Monthly Archives: June 2007

The Shift from Creativity to Value

I enjoyed reading The Shift from Creativity to Value, futurethink‘s 2007 annual Innovation Tracker study. As implied by the name of this blog, innovation is a passion of mine, even though I reluctantly have to agree with one of the main findings of the report, that innovation remains elusive.

The study had some interesting findings. For starters:

  • Many organizations set out to become innovative without actually defining what innovation means for their business.
  • Leadership needs to be more committed to innovation if they are to inspire their employees to be innovative.
  • People need a climate that enables them to innovate.
  • People are afraid to fail, feel they don’t have the time or flexibility they need, and believe that their leaders are too averse to risk.
  • Lack of Creativity is an oft-sited hurdle to innovation.

And what do these findings mean?

  • As the study says, organizations need to define what innovation means to them. More importantly, they need to define what it means relative to their current product or service offerings. There are many kinds of innovation, ranging from what would be an apparent solution to a fresh eye to a revolutionary new discovery. But as practitioners of TRIZ know, you’re only going to make a revolutionary advance at most 1% of the time and come up with a new concept at most 5% of the time. However, as any good business guru knows, you don’t need a revolutionary new discovery to be the market leader, just sell a better, more efficient, and more cost-effective product than your competitors. Just look at Toyota. They’re still selling, more-or-less, the same product they sold last year – cars – but they are made better, more efficiently, sell for less than some of their competitors, and offer you more value. And they’re doing great. And it doesn’t take a genius to do what they do, just everyday intelligence, a good education, and perseverance.
  • Leaders set the tone of their corporate culture. If they are not committed to innovation, but are instead committed to “tried-and-true” practices, chances are their employees are also going to be committed to “tried-and-true” processes in their efforts to please management.
  • Innovation requires creativity, creativity requires the right mindset, and the right mindset requires the right environment.
  • Innovation is not a smooth and straight freshly paved highway, but a curvy and jagged pot-holed dirt road that is guaranteed to contain a few bumps along the way. Failure to some degree is inevitable – and that’s not a bad thing. As humans, we can often learn more from our mistakes than our successes. As long as we take the time to learn from these failures, and manage the risks by constraining the impact, there is no reason that we cannot eventually succeed, and sometimes do so beyond our expectations. Thus, it’s important that employees know that it’s okay to fail (as long as you do so within well-defined bounds).
  • The corporate culture is key to creativity, and an organization must adopt a forward-thinking culture from the outset.

The study also points out that innovation is about ideas, and, in a business context, addresses a need and generates value. Furthermore, innovative businesses are those that just do it – not those that just talk about it. Some of the most innovative businesses don’t even talk about innovation as it’s so ingrained into their culture that it’s just natural. And that’s the way innovation should be.

the doctor’s Been Busy!

I spent all of last week in the San Francisco Bay Area (and a little beyond), and besides attending the EyeForProcurement Technology for Procurement Forum, which had some really good presentations that I’ll start blogging about in about a week (playing catch up at the moment), I also met with ten different companies (with follow-up calls to be scheduled with at least half of them). Over the next month, expect some elucidating posts on not only some of the hottest technology companies in the sourcing and procurement space, but some disruptive offerings about to come out of these shops as well. It may take me half the summer to get through them all, but you can be sure it will be worth the wait. From A to Z, in the last week I’ve had detailed conversations with
Aravo ,
Arena ,
CombineNet ,
Denali ,
Enporion ,
Ketera ,
Nextance ,
Provade , and
TrueDemand. Stay tuned!

Short Text RSS

Just like SpendMatters, I’ve also moved to short-text RSS. I know that this does not involve many of you (since the majority of readers still read this blog the old fashioned way), but I wanted to let you know that my reasons were the same as Jason’s reasons – some third party sites are now sucking in my entire posts, and some with little or no recognition or links to the original source. Please feel free to express your discontent in the comments.

Global Economics for Sourcing Professionals

The European Leaders in Procurement network recently posted a white-paper by Booz Allen Hamilton titled Buy Globally, Think Globally, Implications of Global Economics for Sourcing Professionals that is a fascinating read. (I’m surprised our resident economist hasn’t picked up on it yet. Guess he’s just too busy trying to do my job.)

According to the article, sourcing professionals in many industries pay scant attention to important global economic and geopolitical factors when developing their strategy. Considering the impact that even a change in tax policy can have on one’s overall cost savings (turning a winning contract into a losing one), yet alone a war (or state seizure, which is not becoming uncommon in Venezuala and not just Russia), this can be dangerous. Economic and Geo-Political risks are real, and any strategy developed without due consideration of these strategies is a poor strategy indeed.

However, for those professionals willing to apply some foresight and brainpower to the issue, these bind spots are good news. They can lead to overlooked opportunities and give the company an edge over their competition. In some commodities, a procurement manager can profit from knowledge of regular cyclical swings in price by locking in prices at the bottom of a cycle. At other times, understanding the market can help procurement see when a permanent shift in the market has occurred. Furthermore, currency fluctuations can also provide a source of savings.

In addition, failure to keep a watch on market conditions can lead to sharp unexpected increases in cost or unavailability of supply. And although perfect foresight is impossible, as there are conceivably an infinite number of events that can affect your supply chain positively as well as negatively, in reality, you do not need to monitor an infinite number of data streams to keep on top of the most critical issues or pick up on the issues that could affect you positively or negatively down the road.

As the article points out, asking four simple questions can go a long way towards preventing the shock the airlines suffered during the last oil price rise and help you take advantage of emerging opportunities:

  1. Which categories within our spend are strategic enough to warrant close attention?
  2. What are the economic drivers behind these key categories.
  3. How would those driver’s movements affect the overall performance of our current sourcing effort?
  4. How can my team best monitor changes in those drivers?

If you use the resources at your disposal, and ask the right questions of the experts within your four walls and of the specialist consultancies you use to keep you up to date on best practices and audit your processes from time to time, you’ll find that you can pinpoint many of the issues even without firing up elgooG. Your legal, taxation, regulatory, finance, and communications personnel, as well as those buyers that have good relationships with your oversees suppliers and partners will probably be able to nail the issues you need to understand, track, and plan for in a matter of minutes. And then, as the white-paper keenly observes, blogs (like Sourcing Innovation and Spend Matters)

are becoming increasingly valuable sources of industry information.

JLP Responsible Sourcing Part II: Child Labour

In today’s post, we cover Section B of The John Lewis Partnership‘s Responsible Sourcing Supplier Workbook which tackles issues relating to the employment of children.

Children work in every country in the world, and the work can take many forms, not all of which are problematic or illegal. Child labour becomes a problem when children are exploited, put at risk, forced to work in an unhealthy environment, denied an education, or denied a childhood.

The workbook defines unacceptable forms of child labour as:

  • children forced to work against their will as bonded labour
  • children working in formal factories under the legal minimum age
  • children working in hazardous conditions

The workbook also lays out the JLP code for acceptable child labour:

  • no recruiting or employment of children under 15 (or 14 if ILO exemptions apply)
  • no exploitation and no denial of education
  • protection of health and safety at all times
  • no working at night or in hazardous conditions
  • there shall be a clear policy for dealing with under-age workers

Furthermore, the workbook identifies the following situations for examination on a case-by-case basis to make sure the employment is acceptable:

  • children who work regularly and attend school
  • children who work occasionally to supplement parental income
  • children who work at home
  • children who live in and around work sites
  • children who are involved with seasonal harvesting

The workbook also points out some relevant facts:

  • high-risk countries for child labour include India, Bangladesh, Pakistan, and, increasingly, China
  • over 246 million children worldwide are involved in child labour
  • more than half of these children are engaged in hazardous work with 180 million facing long-term health risks
  • with the number of children orphaned by HIV now at 15 million, the risk that more children will be forced into labor has increased

Thus, as a supplier you need to insure that

  • there are effective systems to check age at time of recruitment
  • a personnel file for each worker is kept
  • a clear and documented policy is developed to deal with child labor
  • if you have a creche, this is an adequate distance from production areas
  • your workers have access to education
  • each of your suppliers also follows the rules

You also need to be active in the protection of young workers:

  • identify who your young workers are
  • carry out a risk assessment for these young workers
  • remove any hazards or risks they are exposed to
  • carry out regular spot checks
  • scrutinize shift rosters, timecards, and wage records for compliance
  • sponsor annual medical checkups and access to health services

If you find child labour that is not compliance with all of the requirements of the JLP Code and the ILO regulations, the workbook also suggests appropriate remediations, since inappropriate responses can often be as damaging as the child labor itself. It also includes some case studies that clarify acceptable child labor from unacceptable child labor and points you to a number of additional resources that you can draw on.

In our next post, we’ll tackle the second major issue addressed by the workbook, forced labor. (You can access all of the posts in the series (to-date) by selecting the JLP category at any time.)