Collaboration is a Key Competitive Advantage

RP_Group_blueIn the 20th century, the key to business strategy was the linear value chain. The goal was to maximize bargaining power with buyers and suppliers, while at the same time minimizing threats from new market entrants and substitute goods. A strategy was like a game of chess and you had to maneuver all the right pieces in all the right places.

Today, that linear world has broken down and we operate in a semantic economy where everything connects. It no longer matters what resources you control, but what you can access and many of the best assets lie outside your organization. Firms that can collaborate win. What is collaboration all about?

SOCIAL ECONOMY
Today, that linear world has broken down and we operate in a semantic economy where everything connects. It no longer matters what resources you control, but what you can access and many of the best assets lie outside your organization. When everything is connected, closing yourself off means that you are more likely to lose access to valuable resources than you are to protect anything that can’t be duplicated elsewhere. That’s why now we need to use platforms to access ecosystems of talent, technology, and information. Nobody can go it alone anymore. Strategy in a networked world can no longer focus solely on efficiency.

Today many large companies see themselves as essentially utility companies, providing fundamental technology and letting smaller firms and startups explore new business models. Innovation has come to be seen as largely a matter of agility and adaptation. Small, nimble players can adapt to changing conditions much faster than industry giants. That gives them an advantage over large, bureaucratic firms in bringing new technologies and other products to market.

That’s why today’s economy is a social economy with collaboration at its center. In the past, we could dominate by accumulating resources and driving efficiency, but now agility and interoperability that rule the day. We need to shift our focus from assets and capabilities to trust, design and networked organizations.

SUCCESFUL COLLABORATION
Collaboration isn’t simply about “being nice to each other”. Effective collaboration, whether between individuals or whole businesses, is about strong, robust relationships where partners can scrutinize each other and deal with conflicts constructively in an environment based on trust.

Wikipedia says: “A Collaboration is a purposeful relationship in which all parties strategically choose to cooperate in order to achieve shared or overlapping objectives.”

Herminia Ibarra says: Collaboration is a way of working that attracts and involves people outside one’s formal control, organization, and expertise to accomplish common goals. Understanding what collaboration is not is a crucial part of getting better at it.

At Collaboration Growers we have developed the Collaboration Wheel. It is a 6 step process which guides you in terms of setting up your collaboration platform. If you would like to know more about the Collaboration Wheel you can check out this blogpost. The process has 6 steps:

  • Define the need and create awareness
  • Build the guiding governance
  • Build the collaboration platform
  • Define the customer collaborative activities
  • Get moving: Seek, assess, validate and engage
  • Stay on top of things: Manage and exit

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

 

The Collaboration Wheel – Your Tool for Successful Collaborations

RP_Gears_dot_blue1-120x120

 

In a time of rapid change the ability to innovate and change quickly and effectively, again and again, is perhaps the only enduring competitive advantage. Those firms that can innovate and change constantly will thrive. Those that do not or cannot be left behind. This demands that companies seek outside their own ecosystem for ideas and execution in timely speed. Companies need to collaborate.How could a structured approach look like in the entire lifecycle of the relationship? 

We have developed the Collaboration Wheel, a tool which can help you create successful collaborations.

1. DEFINING THE NEED AND CREATING AWARENESS
As a company you need to be able to explain why you are looking for inspiration outside your own ecoinnovation system and most importantly how should it benefit your company? It is important that the open approach is anchored in your company´s strategy. It is also important that your leaders have a collaborative mindset. Check out this blogpost on Collaborative Leadership skills. Keywords:

  • Alignment with your company´s strategic objectives
  • Objective with your company´s Collaboration or Open Innovation Manifesto
  • Collaborative Leadership approach

2. GUIDING GOVERNANCE
The governance structure behind your approach is your backbone. The question is what type of collaboration culture you would like your employees to work by. What are their current skills and how much trust are they capable of and willing to put into the relationship? From an idea is generated to the idea is implemented – what are the roles and responsibilitues in that proces – and what happens in the relation if it does not get implemented. Keywords:

  • Creating a collaborative culture
  • Assessing people collaborative skills
  • Assessing the company´s collaboration maturity
  • Trustometer – Ecosystem trust
  • Stakeholder management
  • Decision making process
  • Roles and Responsibilities
  • Intellectual property Management

3. COLLABORATION PLATFORM (PEOPLE WITH PEOPLE)
Now that your backbone is in place and anchored in the strategy it is time to engage the people that are part of the process. What sort of tools and processes are you going to utilize for knowledge exploration, retention and exploitation? Keywords:

  • Knowledge exploration
  • Knowledge retention
  • Knowledge exploitation

4. CUSTOMER COLLABORATIVE ACTIVITIES
How is that your partners should be involved in your ecosystem, what sort of information are you going to share with them and how will you assist them? Keywords:

  • Ecosystem involvement
  • Customer communication
  • Customer assistance

5. GET MOVING
You have the system in place. Now it is time to seek out the ecosystem partners, assess their willingness and validate their capabilities. Keywords:

  • Seek ideas and ecosystem partners
  • Assess willingness
  • Validate ecosystem partner capabilities
  • Engage, collaborate and build trust

6. STAY ON TOP OF THINGS
It takes trust to manage a relationship. Do you have the knowledge about what triggers trust and how to use it effectively in your relationship?
If the relationship is not benefitting the company and the strategic direction it is time to say goodbye. How is the process and what triggers it? Keywords:

  • Manage relationship and maintain trust
  • Exit strategy, triggers and process

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

Collaborative Leadership Skills in a Turbulent World

RP_GamingTechnological advances are disrupting the status quo and creating turbulence. Industries are converging and new competitors are emerging at lightning speed. At the same time, resources are constrained and it demands that we rethink the way we think about materials.

Companies need to seek outside their own ecosystem for ideas and execution in timely speed and collaborate. What is collaboration all about – and what kind of leadership attitude does it take?

HOW IS YOUR BUSINESS ENVIRONMENT CHANGING?
Valuable materials are leaking from our economies. In a world where demand and competition for finite, and sometimes scarce resources, will continue to increase. Where pressure on resources is causing greater environmental degradation and fragility. In such a world we can benefit economically and environmentally from making better use of those resources. There is a strong business case for improving resource productivity. It is estimated, that resource efficiency improvements all along the value chain could reduce the material input needs by 17-24% by 2030. A better use of resources could represent an overall savings potential of €630 billion per year, for the European industry alone.

Since the industrial revolution, waste has constantly grown. This is because our economies have used a “take-make-consume and dispose pattern of growth – a linear model, which assumes that resources are abundant, available and cheap to dispose of. That is why it is called the Circular Economy, it is simply circular. We will not dispose it, but recirculate it into the economy.

CIRCULAR ECONOMY IS ABOUT COLLABORATION
The Circular Economy is also described as the Collaboration Economy. Primarily because it is a socio-economic system built around the sharing of human and physical resources. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organizations. In a time of rapid change, the ability to innovate quickly and effectively, again and again, is perhaps the only enduring competitive advantage. Those firms that can innovate constantly will thrive. Those that do not, or cannot, will be left behind.

It is about decoupling growth from constrained resources through innovation. It is about rethinking materials, methods of make, products, how to partner and business models to solve complex challenges. Simply put: We all have to re-challenge the mental model of what materials are. Your challenge in this playing field is, that the people who will make you and your business successful does not necessarily work in your own organization. They may not even share your language, beliefs, manner or behaviors. But without their skills and effort, you will never deliver the results you need to as a leader in today’s world. That is why you need to learn the discipline of collaboration. It is a competency.

WHAT IS COLLABORATION
Collaboration isn’t simply about “being nice to each other”. Effective collaboration, whether between individuals or whole businesses, is about strong, robust relationships where partners can scrutinize each other and deal with conflicts constructively in an environment based on trust.

Wikipedia says: “A Collaboration is a purposeful relationship in which all parties strategically choose to cooperate in order to achieve shared or overlapping objectives.”

The Collaboration Model from Collaboration Growers has 6 cornerstones:

  • Define the need and create awareness
  • Build the guiding governance
  • Build the collaboration platform
  • Define the customer collaborative activities
  • Get moving: Seek, assess, validate and engage
  • Stay on top of things: Manage and exit

WHICH SKILLS DEFINE A COLLABORATIVE LEADER?
Collaborative leadership is the type of leadership required to get results across the organizational boundaries. It requires a basic leadership skill set. It is all about:

  • Confrontation: Collaborative leaders need to be able to handle conflict early. It is called constructive disagreement.
  • Influence: Collaborative leaders need to be able to share control and determine their strategy for influencing others
  • Engage and learn: Collaborative leaders can not be successful without the skills of networking and relationship building. It needs a recursive process of trial and error.
  • Integrative decision-making: Much of creating something novel and useful arises from combining existing ideas, including ideas that once seemed mutually exclusive.
  • Patience and Urgency: Creativity can not be scheduled. People need time to absorb and digest. To make integrative decisions possible, leaders must know when to allow debate and discovery and when to move on to decision making and execution.
  • Self-awareness: A collaborative leader must be underpinned by a willingness to truly listen and be open minded to the view of others

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

There is more to Procurement than Savings

 

RP_waste_healthProcurement is a fairly new discipline. Having started in the mid 80’s where “the Chinese” made prices go down and Procurement had their glory because Procurement savings were a safe bet – we now have a new situation. What is the role of Procurement going forward?

THE NEW REALITY
After multiple rounds of cost reductions, customers and suppliers find themselves in a different world. Demographics in China have become unfavorable, and the cost of Chinese labor has more than quadrupled over the past 15 years. Growth rates are slowing or stagnating around the world, and politicians in Europe and the United States are promising to roll back globalization.

In this new reality, it is difficult to have much leverage over suppliers and pushing them further would mean that you would have to compromise on product quality, delivery reliability, or working conditions.

Procurement must create value in new ways and strategic innovation could be a helpful tool. In this blog post I am discussing ways in which you can start building your new value proposition as a CPO.

WHAT IS INNOVATION?

No matter whether you work in Procurement or anywhere else in the organization we are all dependent on our ability to bring in new radical ideas to the business. Not just the incremental ones but true radical ideas. We need to encourage to examine established beliefs, facilitate innovative solutions, and even challenge what is core. How can this be done in a structured way?What is innovation? This discussion is very important to have not only on an executive level but also with your employees. Quite often employees will think that innovation is something which is all about developing new products. It is much more than that. Frame the way you want to change the world. Start with defining and publishing innovation goals at the company level, and then ask teams for a breakdown into incremental, sustaining, and disruptive innovations.

This discussion is very important to have not only on an executive level but also with your employees. Quite often employees will think that innovation is something which is all about developing new products. It is much more than that. Frame the way you want to change the world. Start with defining and publishing innovation goals at the company level, and then ask teams for a breakdown into incremental, sustaining, and disruptive innovations.

INNOVATION IS MORE THAN PRODUCT DEVELOPMENT
Encourage your employees to think about innovation from different domains – it could be the 4 P’s: profit models, processes, products, and policies. By highlighting the different arenas in which employees can be involved with innovation, companies can help employees add value in areas where they have deep knowledge and a desire to get involved. Tools which could support you here is an innovation intent. If your company does not have an innovation intent – get inspired by the innovation intent which Grundfos has created right here. If your company has an innovation intent – describe to your employees how you expect them to translate that in procurement. By highlighting the different arenas in which employees can be involved with innovation, companies can help employees add value in areas where they have deep knowledge and a desire to get involved.

If your company has an innovation intent – describe to your employees how you expect them to translate that in procurement. By highlighting the different arenas in which employees can be involved with innovation, companies can help employees add value in areas where they have deep knowledge and a desire to get involved.

FIND YOUR CHAMPIONS AND DEVELOP YOUR INNOVATION CULTURE
Big businesses have large employee bases with clear reporting lines.  While this structure provides a number of benefits, it can also be a roadblock when it comes to creating a culture of innovation.  While a company may preach the benefits of innovation, middle managers are still tasked with ensuring optimal performance in the business’s core activities.  They have little desire or capacity to jeopardize core initiatives for unproven innovation efforts. Innovation champions can help employees find friendly spaces to test their new ideas, while also providing a level of protection against managers who are charged with focusing on the core.

NEW METRICS & FRAMEWORK
New initiatives can’t compete at the same level, and they are killed off before they’re given a chance to prove themselves.  Performance metrics often suffer from the same problem.  While employees are told to be innovative, their performance goals and compensation packages don’t create the incentives to do so.  Even the best ideas aren’t going to get any traction if the value they bring to the organization isn’t made clear.  And that’s often where companies fall short.  I recommend that you invest in innovation programs to bring in new ideas. You should give individuals the tools or frameworks to show why those ideas which have been generated are worthwhile. So instead of teaching employees how to come up with new ideas, you should rather teach them what to do with the good ideas they come up with, from knowing who should hear the idea to what that person should be hearing.

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

The Leaders guide to Creating Successful Strategic Partnerships

RP_Group_blueToday partnerships are becoming prominent growth engines inside many companies. Strategic partnerships are becoming more vital to the competitive advantage of businesses. Learn why it is important and get tools to create successful strategic partnerships in this blog post.    

THE NEW STRATEGY PLAYBOOK
Businesses operate in volatile and uncertain environments. If you want to win in this type of environment it is necessary to learn to explore opportunities with speed and decisiveness. Also, companies are increasingly expected to join with other organizations and companies, both public and private, to not only address social and environmental problems but also solve them. It is not trendy to own assets – rather it is trendy to have the possibility to access assets, hence leveraging external resources (forming strategic partnerships) rather than building it within the company is top of mind with many executives.

The value derived from the right partnerships can be huge. Partnerships can help fuel greater market share and give a competitive advantage. They can increase revenue, lead to stronger customer loyalty and enhance financial performance.

WHAT IS A GOOD STRATEGIC PARTNERSHIP?
A good strategic partnership according to Wikipedia is: “A party with which a long-term agreement is reached for sharing of physical and/or intellectual resources in an achievement of defined common objective”. A partnership to me is a relationship with shared economics, mutual successes, perhaps shared customers and with a culture to co-develop. Most importantly both parties must feel equitable, get good value from the arrangement, and the partnership is achieving its objectives.

TRUST AND INTEGRITY
What does it take to create a successful strategic partnership? Stefan Lindegaard, author of “Making open innovation work” mentions, that during a conversation with P&G’s Open Innovation Manager Chris Toen he listed trust and integrity as two of the characteristics P&G are looking for in their strategic partnerships. Also, he mentions good chemistry in the working relationship, responsive partners who align with purpose, values, and principles. Barriers for trust is typically something which we take for granted, something which is typically part of the way we live and have organized our business life. Most companies view external partners as someone who is paid to deliver a specific service rather than a source of co-creation. Large companies can be inherently skeptical about the capabilities of small companies, though we must not forget that.

Never before have we had access to so many tools to connect and collaborate with others. These connections are transcending organizational and national boundaries and inspiring so many new people to step into the responsibility of contributing to change. This generation of change makers is spreading out through all areas of society, business, and government, and they’re not going to compromise on profit versus planet versus people, they’re going to invent a new way.

The must do’s:

SHARED VISION AND PURPOSE
The best partnerships have a shared vision and purpose, clear objectives with defined KPIs, adequate resourcing and management for operationalising, and transparent, effective governance. Appreciation for and experience in partnership management is very helpful to ensure they are effective. Professional facilitators may be helpful for some partnerships where this experience is not available in the house. When drafting the vision it is important to define a compelling picture of what the partnership can achieve and specifically how it is going to get there.

STRUCTURE
I like to work with structure. Hence the first phase would be to choose the right partners. The second phase would be to introduce the new partnerships to the organization and the third phase is about managing the partnership. This will include the practical every day nurturing of the partnership to help it flourish and ensure that the partnership moves in the right direction.

A structure helps to:

  • Bring awareness and reinforcement about partnerships internally.
  • Helps build commitment and support from internal managers.
  • Keeps the value and goals of partnerships clearly in focus for internal managers and all stakeholders
  • Put’s in place a method to flag a problem and address it
  • Repeatability: Learn and repeat successes

If you would like to be inspired by other Strategic Partnerships then there is a list of 11 case stories right here.

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

Passion & Purpose – Leadership skills in the Collaborative Economy

rp_succes_man_blueIn the future, only brands, which work to make life better for mankind will survive. What is it that you can do as a leader in order to make life better for mankind?

Successful leaders are shifting their leadership styles and increasingly engaging the “mind, heart and soul” of people. Conscious Leadership is the new master competency to handle today’s complex business challenges in a world that is increasingly demanding “doing well by doing good”. Maximizing shareholder wealth and profit maximization are no longer the dominant driving forces in most long-lasting financially successful companies. Success is not just measured in profit but in the five Ps: passion, purpose, people, planet and profit.

“The Zen Master would say that profits are what happen when you do everything else right.”  — Yvon Chouinard, Patagonia Founder

CONSCIOUS LEADERSHIP
The conscious, authentic leader shows genuine responsibility, integrity, humility, honest communication, win-win negotiation skills, outstanding ability to collaborate with others, greater self-awareness and high levels of emotional mastery. Authentic leaders are visionary, thinking long-term, are brave and dare to say no to ideas, even though they may appear attractive in the short term. They are ethnocentric, have high emotional intelligence, put themselves in the front and show how it can be done. It requires great willpower, perseverance, good ability to set boundaries and competent, clear communication. Co-creation, co-action and collaboration comes into focus, and choices based on what is good for me, good for you and good for all prejudice. It has to have a purpose.

SOMETHING TO BELIEVE IN – PURPOSE

“I want to work for a company that contributes to and is part of the community.  I want something not just to invest in.  I want something to believe in.” – Anita Roddick, the Body Shop Founder

According to a study made by Deloitte (Millenial Survey) 77% of the new millennium generation choose to work for meaningful firms. Companies or organizations that work on the basis of meaningfulness has a greater purpose for their existence than just selling a product and attracts automatically better labor because employees can choose work that matches their own values and passion. The modern consumer is also very aware of corporate behavior, a trend that will only be strengthened in the future. As all people increasingly become more authentic, consumers will even more demand that companies and organizations are transparent.

It is important to create a culture and human understanding, which creates space for innovation, trial, error, learning and continuous improvement. There is a need for a learning process that allows success, and it is indeed rare that success will be created without trial and error. It takes strength to be – and allow – our own and others’ vulnerability and human imperfection. We must all earn to live our lives, do business, commit entrepreneurship and lead in a way that restores the balance between people and planet. We have to rediscover the connection, first of all know that each of us taking responsibility for ourselves first, then guides our closest. When we can manage ourselves and our nearest with authentic consciousness, we are ready to make a difference on a larger scale.

PASSION – ABOUT BEING TRULY SATISFIED
“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.” – Steve Jobs, Apple Founder and past CEO

Steve Jobs is the best example I can think of in relation to how passion can change and influence people’s life’s. An increasing body of research shows, that the best leaders not only demonstrate commitment to a worthwhile vision, they also have a genuine passion for work, ability to create trusting relationships and are able to maintain a focus on creating results, that are aligned with the larger organizational mission.

These leaders have realized that conventional KPIs are necessary but not sufficient to inform them about how things are. They also know how to see and interpret the intangible and immeasurable. These are skills that take genuine experience, practice and demand higher degrees of awareness and maturity. In this “creative economy” it is no longer enough to treat humans like material resources which can be commanded and controlled. Instead great leadership and a culture of learning and excellence is being created through the pursuit of higher levels of personal mastery and genuine self-actualization at work.

Passion appear when people are allowed to be themselves and, if we foster a community that focuses on cultivating and celebrating the individual’s authenticity. Authentic leaders understand that the more support and freedom people get to be authentic, the better they feel about themselves, which means that they are more passionate, produce better and more creative solutions and innovation – and provide a high degree value in companies and society.

The opposite happens when controlled by control and fear – people are absent and uninvolved, without passion and commitment. It can cause stress, depression, lack of vitality and sickness of body and mind. And society will not benefit from this individual innovative and creative engagement. It is expensive for society.

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

Your Circular Transformation requires Paradox Thinking

rp_circular_procurementHow can paradox thinking help you transform your company into a more circular one? What does it take from me as a business professional? 

Why circular?
Why do we need the Circular Economy? Isn’t it just another way of saying that we should re-cycle? As Andre Gide has said: “Everything that needs to be said has already been said. But since no one was listening everything must be said again”. We have to find a practical way to solve the world’s emerging resource crunch. Reserves of key resources such as rare earth metals and minerals are diminishing, while exploration and material extraction costs are rising. The current ‘take-make-dispose’ linear economy approach results in massive waste.

It has been stated that 90% of the raw materials used in manufacturing become waste before the product leaves the factory while 80% of products made get thrown away within the first six months of their life. This, coupled with growing tensions around geopolitics and supply risk, are contributing to volatile commodity prices. A circular economy could help stabilize some of these issues by decoupling economic growth from resource consumption.

Leadership is key
Ground-level innovation in this field is being driven by large corporations who are piloting business models based on leasing, product performance, remanufacture, and extended lifecycle thinking. These companies have the power to effect change quickest, given their geographical reach through global supply chains, and their efforts are likely to accelerate with the emergence of a business-led platform for collaboration. While the circular economy also relies on the involvement of SMEs, take-up in this sector remains limited. A recent survey of nearly 300 small businesses across England, France and Belgium found almost 50% had not heard of the concept. Whereever you are in terms of companysize – it is important to have the right mindset. Developing a circular business model is not a matter of choosing between one approach or the other. It is simply a matter of working with the paradoxes.

Paradox thinking
A paradox is a contradictory statement contrary to common beliefs. While a dilemma is a challenging choice between two alternatives. True leadership crushes paradoxes by challenging the general outlook and thereby change the way we think. A leader which manages paradox thinking uses logic, personal knowledge and recognizes creative patterns. Hence people who have the ability to master paradox thinking has a much higher value for the company. In the fast changing business environment of 2016 it is no longer enough just to put your focus on a well run optimized machine. You will need to find solutions to the paradoxes surrounding you. The resource paradox is one of the many paradoxes that needs to be solved. In relation to the circular economy make sure you develop paradoxes and not dilemmas.

 

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

 

Is Procurement Getting Disrupted?

 

A lot of business stories show that simply managing well, developing quality products and building up well recognized brands is insufficient to remain in the top. “Disruption” is the buzzword used. It will probably be the business word of the year as it is on everybody’s lips.

The key question is why Procurement should take disruption seriously in order not to get “disrupted” and how Procurement executives should act.

What is disruption?
Clayton M. Christensen describes disruption as:

“A process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others”.

Translated – it is all about the fact that there is a new logic in strategy. Typically companies define their most important competitors as other companies within the same industry, meaning companies offering products that are a close substitute for one another. What is happening is, that in more and more market’s we will see industries competing with other industries and entirely new categories. By that I am not saying that the industry is irrelevant, I am just saying that using industry as a level of analysis is not enough any longer. Also, the competitive advantages once achieved might no longer be an advantage as they can be copied quickly, challenged by new technologies or challenged by customers seeking other alternatives.

Should Procurement take disruption seriously?
I would rather ask the question – what will happen if Procurement will not take disruption seriously. Typically when a company has achieved a solid position within an industry the company is encouraged to optimize their people, assets and systems around these advantages. The issue is though, that since these advantages are not sustainable it might not make any sense. Instead companies should focus on leveraging ephemeral things such as deep customer relationships and the ability to design irreplaceable experiences across multiple arenas. Where is the role of Procurement if it is not in optimization, that is the big question in the light of the new logic in strategy.

High potential for Procurement
Procurement still has a vital role to play. To win in these volatile and uncertain environments executives (from all over the company) need to learn how to “exploit short-lived opportunities with speed and decisiveness” (Rita McGrath; The end of Competitive Advantage, Preface). Collaboration with all types of partners, and their willingness and ability to share their knowledge, will be crucial and key to a successful development and execution of new disruptive concepts. Bearing that in mind, Procurement has an opportunity to facilitate that supply partnerships emerge from a pure cost orientation towards a strong focus on joint collaboration and innovations. For Procurement to be successful in these innovation oriented supply partnerships I believe, that it requires new models for relationship building and collaboration. It also requires procurement to integrate across the whole organization.

In many companies it is typically a challenge to include suppliers in the front end of the innovation process. Procurement teams are often disconnected from the functions they serve and the markets they engage with. They are not fluent in the nuances of the business and hence lack experience and authority. Also in many companies, Procurement are used to “innovation” being an internal capability and are hence not used to working together with external partners on delivering innovation.

How do executives act?
Summing up all of the above has significant implications for how Procurement professionals are trained, developed and deployed in future organizations. You might not know what kind of people you will need. That is why Procurement executives should hire for the ability to acquire new skills (learnability) and not for existing skills. As a Procurement executive I believe you will be measured on your ability to move from advantage to advantage and prepare for the needs that lies ahead.

To do that you will need a flexible learning environment. Take a close look at the Procurement Academy. A flexible solution where you can train your staff to what is required for their role, and in line with your business challenges and strategy.

Release the (supplier) innovation potential through visions

RP_lightbulb_dot_green

In all companies there is a great potential hidden in the whole innovation eco-system. The possibility to create extra value in the early stages of the value chain, where solutions are developed, are inexhaustible. To my opinion it is almost only the fantasy that sets the limits for what can be achieved.

I believe that one thing where a lot of organizations can improve is by setting common visions as a strategic tool. These should be valid not only for the development organization, but also for all other parts of the organization.

Including Procurement.

Think about it in your own organization. If you took a step back and looked at your own achievements. I am sure you could come up with some suggestions to how you could improve your approach and create more innovation possibilities. This is the easy part. The hard part is to actually execute on it. Lot’s of organizations have made improvements in the development organization. The leadership team have made improvements in terms of leadership competences. People with “knowledge to innovate” have improved their professional skills. The challenge is often to make these competences work in one common direction. Quite often I find, that professional competences (expertise) and individual goals fill up the space, compared to the company’s goals and the common goal and the ability to integrate.

In order to get maximum innovation value it is necessary to have one vision. A vision which is actually value driven. Perhaps even KPI driven. It should be focused around the customer and the value that can be created for the customer. It has to be the vision, the dream you could say that everyone should work towards.

When talking about supplier innovation it is important to integrate the supplier into the process by communicating the company vision to them as well. By loading them with knowledge about customer expectations. Imagine a customer-supplier relationship where they are motivated to take even more responsibility for innovation and for driving radical change? This could potentially be a game changer for your company. Though, the common vision is key for not only the whole organization, but also for your suppliers.

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform. 

 

The Circular Economy – An Innovation Opportunity

RP_building_strategic_approachIf you ask the new generation what they think about the Circular Economy they will most probably tell you, that it is cool and it is disruptive. Why? Put in short it offers those who are spirited to take flight with new enterprise, and those who are disillusioned a chance to re-engage with their future. (Check out Maxine Perella’s study here)

Circularity starts to mainstream – so what can you, as a company, do to tap into the creativity of the new generations? The answer is simple: start embracing open source – because the young people are already there. They are ready to go for disruptive innovation.

DISRUPTIVE?
The theory of disruptive innovation was invented by Clayton Christensen, of Harvard Business School, in his book “The Innovator’s Dilemma”. Mr Christensen used the term to describe innovations that create new markets by discovering new categories of customers. They do this partly by harnessing new technologies but also by developing new business models and exploiting old technologies in new ways.

He contrasted disruptive innovation with sustaining innovation, which simply improves existing products. Personal computers, for example, were disruptive innovations because they created a new mass market for computers; previously, expensive mainframe computers had been sold only to big companies and research universities.

While sustainable innovation is more disruptive, it is also considered to have a stronger case for change than other forms of innovation.

DRIVERS FOR CHANGE
The drivers for change include:

  • Changing consumer aspirations and behaviours, such as Millennials not wishing to own vehicles and instead focussing on how to optimally get from A to B.
  • Customers and consumers expecting companies to look after the environment and community – with some consumers preferring products with provenance“Sustainable innovation has a good bottom line benefit”
  • Increasing staff expectations of their employers (and managers) to share their personal values, ethics and purpose
  • Environmental and social externalities being included into business cases
  • Cleaner technologies (such as renewable energy)
  • Shareholders equating good sustainability performance with good management
  • Communities increasingly challenging companies’ licence to operate (and licence to grow)

COLLABORATION IS KEY
More disruptive business models unlocking different types of value require greater collaboration to succeed. This can include collaboration between and among individuals, divisions, and organizations. In some instances one company alone cannot succeed and must work with its peers because the challenges are bigger than any single participant’s resources. In other cases, uncertainty about the future is causing companies to spread their innovation investment across a broader portfolio of initiatives, so co-funding is needed.

Check out this blogpost: The 5 pitfalls of sustainable supplier collaboration.

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.