were listed in the RFP – meaning that we were convinced that if we sold them what they were asking for (requirements), they would not get the business benefits OR results.  In addition, the types of questions they were asking about our capabilities were also not aligned with their expected business results.  The entire process was also being run on a sourcing technology platform that severely restricted and constrained us from truly presenting our capabilities (more on this topic in a later blog but there needs to be a serious open discussion, that MUST involve the supplier community, on the benefits of the various technology platforms – seems to me they are all geared towards improving the efficiency of the sourcing department and helping to find the cheapest supplier!!). 

We made this decision even though we were humbly but absolutely convinced that we were at least one of the best solutions for them.  Fortunately, we think we got the attention of the customer by sending this letter by offering them a Next Practice.  We told them about our standard transparent pricing philosophy where we will share with them what we charge other customers (blind) so that they can determine if we are giving them a fair price and thus eliminate price risk from their decision. In addition, in lieu of spending the time, effort and cost to respond to a lengthy RFP, we asked for time with their decision making team and committed to live with their decision after we met with them.  For saving us the time and effort, we offered to make a donation to their favorite charity in return.

 Another recent example is a client (academic institution) who was running the standard type of adversarial sourcing process based on finding the lowest price for a solution that was literally core to their value proposition. They were headed for a total doomsday scenario where the entire academic community was up in arms already.  It wasn’t until we changed the entire orientation of their process that they discovered that not only were they behind but their current strategy would have made sure that they fell even further and further behind their competition – in a BIG way!!

 The question for you to ponder is how many times is that happening in your organization?  How many times are you turning away the best possible supplier because of your process or your technology platform?  And is that a “too bad” for the supplier or a disastrous result for your company?  Are you really serving the interests of your internal customers if your process and technology are so draconian and adversarial that you are keeping the best solutions from your customers?  Is it your job to eliminate price risk for your customers so that they can focus on the capabilities and finding the best solution or is it to make sure that you find the cheapest solution?

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Next Practices with “Generation Next”

The “Millennials” or often referred to as “Generation Next” are not only coming, they are already here. With this new generation 80 million strong (born between 1980 and 1995) and rapidly taking over from the baby boomers who are now pushing 60, we are being forced to look at Talent Management in a completely new way.  We must take a Next Practice approach to managing “Generation Next” or lose the war for talent altogether.  60 Minutes’ MorIey Safer did a report a few years ago entitled “The Millennials are Coming” where he discusses some of the challenges being faced in the workplace as we deal with this new generation of workers.  Safer says, “They were raised by doting parents who told them they are special, played in little leagues with no winners or losers, or all winners. They are laden with trophies just for participating and they think your business-as-usual ethic is for the birds. And if you persist in the belief you can, take your job and shove it”.  Where there are challenges there are also opportunities and Supply Chain leaders have the opportunity to turn these young, multitasking, tech-savvy, “I come first” workers into the most innovative, productive workforce of our time.

I was sitting in a conference yesterday listening to a number of speakers discuss the challenges we will all be facing with “Generation Next” (I have three sons in this category and am quite familiar with both the joys and challenges of this generation).  As I was listening, I was also thinking about all the Next Practices we (The Mpower Group “TMG”) have been trying to drive home to the Supply Chain community.  The thought occurred to me that some of the attributes of “Generation Next” may very well be THE personal attributes of a successful “Next Practice” Supply Chain professional:

  • Well educated
  • Hardworking
  • Self-confident
  • Team players / collaborators
  • Inclusive and diverse
  • Technology / social media savvy
  • Socially responsible
  • Information gatherers
  • Communicators

Would these not be the very attributes that would be required to attack the Supply Chain from a value focus as opposed to the traditional (they are not even familiar with this approach) TCO approach as Dalip Raheja laid out in “Friends, Romans and Countrymen – Lend Me Your Ears!  I Come to Bury TCO . . . . . .”  or tackle the Social Media issues as depicted by Crystal Jones in “Social Media and the Supply Chain”  or  help solve the adoption issues (has this generation not been the faster adopters of new solutions and technology?) as discussed in “Old MacDonald Was Right — It Is About E-I-E-I-O!”

In addition, “Generation Next” has very specific requirements as they are choosing a career. They are looking for the following:

  • Flexibility
  • Work / life balance
  • Direction / roadmap
  • Interesting work
  • Training & development
  • Career advancement
  • Frequent feedback
  • Coaching / mentoring

In other words, they are literally crying out for Competency Based Talent Management (“CBTM”) which is what I was at the conference to present AND TMG has had numerous posts on

In a nutshell, CBTM starts out by defining the demonstrable skills, knowledge and behaviors (competencies) required to be successful within your role to meet and/or exceed the goals and objectives of your organization – direction and roadmap.  It then uses those competencies as the foundation for an integrated talent management program:

  • Recruiting (you must have all the other elements in place or you will be forever recruiting)
  • Performance evaluation (frequent feedback focused on demonstrated competency)
  • Training & development (a MUST – focused on APPLICATION of new competencies)
  • Career Management (coaching / mentoring to advance your career)
  • Succession Planning (identification and movement of high potentials)

Interesting work – I may be a geek but I think Supply Chain is diverse, exciting, challenging and offers a wide range of career opportunities within and across organizations and industries!

As for flexibility, work / life balance and social responsibility – well, maybe we Baby Boomers could learn a few Next Practices from “Generation Next”.

If you don’t have a competency based talent management program in place for your organization you may want to step on the Next Practice bandwagon before “Generation Next” passes you by and goes to the Next company.

Join the conversation . . . . . .

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What Your Parents Were Afraid to Tell You About The Birds and The Bees – Secrets FINALLY Revealed!!

No, this is not about the Kama Sutra – sorry!  But before I tell you about The Birds and The Bees, let me ask you a serious question.  If you were faced with a life and death situation, what percentage of the time do you think you would make the right decision?  What if the decision criteria were fairly complex?  Would your percentage drop?  What if you had to get a few more people involved in making the decision?  What if I said that your process MUST involve collective fact-finding, vigorous debate, and consensus building?  Would your percentage drop even further?  By the way, this represents the decision making situations in your work everyday -n’est ce pas?  Let’s stretch this a little further – how about those few more people are actually 10,000 people?  What would your percentage be now?  I’m not done yet: what if you had to make that decision every year, year after year?  What kind of success rate would you predict of making the right decision every time?  Would you like to learn about a top secret methodology that will guarantee a success rate of close to 90% given ALL the criteria above?  All you have to do is to forget whatever your parents taught you about birds and the bees and listen to what Professor Thomas Seeley from Cornell has to say about bees in a Harvard Business Review article. I’ll cover the birds some other time.

A beehive has to find a new place to call home every single year because of over population.  And what I described above is the actual situation that they face, every single year, and Seeley’s research documents a success rate of 90% – year after year.  They have very complex criteria that they have to meet because their survival depends on it, and they have developed a process which depends on experts to gather data, ways to consolidate the market research, validate the information, communicate to everyone and build consensus and then most importantly, make the decision and get it Adopted and Implemented.  And then they live happily forever – till next year!  90% success rate!!!!!  Seeley points to the fact that bees have figured out how to achieve a high collective IQ and that organizations would be well served to emulate bees.  I could not agree more, and we at TMG have been preaching similarly.  Here are his 5 keys:

  1. Remind the group’s members of their shared interests and foster mutual respect, so they work together productively.
  2. Explore diverse solutions to the problem, to maximize the group’s likelihood of uncovering an excellent option.
  3. Aggregate the group’s knowledge through a frank debate.
  4. Minimize the leader’s influence on the group’s thinking.
  5. Balance interdependence (information sharing) and independence (absence of peer pressure) among the group’s members.

Raising the collective IQ, High Performance Work Teams, Change Management,   etc. are clearly critical competencies in organizations.  In addition, decision making is the most overlooked competency in organizations today.  People are promoted based on an assumption that they are better decision makers than others.  Group decision making is probably the single biggest bottle neck in corporation today.  Yet, there is very little attention paid to this issue-both at an individual level and at a group level.  If you do find competencies related to Seeley’s list above, my guess is that it will be in the dreaded soft skills category and we all know how those are treated most of the time.

You first must fundamentally believe that those Strategic Competencies (soft skills) are the key to your organization’s success. Defining the right competencies, developing those organizational competencies (CBTM) and then adopting and implementing (AEIOU) can get you a 90% success rate.  With 10,000 stakeholders to boot.

And again, my apologies to those who were expecting something from the Kama Sutra!

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Fighting the War for Talent – Focus on Career Management!

We’ve been hearing about the “War for Talent” in the Sourcing / Supply Chain space for quite some time and it does not seem to be improving. In our previous posts, we explored how the lack of a holistic approach to Competency Based Talent Management (“CBTM”) is the root cause of the problem. In addition, we have advocated that to be sustainable, CBTM must cover ALL five phases of an employee’s journey through a company — recruiting, performance evaluation, training / development, career management and succession planning.

Let’s focus here on one element – Career management. According to Wikipedia, Career Management is the combination of structured planning and the active management choice of one’s own professional career. While career management should ideally be the responsibility of the individual, it MUST be driven by the organization. To start, employees need to know which skills / competencies are required to be successful today and how those skills /competencies need to grow and develop in order to progress within the company. These can only be defined by the organization and are the foundation for CBTM. A well-defined competency model, which is critical here, can also be used and integrated into the other four phases of CBTM. In addition, individuals need to see the career options (career path) and the expectations associated with moving through the path. How many Sourcing / Supply Chain organizations have actually taken the time to not only define the competencies but also lay out a career path for their employees? Not many. By the way, the first people to leave because of the absence of career management are the people you most want to hold on to — your high potentials. They are off listening to other companies who seem to be able to articulate a career path – can’t all companies do this during the recruiting phase even if it is all smoke and mirrors?

Without a Career Management process in place, you will:

  • lose your best people
  • constantly be recruiting (this is an expensive proposition)
  • never realize the full ROI of your asset (your people) base
  • lose the opportunity to infiltrate (love that word) the rest of the organization with Sourcing / Supply Chain thinking
  • never get beyond tactical contribution (real value comes thru competency growth)

The consequences of ignoring Career Management as part of your talent management program (if you have one) can be devastating to an organization. While the official definition of Career Management places the responsibility with the individual, the organization needs to put the infrastructure (process tools, metrics, mentors, etc.) in place AND drive the adoption and execution of the process. If we look at Career Management as benefiting both the employee and the organization then we MUST ensure that it is happening — tools are of no use unless they are being utilized.

What do you need to do to fix the career management void? Here are a few Next Practice tips:

  • Develop a competency model which allows employees to see their path for success
  • Tie career progression to competency growth
  • Ensure that competency growth is NOT about “what you know” but more about “what you DO with what you know”
  • Link career paths across functions by competency
  • Ensure career management is integrated into ALL phases of CBTM
  • Create a “success culture”, providing organizational mobility and access to new opportunities
  • Provide employees with “stretch” assignments to further competency growth
  • Ensure your organization is the “place to be” to ensure professional growth
  • Provide ongoing feedback and coaching so that employees can grow and take advantage of new opportunities

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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