Rewiring the Procurement Black Box (Without Being the Bottleneck on Change) (Bruce Haupt)

Procurement is a black box of NDAs, secret evaluation committees, and obscure and complex processes. *It’s notoriously boring.* What’s more, many political donations come from longtime and potential contractors, and politicians and civil servants can face consequences for meddling in procurement. It’s messy, but the playing field is ripe with opportunity.

Procurement is where value can most easily be unlocked via improvements to service delivery and in terms of savings and revenues.

We literally buy better outcomes via procurement. But where to start? At a high level, I think about leadership and data.

1. Co-creating a vision for procurement that harnesses diversity and empowers teams to enact real change

Leaders don’t have the time or know-how to fix the challenges of procurement on their own. Even if they did, the changes they might drive (or force, or micro-manage) to implementation often snap back to business-as-usual after leaders focus elsewhere or leave (and they may be out the door sooner for their efforts).

The leader’s role is framing the problem, getting the right people to the table, setting the tempo for action, and asking for more.

To understand the complex governmental onion that is procurement, it is critical that leaders draw in an eclectic and diverse mix of people with a broad range of expertise and perspectives—and then empower them to make real change. While the outcome will become less certain when loosening the reins of control, something better and more sustainable for your organization and community will likely transpire. You’ll certainly understand the problem in more well-rounded ways than you would otherwise.

What does empowering your people look like?

• Don’t tell your procurement team to do or achieve differently with the same limited resources. Dedicate full-time staff to these issues and involve government leadership, purchasing, and operating departments. Then invest in them.
• Ask what you can do to enable the team. What do they need from you? Do they have the skills and expertise? Is the mission clear? (e.g., have you asked them to focus on all of the following simultaneously: compliance, process management, timelines, reducing costs, service performance, innovation) How are they rewarded? How much risk are they exposed to? What’s their exposure to senior leaders and strategy? Are you actually listening to them? (you are not solving the problem, they are!)
• Find innovative peers and latch on. Innovation is a lonely journey. You’ll go farther with mentors and companions. If there’s a network, invest time there (you and a cross-section of your people), and share as much or more than you get in return. Openness and trust begets openness and trust, which gets you knowledge and support for implementing complex change.

When Houston kicked off our procurement transformation effort and partnered with one of the top global consulting firms for expertise, departments and staff were excited to improve processes and build out staff capabilities. While we didn’t fully realize this ideal (largely because we paid our advisors on contingency—a percent of actual realized savings—which unsurprisingly led to a focus on reducing contract spending), we did catch a glimpse of best-in-class capability-building offerings.

Our people have so much to offer too, and Houston’s Lean Six Sigma program demonstrated that. Outside of our procurement effort, we built an internal program that trained ~3,000 staff, achieved accreditation, and generated dramatic process improvements and millions in impact (and new career trajectories for many!). If you can’t empower people and scale up your number of change agents, then the bottleneck on positive change is you.

2. Data is power

Peter Drucker said, “What’s measured is managed.” We often don’t really measure procurement, or ask what’s important. When Houston built a performance management and reporting program in 2012, the first step was to survey 15 leading cities nationwide on various approaches to performance management and what worked (and didn’t) for peer cities.

For instance:

• Less measures > hundreds or thousands of measures.
• A problem solving way of working > accountability (gotcha) culture.

We also learned how many city programs were evolving into hands-on internal consulting efforts to drive change (which is how we started), and how cities like New Orleans were pioneering subject matter specific “CitiStat” programs (e.g., BlightStat). It was in these conversations that we also learned how a city like ours could build its own “lean” capability building center (i.e., thank you for the idea Denver).

A few lessons learned from our experiences:

Build a Targeted and Data-Driven Procurement Transformation. BlightStat, for example, puts executive and organizational attention on specific problems, gathering all relevant data, and assembling a cross-functional and extra-governmental group to tackle a problem on a regular basis. Hands down, it’s much easier to drive change when you are anchoring yourself to data (both quantitative and qualitative).

Invest in Data and Tech. Data was key as we tackled procurement in Houston. We pushed our business intelligence environment to its limit. With highly skilled analysts and buy-in from our departments and purchasing team, we were able to extract atomic-level data on our procurements. We could then slice and dice the data to see how many paper clips and Adobe licenses we had citywide, and who was getting the best deal on them.

In Harris County now, we’re far from the finish line and one of our significant challenges is data and reporting capabilities. Currently, I can only get purchase order (PO) or contract-level data. That doesn’t cut it (but we are working on it).

Painting the current state procurement picture likely will require front-end IT investment. Until you have data, look to your most painful processes and biggest contracts. Probe the tried-and-true categories (e.g., electricity, fleet, cell phones, chemicals, temp staffing contracts, etc.). Know, though, that you’ll have difficulty seeing the forest or trees until you have the right systems and perspectives from your data.

Reality-check your data and priorities. Don’t lose yourself in the data and specific opportunities. This is why engagement with diverse stakeholders is important. Explore with your community and partners how procurement intersects with your strategy (check out Sascha Haselmayer’s work for more). Also continue to check-in with your peers and with networks of other innovators.

It’s important to note that you won’t “fix procurement” in six or 18 months. However, you can obtain many victories on the road to long-term transformation. Remind your stakeholders of the vision. Give them what they need. Keep the pressure on. Celebrate successes.

Extra points if you can lead the procurement transformation without saying the word “procurement”. Good luck!