The following article summarizes a recently published whitepaper on stakeholder engagement, developed from Denali Group’s ongoing research and the company’s 2011 Procurement Innovation Executive Summit. Complimentary downloads of Procurement Innovation Research whitepapers are available on the Denali Group website.
Quotes herein are from participants in the Denali Group 2011 Summit.
Today’s Procurement organizations are striving to push the boundaries of value creation and deliver beyond expectations. This innovation effort begins with “stakeholder engagement” that is collaborative, pro-active, and forwarding thinking; engagement that is motivated by stakeholder needs and tied to corporate-wide goals.
Customer Stakeholders: The Heart of Innovation
Summit participants collectively agreed on the maxim, "The customer is king.” They also agreed that to innovate and deliver exceptional value, Procurement must put internal customer stakeholders at the “heart” of innovation efforts. The following chart outlines characteristics that engender organizational innovation.
The Procurement Innovation Development Lifecycle
Below is a development lifecycle for managing innovation initiatives, as well as summary descriptors of each phase.
1) “Carpet Time”
First, learn stakeholder needs, wants, problems, and opportunities. We call this “Carpet Time” -- getting down and spending time in their environment. Only through time and trust building will you learn what counts to them. 2) Procurement Value Proposition
Next, match customer needs with Procurement’s talents and capabilities. A “Procurement Value Proposition” differentiates your services while communicating a customer-driven benefit. The value proposition should be developed with customer input, backed by services that are ready to go, and be well communicated. “You have got to get out there and brand – ‘Here is how we add value and why’” 3) “Sand Box”
Now, start a dialogue and work with customers to co-create solutions. We call this the “Sand Box”, which takes interaction beyond listening to active collaboration. It is an opportunity to understand their language and terms. “You have to understand what makes them tick; it’s different for each client group” 4) Innovation Prototype / Test
Next, prototype and test offerings. It is important to define successes and metrics before testing. Shared definitions ensure cohesiveness and link individual goals with team objectives. “Match performance to the metrics that matter... Create a matrix on what success looks like to the business unit.”
The goal is to learn quickly, respond to feedback, and be nimble. Failure is good learning tool and leads to new solutions. 5) Launch / Rollout
Launching programs is another opportunity to learn from successes and failures and build credibility. You may want to stage the rollout by geography, stakeholder group, or other variables. Stay flexible and make adjustments along the way. 6) Report, Reward, Re-Assess
Finally, communication is key. Report on metrics, reward successes, and re-assess programs. Make customer stakeholders the hero, but also promote value added by Procurement. Continuous success means ongoing listing, interacting, and co-creation. “We do a 'Show and Tell' with our stakeholders. We show key initiatives done for other business lines and ask, ‘What else could we be doing for you?’”
Becoming a Procurement Innovator
Becoming a Procurement Innovator involves mindset, organizational capabilities, determination, and follow-through.
To innovate, Procurement needs to shift from cost savings to value creation. Customer interaction is key.
Leading an innovation initiative can be a bit daunting, but keep in mind the opportunity and Procurement’s amazing position within the enterprise. "Procurement can connect the dots between suppliers, the market, and internal investment priorities."
Procurement certainly has the potential to drive exceptional value and to be a strategic weapon for the company.