Recently, while we were discussing the importance of Desired Outcomes in a Vested agreement, one of my friends noticed that the same type of outcome-based approach should ideally support the way we partner with our key business stakeholders, as much as it governs any Vested relationship.
Her statement was not only very valid, but also fully aligned with a steadily growing number of articles and studies which keep highlighting the need for procurement to re-invent itself, by moving from a short-sighted focus on the delivery of transactional sourcing targets towards a customer-oriented/wide-open contribution to the achievement of strategic business goals on the long run.
That being said, any outcome-based approach to category management remains strongly dependent on how business-oriented, visionary and customer-driven your procurement organization is today.
Said differently, if your executives have recently raised the needs to 'closely partner with the business', 'generate value beyond savings' or 'drive innovation with strategic suppliers' as some of their top priorities over the coming years, it looks like your procurement organization has started to fully embrace business goals by shifting its core purpose towards greater ambitions, rather than pushing for the delivery of short-term transactional sourcing objectives that are too often disconnected from the business agenda.
Regardless of the time and complexity of your journey, it will have to start with the early identification of your final destination, which should mirror the raison d’être of your procurement strategy. Ultimately, your Desired Outcomes should not only clearly state what you wish to accomplish for/with your internal customers in the future, but also be inclusive enough to form the base of a 'friendly merger' with their own Desired Outcomes into one Shared Vision of Success.
Just to clarify… All of this has nothing to do with the aggregation of their tactical performance targets with yours into another 'joint performance scorecard', since the addition of short-term & selfish interests has always proven too weak and erratic to benefit all parties in place. Gathering competing ideas that look good on the surface might be tempting, but does not produce many results in reality as this kind of compromise remains strongly tied to politically-driven/win-lose tactics.
Instead, start to think of everyone’s understanding of everyone’s interests, powered by everyone’s willingness to partner and fuelled by everyone’s desire to drive the corporate strategy, as what ultimately triggers value from/for everyone (including your company, its end-customers and incidentally… yourself).
In short, this is what the Sum of the Parts is about, and its highly consensual and holistic nature is precisely what makes it look difficult to reach. You might also remember this as What’s In It For We (WIIFWe), a mindset introduced by Kate Vitasek and recognized as the cornerstone of any successful partnership.
Now, what exactly do we know about our internal customers’ Desired Outcomes? A simple way to define such outcomes would be to describe them as strongly related to: 'Their very own and personal definition of value'. This might sometimes look quite vague, considering that:
. Value is subjective, and varies based on personal considerations;
. Value is not always monetary, and can cover a broad scope of benefits;
. Value might be difficult to measure (and ignored by default thereto);
. Value channels differ across functions and business units.
Not only is this a fair statement, but to make it more difficult, the concept of value has been so overused for the past decades that it has either become a tarnished marketing cliché or a trendy (but deceptive) substitute for cost savings, which has all been contributing to drawing it away from its true essence.
Isn't this ironic, when you think that value is probably one of the most easily understandable, accessible and popular topics that has never left the top of everyone's agenda, whether that value is delivered for your career, your family, your pension plan, your well-being, your safety, your kids' education or those in need of your support, and regardless of its form? Our individual understanding of value sometimes seems to be as broad as our lack of awareness of what it also means for our internal customers, beyond the 4 walls of our functional area.
For many years, corporate functions have continuously been acting like as many standalone profit/cost centers whose respective objectives have progressively started to disconnect from the overall corporate vision that many of us have ended-up losing sight of. There was a time where this type of functional segregation used to prove right when the promotion of individual interests was a key motivator to secure the delivery of results, as profit used to flow easily enough to temporarily hide the harmful impacts of such behaviors on corporate results.
In today's uncertain, challenging and highly-connected business environment and more than ever, the power of the Sum of the Parts is needed to drive successful outcomes through the reuniting of core business functions around the same corporate vision, as One Team, working together for a better future. At the end, if Procurement still owns 'cost savings', Supply Chain 'product availability' and Human Resources 'employee retention', all corporate functions remain jointly and severally accountable for the production of business success.
Back to our Desired Outcomes, and to quote one of my former colleagues:
In case this question still sounds unclear, you might let your stakeholders talk about their performance targets instead, as there are strong chances that their approach to value might be hidden in there, within a whole load of tactical objectives and transactional KPIs.
If you succeed, your Human Resources stakeholders will tell you that value results from employee engagement, associate development & promotion, people development, organizational effectiveness and diversity & inclusion...
For your Supply Chain stakeholders, value lies in operational excellence, continuity of supply, network agility, risk mitigation, compliance, customer satisfaction, revenue recognition, process efficiencies and end-to-end visibility...
As for your Marketing stakeholders, they usually see value through the lens of brand power & impact, digital technologies, advocacy & loyalty, purchasing behaviors, product adoption, customer retention and social interactions...
And this will go on, across functions and business units... Every value definition you will uncover potentially hides one or many Desired Outcomes, i.e. a series of 'system-wide/high-level metrics that clearly define the type of value your company strongly wants to achieve in an ideal future'. The acknowledgment and integration of such business outcomes into a holistic and collaborative value framework is what it takes to engage your stakeholders, and be recognized as a trusted and reliable partner throughout your organization.
Now, if some of you were expecting an overly complex map of what the quest for Desired Outcomes looks like, reality is actually way simpler as essentially tied to our ability to listen (carefully) & engage (truly) with our customers, not much more.
Ultimately, if the main aspiration of today's sourcing professionals is to be perceived as Value Architects rather than Procurement Pit-Bulls, and before engaging into discussions related to Desired Outcomes with our strategic suppliers, each of us should first start to consider what these Desired Outcomes really mean for us, our procurement organization, our business stakeholders, our company and its end-customers.