Your Brexit Satnav: Delivering value through procurement in times of uncertainty

Your Brexit Satnav: Delivering value through procurement in times of uncertainty

The aftermath of the Brexit referendum has been a time of astonishing upheaval in Britain. With the nation’s future relationship with the continent still mired in uncertainty, what are the lessons that businesses can take from this extraordinary period in our history?

Eton Bridge Partners’ Ross Dawson, Partner in Interim Management, Business Transformation & Operations, Procurement & Supply Chain, hosted a round-table breakfast briefing to explore ways of creating transformation through best-practice procurement in such an era. The session was led by David Loseby, a renowned international Chief Procurement Officer with more than 25 years’ experience at senior level driving value and change through procurement.

There has been very little consensus on the subject of Brexit ever since the British people voted by a narrow majority in 2016 to leave the European Union.

However, there is widespread agreement that, whatever your stance on Brexit, the upheaval that has followed the poll represents a challenging time for businesses across the UK.

The consequences do not have to be entirely negative, though. As David Loseby told his audience, from controversy can come opportunity. Many members of the Chartered Institute of Procurement and Supply have reported seeing growth and new opportunities.

The prospect of a changed relationship with their EU partners has forced businesses to take a hard look at their long-established supply chain working practices, assess the risks involved and decide whether there needs to be a rethink.

At Eton Bridge Partners, we understand the importance of bringing in the right procurement people and teams who can deliver change that is transformational rather than merely incremental.

Science vs people: what should drive your decision making?

David described how there’s a large degree of science informing the decisions made by businesses. Systems, processes and data all come from a place of logic and rationality.

However, procurement is a strategic function rather than merely an operational one. It should take into account the need for compromise, diversity and flexibility. In short, we should understand that decisions are ultimately made by human beings rather than computers.

It’s also important to take into account the fact that the way information is presented can make a huge difference to the way people respond to it – and, consequently, the decision to which it leads.

Take the case of a man who goes to his doctor and is given the bad news that he has a serious illness; but is also told there is a clinical trial under way with a 90 per cent success rate. He goes to another doctor for a second opinion and hears again that he is seriously unwell; this time he hears there is a clinical trial under way but 10 per cent of its subjects don’t survive.

Exactly the same information was delivered from two contrasting standpoints. How often do we find echoes of that in politics – with the wrangles over Brexit a shining example – and in business?

What can businesses learn from the Brexit crisis?

1 – The importance of collective ownership: A joint approach to a common problem is clearly necessary – look at the Second World War, when in a time of crisis Britain had a coalition government.

2 – Trust: You can’t run any negotiation or organisation without trust. You have to trust the other side, and your own people. This is a fundamental pillar of any successful business.

3 – Fairness observed: This echoes the point above, in that it’s important people can see they have been treated justly.

4 – Respect: In business, as in politics, its absence makes progress a great deal harder.

5 – Innovation: The cornerstone of competitive advantage. Solutions to business challenges – and political quagmires – can be reached through innovation.

Do CEOs look for the right attributes in their procurement leaders?

Intriguingly, there is a sharp disconnect between the qualities procurement leaders believe are most important to their role, and the attributes seen by CEOs as most important in senior procurement professionals.

A survey of more than 250 CPOs found that their three most important attributes were:

  • Emotionally intelligent
  • Influencer-Communicator
  • Creative & Problem Solver

Ask a CEO, however, and they will tend to look at procurement as purely an operational area – and want a results-driven leader in the field. Indeed, some businesses regard procurement as an overhead, rather than an investment.

In fact, the Chief Procurement Officer in an organisation should be a key adviser in transformation and change. While it is always desirable to deliver savings, there should be a much wider scope to bring benefits to the business – such as looking at the way things are done and the way they should be done.

David gave a compelling example of a situation when he was asked to support an IT outsourcing deal that, as currently constructed, would not be a viable business case. By analysing and applying a different approach through critical thinking skills and behavioural science, he turned the business case around by £3 million in the space of eight weeks and the contract is being drafted as we speak!

Critical thinking is a strategic procurement skill – a good operator in the practice can make a significant contribution to the direction of an organisation.

However, the onus is on the business too. If a procurement leader is restricted purely to a transactional role, they will have no opportunity to grow and bring creative solutions to the table.

How do behaviours and biases influence procurement?

Once we accept that people are at the heart of business rather than science, it is useful to understand what makes us complicated humans tick. David shared some insights into the science of heuristics, the rules that govern our behaviour.

There are currently 188 cognitive bias codes – and counting. These influence the way the experiences you collect throughout your life help you to make judgments. Once you start mixing the biases, and your own personality traits, the number of potential combinations is close to infinite.

One example of a bias is confirmation bias. People select one piece of information from a broad context that fits their existing viewpoint and use it to confirm a decision. We have to think about strategies and approaches that mitigate the effects of such a bias.

Part of procurement is figuring out the reasoning behind decisions so that, in future, better ones can be made.

What are the Big Five personality traits?

Every one of us has a mixture of the following. Understanding this – and the mixture of personalities within a team or business – is critical to the success of the organisation involved.

The five traits are:

1 – Openness

2 – Conscientiousness

3 – Extraversion

4 – Agreeableness

5 – Neuroticism

Think about the people you work with and the different degrees to which they exhibit some or all of those traits – and you’ll see how developing a team that really works together is both challenging and fundamental to the success of a business.

What are the three cognitive frames?

David explained that there are three ways in which people ingest information, process it and come to a decision based on it.

He defined the frames as:

1 –  Unidimensional

2 – Hierarchical

3 – Paradoxical

A person with a unidimensional cognitive frame, for instance, will be able to deal only with low-complexity decisions. That will inevitably impact the quality of their decision making and is a significant consideration if you are bringing strategic procurement thinking into a business.

Which skills will be critical to future success?

1 – Critical thinking and problem solving

2 – Collaboration across networks and leading by influence

3 – Agility and adaptability

4 – Initiative and entrepreneurship

5 – Effective oral and written communication

6 – Assessing and analysing information

7 – Curiosity and imagination

These are attributes we should be looking for in both politics and business. However, it’s worth pondering how many of these skills have been in evidence during the Brexit negotiation process.

Ultimately, managing people and behaviours is more important than processes and systems.

Assembling a procurement team that works really well for a business is a critical decision, yet that is not always recognised – just as bringing the right politicians into a Brexit negotiation is incredibly important. How has that been working so far?

Ross Dawson

Partner
Interim Management
Business Transformation & Procurement, Supply Chain & Operations


Ross has over 10 years interim recruitment experience and specialises in executive level interim appointments within business transformation. Ross is accustomed to working with a diverse client base from global businesses to SMEs across private and public sectors, as well as not-for-profit.