5 milestones to Sourcing Excellence

“Sourcing excellence = professional knowledge + market knowledge + product knowledge” Jonathan Dutton

As per a recent study conducted by IACCM, 88% of Contract Management professionals indicate that improvement of the quality of the Requirements was the number one factor to improve contract performance in their organisations (IACCM – Contract and Commercial Management – A Operational Guide).

I have discussed the importance of understanding and clarifying the scope with your vendor as part of the Iron Triangle (here).

As we all know, having incomplete, erroneous or unexamined specifications for a product or service category lead to confusion, rework or simply sub-optimum  results.

To be successful, you first need to fully understand the scope and alternatives yourself i.e. what the business really needs and different possible ways to achieve it.

Let’s see some practical tips on how to do so.

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The 5 milestone Road to successful Requirements’ Identification and Sourcing Excellence

1) Know your stakeholders

First of all, you need to know your own stakeholders.

Anyone, the project affects directly and indirectly is a stakeholder.

Some of them are affected more than others and some of them will have a greater influence in determining the success of the project. So, if during the procurement process, you miss out on engaging with a stakeholder, you then risk project failure.

HOW to: Brainstorming and looking at the process and usage of the product and service should reveal who you need to approach.

2) Know you business objectives

You also need to know your business objectives.

You should embrace a different approach if the business objective is a strategic one e.g. entering a different market, rather than a tactical or an operational e.g. improving a process or removing cost.

Moreover, different stakeholders will have different motives and will probably target different outcomes in order to consider the project outcome successful. These need to be identified and defined.

Hence, the stakeholders need to know and sign off on the final defined business objectives.

HOW TO: Use interviews and questionnaires to define the requirements, needs and expectations from each one. Then ask them to review and sign off on the final result.

3) Understand the Specification

This is self evident. If you cannot articulate the functional and technical specifications then you probably do not have a good grasp of the project and would not know how to evaluate the suppliers.

Try defining this using AMPP technique (Ask, Mirror, Paraphase and Prime) and see that you have a good understanding of it and its implications.

Moreover, check that the functional and technical requirement are aligned with the business objectives and that at the end of the process all stakeholders have a high level of confidence of the final defined results.

HOW TO: A number of effective communication techniques can be found in the book Crucial Conversations by Kerry Patterson et al.

Phrases like e.g. “Please let me know if you see this differently….. If I understand correctly……. Is this what you mean…… In my mind this means that ……..” can help.

Moreover, make use of a requirements checklist, questionnaires, interviews, roundtable discussions and brainstorming sessions. Research and benchmarking are tools you can also employ.

4) Agree the acceptance criteria

After the 1-3 steps are complete you can crystallise from the feedback provided the acceptance criteria. These can be categorised in three categories:

i) Hurdles (the Must Have criteria) e.g. ISO certification, Insurances’ cover, No accident record.

ii) The Essential Requirements (for which the vendors can be graded on a scale) e.g. quality, price level…

iii) The Good to Have (additional attributes that may not be immediately required but an extension of the service) e.g. operations in another state or territory that may be a target for your company in the future.

Moreover, the project team needs to have a clear idea of

A) What is the procedure of picking a bid
B) What are the quantifiable, measurable criteria and
C) How assessment and grading will be made.

5) Change Management Process

Scope creep, the process of evolving and ever-changing requirements, is a major cause that many projects fail e.g. run over-budget, over-time.

However, ignoring that there may be changes is not an option.

So, especially for complex and longer on duration projects, a clearly defined practical change management process needs to be defined in order  to have a good chance of been successful.

Based on mutual trust a clearly defined process for approaching changes identified (which can be clearly linked to the business objectives) is key.

HOW TO: An effective way to do this is to agree to change control documentation and a sign off process.

Moreover, great tips on the 5 levels of building trust can be found in the book The Speed of Trust by Stephen M.R. Covey

 

The Speed of Trust - 5 Waves

The Speed of Trust – 5 Waves

 

In essence, working on your internal and external relationships is the only way that will provide the necessary trust that is the bedrock on which any change management process can be based on.

 

RELATIONSHIP MANAGEMENT

The Requirements specification  as well as the overall Procurement and Contract Management process are heavily reliant on good relationship management skills.

Ron Larimer in his article My three issues with the Seven Step Model has made this very lucid in the Procurement model he supports:

The Sourcing Wheel

The Sourcing Wheel

 

So, in thinking about Sourcing Excellence I suggest that Jonathan’s quote needs to be modified a little to include the key element of trusting relationships.

Sourcing excellence = professional knowledge + market knowledge + product knowledge + well established trusting relationships

 

What are the successful ways you use to define requirements in your Procurement process?

 

 

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6 additional pitfals to avoid during a negotiation: Cognitive Biases

It was Richard Feynman who gave the most profound warning: “The first principle is that you must not fool yourself — and you are the easiest person to fool.”

 

Following my post which highlighted the importance of identifying Logical Fallacies and showcased the 6 most prevalent ones with practical examples, I feel that it is time to also  touch upon another significant field that can become a pitfall in a negotiation, that of “cognitive bias”.

Read on if you want to find out and become conscious of 6 prevalent tendencies to self-deceive yourself by restricting into thinking in a particular way i.e. fall a victim of cognitive biases.

Gaining consciousness of this “bad reasoning” will assist to identify them and so, improve your negotiation skills.

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Do you see a duck or a rabbit?

DEFINITIONS

Cognition is the mental action or process of acquiring knowledge and understanding through thought, experience and the senses.

As per the Webster’s Dictionary (Consice Encyclopedia)

“Cognition includes every mental process that may be described as an experience of knowing (including perceiving, recognizing, conceiving, and reasoning), as distinguished from an experience of feeling or of willing”.

So, a cognitive bias is a tendency to commit certain errors in the process of reasoning.

How is this different to a Logical Fallacy?

“A [Logical] fallacy is an actual mistake in reasoning. A cognitive bias is a tendency to commit certain sorts of mistakes. Not all fallacies are the result of cognitive biases, and having a cognitive bias doesn’t guarantee that you’ll commit the corresponding error”. AskPhilosopher’s

6 COGNITIVE BIASES TO WATCH OUT FOR

There are many cognitive biases (see list here).

The below 6 form a useful reference list of some fairly common ones that you can identify even on a daily basis:

 

1) Forer Effect or Barnum Effect 

This describes the effect when individuals believe that general enough statements that could apply to a wide range of people are supposedly specifically tailored for them.

This effect can provide a partial explanation for the widespread acceptance of e.g. astrology as well as, some types of personality tests.

Below is a interesting video highlighting how this effect works:

Screen Shot 2014-08-15 at 11.59.33 pm

2) Bandwagon effect

The tendency to do (or believe) things because they are popular at the time. This is also known as herd mentality or groupthink.

Examples can be found in politics and consumer behaviour. Look at how the “cool” product, a popular leader or the latest fad attracts consumers – until the next one comes along. For example:

A political party holds a rousing rally, with music, speeches and much cheering. Those who go are encouraged to ‘keep the faith’ and ‘bring others on board’ and otherwise keep the bandwagon going. (changingminds.org)

Popular diets, popular books and popular “5 step to success” schemes may fall in this category.

 

3) Framing effect

Drawing different conclusions from the same information, depending on how or by whom that information is presented.

“This course of action has a 20 percent failure rate,” few managers would approve. When that same solution is presented as having an 80 percent success rate, the same manager is going to consider it more deeply—even though a 20 percent failure rate means the same thing as an 80 percent success rate! The frame changes the decision’.” Stever Robbins – The Path to Critical Thinking

 

4) Pareidolia

This is a psychological phenomenon during which vague and/or random stimuli (often an image or sound) are perceived as significant.

e.g. seeing a face in the clouds, the face on mars, and hearing non-existent hidden messages on white noise or on records played in reverse.

Face-on-mars

5) Stereotyping

This is the expectation that a member of an ethnic, religious, geographic, gender or other group has certain characteristics just because they belong to that group, without having more information about this person.

As an example:

What comes to mind when you hear the word economist? Probably a male figure of some sort.

Substitute the word “economist” for “nurse”, “teacher”, “scientist” or “doctor”.

Well, there you have it.

 

6) Halo effect

The “what is beautiful is good” effect.

The Halo effect describes the tendency we have to form perceptions of one’s personality (or other characteristics) based on a particular likeable or unlikable element such as the person’s physical attractiveness.

“One great example of the halo effect in action is our overall impression of celebrities. Since we perceive them as attractive, successful, and often likeable, we also tend to see them as intelligent, kind and funny”. (psychology.about)

 

The above six cognitive biases are just a small sample of the wide variety of bad reasoning out there. However, these are a good start on the journey to establishing integrity in thinking towards a successful negotiation.

How many of them can you identify in your daily interactions?

 

Image courtesy of Wikipedia

“The rabbit–duck illusion is anambiguous image in which a rabbit or aduck can be seen….. The image was made famous by Ludwig Wittgenstein, who included it in his Philosophical Investigations as a means of describing two different ways of seeing: seeing that/seeing as”.

In pursuit of Best Practice – Intrapreneurship

This article first appeared on Procurious.com as a guest blog contribution. You can find the original blog post here.

 

At its simplest, Best Practice means we are doing our job better than others. …that might translate to closing deals faster, achieving consistently good negotiated results, establishing terms and change processes that support high-performance relationships or realizing results that regularly exceed expectations. So we want to be better, faster, contributing greater value, making fewer mistakes” Notes on “What do we mean by Best Practice” by IACCM

As already elaborated here, an essential aspect for becoming successful in the future, is Creativity.

The term, Creativity, most probably conjures up images of successful Entrepreneurs that have a vision and the courage to pursue their dreams.

Outstanding Entrepreneurship is a well-defined quality behind every successful organisation.

Entrepreneurs like Richard Branson are followed and their ideas celebrated in the public domain.

However, it would most likely be better for an organisation to not only try to maintain its competitive edge on the ideas of one or even a handful of forward thinking individuals, but also find ways to tamper into the creativity and ideas of every one of its employees.

Hence, organisations should also look into the promotion and support of Intrapreneusrship.

Read on if you want to find out more about this idea, as well as, get to learn about one way to harvest the concept of Intrapreneurship as a means to pursue Best Practice within your own organisation.

Outside the box

Intrapreneurship

Jeroen de Jong and Sander Wennekers explored the concept here.According to them:

“Intrapreneurship refers to employee initiatives in organizations to undertake something new, without being asked to do so.”

There are a few companies that actively promote intrapreneurial behaviour e.g. Google  allows its employees to spend up to 20% of their time to pursue projects of their choice.3M and Intel appear to have programs towards similar promotions (see here).

However, intrapreneurship is not only about the pursuit of new products and revenue streams.

Intrapreneurship contains an element of innovation. Innovation refers to the production and implementation of useful ideas, including the adaptation of products or processes from outside an organization. As Antoncic and Hisrich highlights (here)

“Intrapreneurship is about “emergent behavioural intentions and behaviours that are related to departures from the customary ways of doing business in existing organizations”

In other terms Intrapreneurship is about the pursuit of Best Practice.

In parallel, it is also important to note that the support of the practice of Intrapreneurship also helps maintain engaged teams that always challenge themselves and evolve the organisational practices, processes and results (read more about team engagement here and here).

Ideas Charter (a simple and practical way to pursue Best Practice)

As part of an effort to promote employee engagement and Intrapreneurial behaviours, I developed the Ideas Charter.

This is a simple process which ensures that all new ideas are captured, evaluated, and then through a process that promotes and supports undertaking innovative projects, implemented.

The Ideas Charter Process works like this.

i) A champion is assigned to capture all ideas that can enhance processes or contribute to efficiency and effectiveness in a simple spreadsheet called the Ideas Charter (see template here). This is done on a non judgmental way to the perceived value of the ideas i.e. following Edward De Bono’s six hat definition – by wearing a green hat.

ii) The ideas are then evaluated and validated by a selected committee and approved or not approved for further development.

iii) If an idea is approved, then that idea is made available as a potential candidate for a future side project to be done by a team member or a team.

iv) Every two months the team is asked to select a side project to work on. Each team member is encouraged to pick one of the Ideas in the Ideas Charter and work on it. A due date is allocated.

v) At the end of the allocated period each member presents his/her side project along with a benefits analysis.

vi) The side project outcome is placed into production. This outcome  could be a change in process, a development of a business case i.e.  it could be anything that promotes efficiency or effectiveness.

vii) After 3 side projects are completed and presented, the team is given the opportunity to vote for the best one. The winner is celebrated.

This is a simple but effective way to work towards Best Practice in small teams. From personal experience this concept has the power to engage the team and also to elevate the level of efficiency and effectiveness as delivered by its outputs.

Finally, it works towards Yves Morieux’s vision elaborated in his presentation about “How to Develop a Winning organisation” – see here . Yves eloquently summarised his position as below:

“The real battle is not against competitors. The real battle is against ourselves. Against our bureaucracy, against our complicatedness” – Yves Morieux

What systems do you have in place to promote and support the pursuit of Best Practice?

 

 

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Image courtesy of glendale inquiry

 

The future of Learning – Are you part of the Learning Revolution?

“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” Alvin Toffler

In the future (see also here), I believe that our ability to learn and take advantage of varying environmental shifts and opportunities will define how successful we are and how successful our organisations become.

Johannes Gutenberg

Johannes Gutenberg

The concept of the Learning organisation has been discussed at length and indeed some companies have embraced it looking forward to how the marketspace would be endeavouring to equip themselves with the right tools and right skill-sets and attitudes that would enable them to remain relevant and succeed in the future.

Considering the Future, it is hard to predict what the art of Learning will look like. Technology, social media, interactive learning spaces and our thinking about education and learning is rapidly shifting e.g. embracing concepts like “multiple intelligences” (see here) slowly but surely will remove ourselves from the overly structured and dry learning spaces.

However, it will take years if not decades to fully understand how this shift in thinking will evolve and how it will affect us. To understand this better consider that:

“this is exactly what happened with the invention of the printing press. When Gutenburg first invented the printing press in the 15th century he did not have any idea of the transformative change this machine would bring to the entire humankind. A century later and after printing became a taken-for-granted part of life only then people realized the grandeur of such invention. This is probably what will happen with learning too”. educatorstechnology

As part of this discussion, I came across three resources that very eloquently discuss this issue and contribute to our thinking on how to make Learning more effective for our organisations and for ourselves.

Ken Robinson – his famous talk on the Learning Revolution on TED.com

Ken’s book the Element is also a great resource on the topic.

Sugata Mitra’s TED talk on his Self Organized Learning Environments (SOLE) Project.

SOLE is a great paradigm of how technology can stimulate engagement and learning.

FInally, Knowledgeworks have taken a look into the future of education and learning put their thoughts in this great infographic.

The Future of Learning - knowledgeworks

The Future of Learning – knowledgeworks

Download the pdf version from here.

 

How do you promote learning and employee engagement within your team and your own organisation?

 

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Like what you Read?

Keep on reading: You can find a fully up-to-date catalogue of all published blog posts here.

Sign up via RSS (here) or type in your email address on the sidebar or footer of the page and follow this blog to receive exclusive weekly Procurement and Team Development tips in your inbox as soon as they are published.

Contact me for feedback or ideas by pressing here.

Have a great day!

 

 

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