First, there was the procurement department. Six months later, someone said, “We should do a procurement transformation!” (probably). If you’ve been in or worked with a procurement department for any amount of time, you’ve likely been through a procurement transformation or a larger “business transformation.” These are usually driven by new leadership, the need to rework company structure, or dramatic changes in the wider market, and one of the hardest parts of transformation is getting everyone to pull along with the new direction. If you have to lead the change, this means working hard to convince the skeptics whose immediate response to “change!” is “change back!”. Today’s article is about how to get the skeptics on board with your transformation so you can move forward with confidence, candor, and value.
Continuing on the takeaways from the Advancing Construction conference at the beginning of December, one of the workshops was an extremely interesting discussion on centralizing procurement by Jason Banks of JE Dunn. Mr. Banks led the audience of procurement leaders in discussion, and I took pictures of the group’s whiteboard notes about “convincing the skeptics.” Such awesome thoughts! Today’s article organizes these takeaways into three groups: Starting, Collaborating, and Sustaining.
Starting
If you’ve been reading my articles for any amount of time, you know I always prefer to Start with Why (Simon Sinek). If you haven’t watched his Ted talk (or haven’t watched it recently), it’s worth taking the next 18 minutes to go watch it. Similarly with any kind of transformation, you have to start with why. Why are we changing the procurement (or company) structure? What is driving this need for change? Is it new leadership? Economic forces? Changes in competition? Often companies just say “we’re transforming” without making the case for why. People are smart, and just like my kids they don’t really like an answer that boils down to “because I said so.”
Once you establish the why, that’s when you can create a sense of urgency. First “why?” then “why now?” What are the true deadlines and where do they come from? It’s a lot easier for people to support change when they have a sense of urgency and understand the deadlines involved as much as possible. People don’t actually hate change. They hate transition. It’s the path from point A to point B that’s hard, not the destination on either end. Whenever I meet someone struggling with transition, I recommend this podcast episode by Patrick Lencioni called “Change is Easy, Transition is Hard”. The accompanying pdf is very helpful as well, and so is the next episode after that one. If you’re going through a transition in your personal or professional life, I highly recommend taking a moment to listen to those episodes, which should also be findable on YouTube if you prefer that format.
Now that (most) people are on board and have a sense of urgency, make them part of the process. Let them tell you what the ideal state looks like for their world. Many people will say, “just make it work like it used to,” but there will always be a few people who say, “it would be amazing if the new process looked like this.” Get those people involved and make sure you have representation from your front lines. This means people who do the daily work, not just managers and directors. It’s too easy for directives to come down “from above” and people in an organization’s hierarchy not to really understand the struggles of the everyday tasks.
When you’re just starting off, start with the easy things to fix, also known as the low-hanging fruit. Maybe absolutely everyone hates your requisition process and any change would be helpful. Maybe there’s an approval that has never made sense and you can simply get rid of it quickly. Perhaps there’s some field you fill out the same way every time in your purchase order that you can default to the correct value and stop having to modify each time. Choose something small, make it a win, and then celebrate those early wins loudly. I have a strong tendency to just move on to the next thing on my list, so I have to consciously celebrate wins. Even small wins have a big impact on team morale and keeping momentum in the right direction during a transformation, so make sure you celebrate them and make them visible.
The last piece of starting off right is to create a pilot program. Is there one small part of your team that could be your first adopters of the new process or system? Perhaps it’s a particularly influential group in the team or one that benefits clearly from the change. Or maybe it’s a team full of the kind of people who like to try new things and are willing to experiment. It’s easier to troubleshoot and find wins when 3-5 people are adopting a change than in the middle of rolling things out to 50 people at once. When I’m implementing an e-auction program, it’s always my preference to start with one category manager who is running RFPs constantly and start folding e-auctions into their negotiation strategy. That way the company can see some early results from e-auctions, it concentrates training to just a few people who can learn how to talk about e-auctions successfully, and it fine-tunes the e-auction approach for the company and its culture.
Collaborating
Collaboration is one of those corporate buzzwords that has started to lose meaning. Yet it still has value and ultimately means people working together (and not against one another) to achieve a goal. Transformation requires a great deal of collaboration, which starts with needing to get feedback from the front lines. Often people are afraid of speaking up or think their thoughts will be dismissed, and just as often they are correct. I’ve seen many transformation leaders dismiss valid feedback because of how it was presented (usually with a great deal of passion and pain) or when it was presented (right before go-live after all settings are in place). So instead, solicit feedback early and often. Give those dissenting voices a platform to the right audience and at the right time. Use multiple methods to solicit feedback – skip-level meetings, listening tours, one-on-ones, surveys, really anything you can think of. And then listen.
Getting feedback leads us to the next piece of collaborating well: Overcommunicate. Someone once told me that if I feel like I’m dramatically overcommunicating, I’m probably communicating just enough. It’s hard to actually overcommunicate. Yes, you’re going to get sick of telling people “Why” and “Why Now.” You’re going to wish you could carry around a recording on your phone with those messages and just push “play” every time you enter a conversation. But the person on the other end might be hearing the message for the first time. The Rule of Seven in marketing says someone needs to hear a message seven times to buy. When changing a business, you are literally selling transformation as your product and need people to buy in.
The last piece of collaboration is to make it easy for your audience. Sometimes it’s easy to get lost in a transformation process and forget that you’re trying to make the organization more efficient, more profitable, and faster. That means make the new process as easy as possible for the team to adopt, and consider making the old process harder to use. Create the path of least resistance and most people will walk it. Make sure your new process uses fewer mouse clicks, less waiting time, fewer approvals, and better quality outcomes whenever you can. If your transformation involves adding something to peoples’ plates, make that addition as light and easy as you can. Remember to use the pareto principle and focus on using the least amount of effort to achieve the most value. It’s tempting to try to manage or set up processes for every scenario, but your time is better spent making the most common process as simple as possible.
Sustaining
Transformation is all well and good, but works best when it is sustainable past the initial transition. A McKinsey survey from 2023 found that organizations “lose an average of 42 percent of their expected value in the later phases of the transformation program.” This means that implementation is just the beginning of any business or procurement transformation. If you stood up a task team to lead the implementation, consider leaving at least one member of the team in place to help sustain it. While this seems like a big expense initially, it does mean more value one, three, or five years after all that effort spent transforming the business. If your transformation is an e-auction team, perhaps create a role for an e-auction leader or champion who continues to search for the best e-auction opportunities and making sure the tool is in active use. If your transformation is about implementing software, perhaps the needed role is a software expert with full administrative abilities and a direct phone number of someone at the software company to help troubleshoot any issues. If your transformation is about moving your procurement team to a centralized or hybrid structure, maybe you create a liaison role who constantly makes sure the central team is communicating with local leaders and soliciting feedback. (Or if you are moving to decentralized, perhaps it’s someone who identifies and aggregates spend so you can maximize your market leverage for key categories even while decentralized). Whatever you are transforming, put someone in place who is there to keep capturing the value and supporting the team.
The next piece of sustaining a transformation is to socialize the transformation. Make the new, changed state your standard and company culture. Help people let go of the “old way” to the point where they don’t even remember it well anymore. If you’ve done the work to make the new way easy, this won’t be hard. But if you can’t make the new process easier than the old, tie results and outcomes tightly to your company values and talk about them as the current way you do business. Because they are. Leverage the advocates you’ve created during the transition to help make the change part of your culture and keep people focused on the wins.
Especially in the current world of Big Data and AI, use data to monitor, improve, and show the results of your transformation. There will always be people who say the new way is worse than the old one. Be ready with data to show if they are correct. Sometimes, they are correct, and the new way is worse! If so, use the data to change your course and adjust the transformation as it evolves over time to maximize its value. It’s very hard to calculate or demonstrate the value of a change without the data to show whether it’s working.
Side note: One of the most common objections I see to e-auctions is that “we will have more change orders after implementing e-auctions.” I ask how businesses are measuring change orders before e-auctions and how they will know if there are more after implementing a negotiation or e-auction program. I’ve almost always seen the opposite effect of e-auctions: change orders decrease when a bid was auctioned. Why? Because the scope of work was better. When a technical team knows any supplier invited to e-auction can win the business, they do a better job of thinking about contingencies, writing down what they need (instead of “the incumbent knows what we need”), building a clear pricing schedule, and inviting only quality suppliers to the best and final offer process. Collect the data on change orders before and after an e-auction program and adjust according to what the data tells you.
Lastly, transformations need a lot of carrot, but may still need some stick. By this I mean incentivize your transformation as much as possible: offer prizes to team members who achieve wins, do everything you can to raise morale during transition, coach and support people appropriately. In the end, there will often be a few people who simply won’t change. When I was at a manufacturing plant as an engineer in the early 2000s, we used Solidworks 3D modeling software to design all of our equipment. There was one engineer in one of the plants who had been working for the company for 40 years. When the company implemented Solidworks in the 1990s, he refused to do so. He kept his drafting table and the company ended up employing a string of full-time interns to take his physical drawings and put them into the 3D software. After a few years of doing this, the company did eventually pull him aside and offer him retirement or they would let him go. He chose retirement, of course, but the point is that he wouldn’t make the transition and so the company was no longer the right place for him. While showing people who won’t get on board with a transformation is not the goal nor the ideal, sometimes it’s needed. Realize when you start a transformation you may ultimately be in the position of helping people exit the business or department as a result.
Now, let’s recap! Most of these bullet points are the direct notes taken from the whiteboards around the room after our conference discussion, simply rearranged and organized.
Starting
- Start with why
- Create sense of urgency
- Make them part of the process
- Start with the easy things to fix
- Create those early wins loudly
- Create a pilot program
Collaborating
- Get feedback
- Give dissenting voices a platform to the right audience and at the right time
- Overcommunicate
- Make it easy
Sustaining
- Implementation is just the beginning
- Socialize
- Leverage the advocates you’ve created
- Use data
- Need a lot of carrot, but may still need some stick
Keep these items in mind and you’ll help your next transformation to succeed. If you’d like to talk about an upcoming procurement (or business) transformation, let’s chat. If you’d like to get these articles weekly straight to your inbox and never miss one, sign up for my newsletter.
My book, Transform Procurement: The Value of E-auctions is now available in ebook, paperback and hardcover format: https://www.amazon.com/dp/B0F79T6F25
