Category Archives: Talent

Want a Turnaround? Start With Your Workforce

I enjoyed this recent article in Industry Week on the “Miller Centrifugal Casting Comeback” from revenues of 8M in 2003 to 22M in 2008 because it highlighted the key elements of a successful turnaround: your people. According to MCC, five key structural supports were required to achieve the turnaround, with the first two being workforce morale and employee satisfaction. In other words, it had to put the people who would ultimately be effecting the turnaround first.

MCCs secrets of a turnaround? They are:

  1. Workforce Morale
    MCC starting treating its workforce as valued customers and human beings, not just “resources” and numbers. Managers walked the floor, engaged in open dialogue, and equipped the workforce with decision making power.
  2. Increased Employee Satisfaction
    MCC implemented a gain sharing program in 2005 based on a pay-for-performance system.
  3. Lean
    Specifically, MCC focussed on eliminating waste.
  4. Quality
    MCC strategically invested in equipment and technology that would have a direct impact on quality.
  5. Customers
    MCC focussed on responding to actual customer needs and wants and not just perceived needs.

And they’re pretty much dead on. Add:

  1. Senior Leadership
    Leadership from senior management who embrace the change and walk-the-walk as well as talk-the-talk.
  2. A Realistic Transformation Plan
    Developed in conjunction with an expert that starts with a gap analysis between where you are and where you want to be and lays out a realistic path to get there

Then you are on your way to turnaround success.

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Talent, Training, and Transition: Three Emerging Themes from the Best Practices XChange

Last week, I attended the Best Practices XChange (BPX) hosted by The MPower Group in Chicago. This quarterly, one day BPX roundtable, event brings together senior procurement professionals (director and above) from BPX members and interested organizations.* The event was well put together, and I’ll be diving into the presentation by Dr. Lloyd Rinehart in a later post, but I wanted to start by summarizing the emerging themes from the roundtable discussion.

As pointed out by Brian Sommer in his post last week on The New Sourcing Concerns, one of the big concerns is transition management, both in terms of knowledge transfer and change management. Not only will a large number of baby boomers be bolting for the bay doors by the boatload as soon as the economy rebounds and their 401K will allow them to, but most companies don’t have any processes in place to capture their knowledge while they are still here and transition the knowledge to their new employees. Furthermore, they are starting to recognize the need for advanced sourcing systems to help them with their global strategic sourcing projects, but don’t have any processes about how to go about selecting, implementing and switching over to those systems in a risk and hiccup-less free manner. And while many companies still don’t have good answers, it’s nice to see the senior level recognition of this problem because the solutions are out there, and any company that gives this issue priority will find them.

The next major concern is talent availability. Even though the unemployment market has reached a high, averaging over 10% in North America (especially when you take into account all the underemployed “self-employed” and the “discouraged workers” who are conveniently left out of the US statistics to make the situation look better than it really is), there is still a dearth of talent in the sourcing marketplace, which is only going to get worse when the market recovers. Sourcing needs highly skilled workers, and with falling levels of graduates in science and engineering programs, economics, and other programs that train us to think logically and analyze complex situations, these people just aren’t out there in great numbers.

Furthermore, even when you find the talent, they still need to be trained since even most “supply chain” programs don’t prepare students for the complex sourcing environments present in most multi-nationals — which brings us to our third challenge. The fact of the matter is that there is no mass-market training program out there that will produce an advanced sourcing professional, yet alone a senior leader. (The NLP SPSM and the ISM CPSM, in particular, don’t come close enough. While I am a big fan of the SPSM certification program, because it captures the basics that every sourcing and procurement professional should know, but still doesn’t, and, through the SPSM2, introduces them to the world of international sourcing, on the doctor‘s scale of basic beginner – intermediate – advanced – senior expert, it still only gets you to intermediate. Better than the majority of the offerings out there, but still not where you need to be on a technical, EI, or cultural level if you want to be a senior professional at a major multi-national handling 8, 9, and sometimes 10 figure categories in today’s very challenging global sourcing marketplace.) The only answer is to find the best talent you can, augment them with advanced training from one of the leading consultancies who have been doing this in the field day-in and day-out for decades (after you have insured they have the basics), and then put them under the wing of a senior sourcing professional who needs to transition her knowledge to your rising superstar before she retires (because, when you get right down to it, what really makes a sourcing expert an expert can’t really be taught in a [n on-line] class, and can’t be learned until you have the advanced tools, techniques, and processes at your fingertips to learn from a master).

The story I’ve been pulling together lately, reinforced by this event, is that unless you can

  • find, and hire, talent while unemployment is high (and some of these individuals are available),
  • train them on advanced tools and techniques, and
  • use this new talent to lead your knowledge capture and transfer efforts
    while working under the guidance of a mentor
    (as they will be more comfortable with new systems and processes than your in-house experts)

you could be, to coin a colloquialism, up sh*t creek without a paddle.

I wish you the best of luck in your endeavours. You might just need it.

*In order to ensure best practice sharing amongst peers, each quarterly BPX roundtable is limited to 35 participants. As a result, BPX members get first priority. Remaining slots are then opened up by MPower to senior procurement professionals that are considering membership or interested in finding out more about the value BPX could offer them. For more information, feel free to contact Nicolas Hummer ( nicoh <at> thempowergroup <dot> com ) at any time.

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Charles Dominick on “Are You Prepared”

Today’s post is from Charles Dominick of Next Level Purchasing (and the SPSM certification) and blogmaster of the Purchasing Certification Blog.

I can’t recall a time in my procurement career when business conditions so strongly indicated that changes were a–coming. The latest United States GDP report indicated that the economic freefall has subsided, likely giving businesses the confidence necessary to resume the spending that will fuel growth. The last several US unemployment reports indicate that, while unemployment is still high at 9.8%, things aren’t getting worse by the minute the way that they were earlier in the year. And, after a period where commodities posted month–to–month price declines in seven of eight consecutive months, stability has prevailed and inflation has begun.

All of these indicators should be writing on the wall for today’s chief procurement officers: changes and challenges are ahead. Are you prepared?

What kind of challenges, you ask?

Consider these:

1. Heavier Workload.
As your company forecasts — and invests in marketing to create — demand for 2010, there will be a higher volume of inputs needed to support the higher volume of outputs. So procurement activity will increase. With a 9.8% unemployment rate in the US, this recession has claimed its fair share of procurement jobs. So, if you’re doing more with less now, you’re going to either have to find a way to squeeze more productivity out of your current (possibly depleted) team or add new staff —- new staff that will have to get up to speed very, very quickly.

2. Staff Will Leave.
As you contemplate having your existing staff handle the heavier workload, have you considered the possibility that some of those people may not be around for you to delegate to? Very, very few good employees will voluntarily leave a company during a bad recession. They know the risk of doing so. But as the economy thaws out and heats up, more opportunities will present themselves. Those employees that were unhappy but stuck with the company because of fear will finally feel ready to move on to greener pastures. You may find yourself trying to fill positions that you didn’t count on having vacated.

3. Price Increases.
There will so much upward pressure on price, it’s not funny. First, every year, suppliers come out with their new pricing in January. January is always a convenient excuse for raising prices. January is right around the corner. Second, commodity prices are on the rise, so prices for most goods tend to follow. Third, because of the nasty effects of the recession, some suppliers are so financially weak that their choices are to either raise prices to cover their losses or die. Fourth, it’s basic economics that as demand picks up, prices go up until supply adjusts to keep things in balance. With such a long economic dry spell, businesses are antsy to quit hunkering down already. Demand will go up, pushing prices up.

So, you may very well find yourself with a heavier workload, fewer long-time employees, more newer employees, and suppliers shoving higher prices down your throat. Because of the line of business that I am in, I know one solution that will help employees be more productive, get new employees to deliver results more quickly, boost the morale of existing employees, and provide your team with the skills necessary to combat price increases. But there are other solutions and this post is not a sales pitch so I won’t even go into what that solution is.

What I do want to do is just to share what I foresee in the immediate future for procurement leaders so that you can be prepared for these challenges with the solution(s) of your choice. With proper preparation, you can be ahead of this wave of change and succeed while other, less prepared peers of yours struggle to keep their proverbial heads above water.

Thanks, Charles!

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Individuals Do Matter, Even if Statistics Says they Don’t

A recent article in the Harvard Business Review, which purported to tell us “when individuals don’t matter”, stated that under the right conditions, groups — whether ant colonies, markets, or corporations — can be smarter than any of their members in an effort to apply swarm theory to corporate performance. This is because, in complex adaptive systems, hard-to-predict behaviors emerge from the interaction of the individuals.

The article says that executives make three common mistakes to demonstrate that they don’t grasp how complex systems work. A complex system cannot be understood or managed with a focus on a few key parts, or individuals. It needs to be analyzed as a whole, and this is where many people executives fall short and, according to the author, make the following errors:

  1. They extrapolate individual behaviour to explain collective behaviour.
    Wall street believed that EPS was key to a stock price, but then financial economists concluded that cash flow drove the stock price. The economists, who focussed on how the market behaved, turned out to be more accurate.
  2. They don’t understand that changing one component of a system may have unintended consequences for the whole.
    For example, the collapse of Lehman Brothers, which had losses larger than expected, roiled global financial markets, increased risk aversion, and even parts of the market that were supposed to be unrelated, like money market funds, were jolted.
  3. They prize standout individuals while ignoring how much they draw on their surroundings for support.
    The example given is how many sports teams will hire a star in an effort to quickly improve team results but then see little or no improvement because the newly transplanted star is separated from the people, structures, and norms that made her great in the first place.As someone who has worked primarily with smaller business and start-ups in my career, I have seen this way too many times. “We’re going to hire Mr. Big Shot because he ran the top performing team at Great Success Co. that generated 10M in annual savings” even though he’s never worked at a small company, never sold point solutions, never worked in the vertical, and we have a candidate who used to sell a similar solution for a similar sized competitor who is well educated, experienced, sociable, hard working, and comes with a go-getter attitude. As (I) expected, it turns out Mr. Big Shot was actually Mr. Hot Air who only succeeded in alienating the good people the company already had, who then took other jobs at their first opportunity, because Mr. Big Shot couldn’t survive without a hard-working team who did all his work for him and made him look good in exchange for the little rewards he would throw their way from the big discretionary budget he kept to keep his team happy.

This last point brings me to my main point. Even though, as the author notes, wrong assumptions about the relevance of individual agents to the behaviour of a complex adaptive system will kill your corporate performance, it’s also true that the wrong individual can significantly disrupt the system you have in place and have an effect that is more detrimental on your system than you might think any single individual could. Which is why individuals do matter. Even though it is collective effort from a focussed team that mutually trusts each other that builds an organization, it only takes a single individual to tear it apart. Remember that the next time you get all hot and bothered for an organizational superstar.

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Change By Design, A Book Review

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Although he was the engineer’s engineer, Brunel [who designed the Great Western Railway] was not solely interested in the technology behind his creations. While considering the design of the system, he insisted upon the flattest possible gradient because he wanted passengers to have the sense of “floating across the countryside”. He constructed bridges, viaducts, cuttings, and tunnels all in the cause of creating not just efficient transportation but the best possible experience … Brunnel was one of the earliest examples of a design thinker.

A purely technocentric view of innovation is less sustainable now than ever, and a management philosophy based only on selecting from existing strategies is likely to be overwhelmed by new developments at home or abroad. What we need are new choices — new products that balance the needs of individuals and of society as a whole; new ideas that tackle the global challenges of health, poverty, and education; new strategies that result in differences that matter and a sense of purpose that engages everyone affected by them.

Only gradually did I come to see the power of design not as a link in a chain but as the hub of a wheel. … I also noticed that the people who inspired me were not necessarily members of the design profession; engineers such as Isambard Kingdom Brunel, Thomas Edison, and Ferdinand Porsche, all of whom seemed to have a human-centered rather than technology-centered worldview.

The natural revolution from design doing to design thinking reflects the growing recognition on the part of today’s business leaders that design has become too important to be left to designers.

So begins Tim Brown’s new book Change By Design (available September 29) that tackles the myth of innovation that brilliant ideas leap fully formed from the mids of geniuses while exposing the reality that most innovations stem from rigor and discipline … the kind that comes from the application of proper design thinking. Design thinking, a process for practical, creative resolution of problems or issues, attempts to match necessity to utility, constraint to possibility, and need to demand to meet end-user need and drive business success. The ultimate challenge for a design thinker is to help people articulate the latent needs they don’t even know they have. Fortunately, the search for insight — in contrast to the search for hard data — is that it’s everywhere and it’s free. You just have to open your eyes and look at what people are doing.

For example, when IDEO was hired by Zyliss to design a new line of kitchen tools for the home, they started out by studying children and professional chefs. While neither was the intended market, both yielded valuable insights. A seven-year-old struggling with a can opener highlighted issues of physical control adults have learned to disguise and the shortcuts used by a professional chef yielded insights into cleaning requirements. The exaggerated concerns of people at the margins of the market led the team to abandon the idea of a “matched set” and create a line of products with the right handle for each tool. The end result was a product line that flew off of the shelves. [Proving one of my favourite points: just because you’ve been doing it that way for years, it doesn’t mean you’ve been doing it right!]

The Zyliss success story happened because the willing, and even enthusiastic, acceptance of competing constraints by the design team is the foundation of design thinking. The first stage of the design process is often about discovering which constraints are important and establishing a framework for evaluating them. Constraints can best be visualized in terms of three overlapping criteria for successful ideas: feasibility, viability, and desirability. A competent designer will resolve each of these three constraints, but a design thinker will bring them into harmonious balance. The popular Nintendo Wii is a good example of what happens when someone gets it right.

For those trying to wrap their minds around design thinking, the basic innovation rules that Tim outlines in chapter 3, A Mental Matrix, are a great place to start because they’ll put you in the mindset required to grasp the key tenets of design thinking.

  1. The best ideas emerge when the whole organizational ecosystem has room to experiment.
    And room to fail! The greatest successes will often emerge after you get the false starts and failures out of the way (and make an effort to understand why you failed).
  2. Those most exposed to changing externalities are the ones best placed to respond
    and the most motivated to do so.
    Furthermore, if you have someone who thrives in that sort of an environment, make sure she’s on the team!
  3. Ideas should not be favoured based on those who create them.
    The most successful individuals are often those who latch on to, and promote, good ideas.
  4. Ideas that create a buzz should be favoured.
    Nothing’s better than viral marketing!
  5. The “gardening” skills of senior leadership should be used to tend, prune, and harvest ideas.
    Not to create them.
  6. An overarching purpose should be articulated.
    You’re looking for new ideas to solve a problem that people want solved.

And you want to grasp design thinking, because it works. Probably the best example is that of “Cool Biz“, the imaginative program from the award-winning Japanese advertising agency Hakuhodo designed to help the Ministry of the Environment in Japan get people moor involved in meeting Japan’s commitment to the greenhouse gas reduction goals of the Kyoto Protocol. Within a year of the launch of this program, the slogan “Cool Biz” was recognized by a staggering 95.8% of the Japanese market. Can you imagine the boost to your corporate brand if 95.8% of your potential market recognized your corporate offerings?

For more information on design thinking, which is becoming more necessary by the day in a world where constant change is inevitable and everything is a prototype, see the Design Thinking blog, IDEO’s website, the The Harvard Business Review article on Design Thinking, the Innovation 100 Interview with Tim Brown on YouTube, the Design Thinking video (extended version) on YouTube, and the Global X Interview with Tim Brown on YouTube.

And if you’re still not convinced you should buy the book, consider the following quote which literally made my day:

Business school professors are fond of writing learned articles about the value of brainstorming. I encourage them to continue to do so (after all, some of my best friends are business school professors, and it keeps them busy and out of my way).