Daily Archives: May 3, 2011

For More Savings, Turn Your Sights on IT

Every organization has it’s sacred cows, be it legal, marketing, or IT. And every head of the sacred cow organization says that Procurement couldn’t possibly help it save money because of the nature of the relationships it needs to maintain and the need for highly specialized, expensive skills. And while this is true to some extent, any automated discovery program that does X, Y, and Z may do the trick; printing is not a highly skilled and specialized operation; and most hardware is commodity these days, so Procurement does have a role to play in reducing cost in each of these organizations.

And now that many software systems are becoming commodity and the cloud is making IT a utility, Procurement has an increasingly important role to play, especially for “Factory IT”. As per this recet McKinsey Quarterly article, which is well worth the read, on reshaping IT management for turbulent times, IT can be broken down into “Factory IT” and “Enabling IT”. “Factory IT”, which composes the bulk of an organization’s IT activities, is amenable to standardization, simplication, scale, and outsourcing to increase efficiency and reduce cost — and a perfect category for Procurement to help IT identify significant cost savings. While “Enabling IT”, that helps organizations respond more effectively to changing business needs and gain a competitive advantage through innovation and growth, may need expensive resources with rare skill sets or custom built systems, Factory IT can often be bought like a commodity.

So don’t overlook IT. It’s ripe with cost savings.

The AchieveGlobal Model for an Innovation Culture

A recent article over on Chief Executive outlined The “Six C’s” Model for Building A Culture of Innovation from AchieveGlobal. The model was created by examining the practices and behaviors of the Boston Consulting Group’s top 100 innovative firms around the world and is worth a review.

  1. Collaboration
    Innovation now requires the collaboration of large, diverse groups of people. Not only has the size of research teams grown by 20% per decade over the last 50 years, but a paper is six times more likely to get at least 1,000 citations if it comes from a team, which should be made up of a socioeconomic mix of people at all levels up and down your supply chain, from different departments, functions, divisions, brands and plants.
  2. Customer Centric
    A culture of innovation requires a deep commitment to understanding customers’ expectations and providing them with value. In addition, it looks for user innovation and situations where users use products for unintended purposes or refine the products for particular needs.
  3. Context Rich
    Leaders in innovation put lots of effort into the development of formal and informal systems to collect and share information throughout the workforce.
  4. Curious
    Innovative leaders encourage their employees to question authority, to question their assumptions, to ask why, why not and what if? Innovation leaders give their employees time to research, explore, and even wander down blind alleys.
  5. Confidence Focussed
    Businesses that excel at innovation actively increase their employees’ capabilities and self-esteem. Innovation requires the confidence to explore, experiment, push-through the darkness, and succeed.
  6. Challenge Culture
    Innovative companies focus on meeting challenges and aiming for new heights. They are never content with good enough or solving today’s problems. They strive for excellence and solutions to tomorrow’s problems.