Over the last decade, Chief Procurement Officers (CPOs) have faced steadily rising demands and expectations. Executive teams look to the CPO to deliver exceptional value, maintain healthy relationships with key suppliers, and mitigate value chain risk. Despite the collective challenge these expectations represent, they form the base – not the full extent – of what a CPO must deliver in order to be truly transformational.
According to Gartner’s Top C-Suite Insights for 2018-2019: Procurement Report, nearly half of CPOs say procurement’s measures of value delivery feel outdated and irrelevant to the business. Something has to be done if procurement is to change course.
Procurement-led transformation requires significant changes to strategy, tactics, and mindset. CPOs that aspire to be change leaders have to leverage all of the resources available to them, including talent, external partnerships, and technology. In my experience, the following 5 traits are present in the majority of transformational CPOs:
Trait #1: Strong vision and purpose
Before procurement can achieve its full potential, the CPO needs to present their vision and chart the journey forward. A transformational CPO’s vision must become a compelling platform for change – a rallying cry – that unifies procurement, stakeholders, and the executive team and helps them understand the purpose and value associated with the changes they are carrying out.
Trait #2: Embraces change
CPOs can’t be transformational without openly welcoming change, viewing it as an opportunity rather than a threat. This must be true for the changes they architect as well as the ones they do not anticipate but that arise along the way. Remaining open-minded to what is working and what is not and being completely transparent with everyone in the organization are critical to making the most of the investment and maintaining alignment.
Trait #3: Continuously seeks innovation
Innovation is a must to stay competitive, but continuously finding new sources for ideas and implementing them is extremely challenging and daunting for most. Transformational CPOs like to challenge convention, seek different ways of doing things, and are able to lead internal and external partners through times of uncertainty. There can be no change without an ongoing quest for ways to do things better and create value for the organization.
Trait #4: Collaborative partner
Because the source of procurement’s value is as much internal as it is external, transformational CPOs must be able to collaborate with business stakeholders inside the company and across the value chain. In some cases, the CPO will have to bring them all to the table at the same time. Strong partners are able to work well with diverse business leaders and external partners, keeping everyone focused on mutual success and shared goals.
Being a collaborative partner is also critical with third-party service suppliers. Professional services have to be managed closely on a transformation journey, just as in-house talent and relationships have to be coordinated. Selecting the right professional services partners and investing in those relationships is critical to the CPO’s ability to drive sustained, cost-effective change.
Trait #5: Continuous learner
As all of the above traits come together to form opportunities for the procurement team to drive enterprise-wide change, their skills must keep pace. Transformation provides a wealth of opportunities to foster continuous learning while doing. The success of this hinges on a healthy attitude towards risk and an acceptance that failures and mistakes may occur. Even these missteps should be positioned as learning opportunities, not situations that require discipline.
The other key ingredient that serves as the ‘glue’ for a transformational CPO is consistent communication. What is happening? Why? What will change? Have we been successful? These questions are natural, and the CPO must both anticipate them and share information in advance of their ever being asked. Successes and failures, new discoveries and old roadblocks have to be broadcast, fostering transparency and confidence.
The CPOs that are leading the pack are delivering unprecedented levels of value to their organization’s top and bottom lines, but they are also change drivers. Their transformational impact may start within procurement, but when it is carried out at scale, it has the ability to reach every corner of the enterprise and deep into the value chain. No meaningful change comes without risk, and there will always be difficulties. Transformational CPOs must possess the right balance of vision, purpose, collaboration, flexibility, and empathy.
Keith Hausmann is the chief revenue officer for Globality