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Art of Procurement Podcast: Automating the Negotiation Process w/ Edmund Zagorin

 
 

During ProcureCon Indirect West in September Bid Ops CEO Edmund Zagorin sat down with Philip Ideson from the Art of Procurement Podcast to discuss the impact of emerging technologies in sourcing and their importance in the negotiation process. Listen as they discuss the opportunities automation unveils when introduced in complex sourcing events.

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THE FUTURE OF PROCUREMENT Q&A PANEL: HAL GOOD

THE FUTURE OF PROCUREMENT Q&A PANEL: HAL GOOD

I think one of the exciting things that's happening is the whole cognitive idea where we basically don't allow things to break down, but we basically rely on smart sensors to be able to do predictive analysis and to be able to sense when there's a problem and intervene with no downtime.

Bid Ops Interviews Brent Maas for #TheFutureofProcurement (Part 2)

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Edmund Zagorin: That’s terrific because I was going to ask about what you recommend for writing procurement job descriptions next.  You actually anticipated the next two questions that I had teed up here.  But to zero in a bit, I think what jumped out at me from your description is the term “cross-functional”. There are certainly times where one gets the sense that in procurement, along with local government and even corporate enterprise positions as well, the sense that people have their lane, have their channel, have their silo, and they’re very much encouraged not to look beyond their purview to build value and create opportunities for the organization. And the reason for that is that, if people have a clear understanding of what is and is not their responsibility, then there won't be conflicts over authority, or ambiguity over responsibility and accountability, which can cause frustration. Silos don't exist in a vacuum, after all -- they evolved to meet a need -- they help people have good interpersonal communication. But now, particularly as you look towards the adoption of technology platforms, a lot of times the value that is most delivered is beyond a single role or function, e.g. it is "cross-functional." I saw this in some of my work at Responsible Purchasing Network looking at sustainable procurement initiatives for local government. There the value is really to the organization, in some cases to leadership who have set aggressive targets, for example, for carbon reduction or waste reduction, etc.  But in some cases, when such an initiative it is one small part of too many people's jobs, then it fails to gain traction among people who are very focused on what is or is not their core area of responsibility. This might be a long way to a ham sandwich, but my question is how do you see procurement leadership working against these silos, working towards this "cross-functional" idea where everyone is part of a team that has strategic enterprise value and customer service as its North Star, and how do you hire for that kind of a team? 

Brent Maas: I tend to think in terms of outcomes.  Let’s talk about the hiring process itself, for example.  Having conversations where they talk about outcomes- how did what you did impact your staff, your teammate, your superiors, other departments, etc?  I think engaging in the conversation is really about hearing whether or not folks are relatively fluent or articulate in talking about their understanding of impacts and because of the job that they do, they are contributing in some manner to the organization.  If their experience is restricted to a particular category of product or service and they don't seem to indicate much awareness of any other attribute of organizational function, in fairness, you can ask some questions, probably reviewing to probe a little bit to find out whether they hadn't been given an opportunity to form much awareness and are therefore ignorant (I don’t mean that in the negative connotation), especially in an entry level type job.

But the more they could reflect the capacity to understand- “I recognize there’s multiple stakeholders across the organization and I can’t figure out why we can’t, to use your earlier example, seem to move the needle on carbon emissions related programs?  Why aren’t we doing that?" Well, there are a lot of reasons - not just within single organizations, but across communities we see problems like this, where getting groups of people to be motivated enough to take difficult actions and make tough choices is what leadership is all about. And I can come up with a bunch of reasons but I think part of it is having a conversation with folks to help facilitate their thinking to go beyond what their immediate task is or what their immediate charge may be. There are some folks that can’t go beyond the hypothetical or get into a creative mode where they are conceptualizing beyond the black and white, and that’s OK, you need people like that, too.  But in terms of looking for those you might develop into roles that could conceivably be formal leadership roles, you are looking for those who naturally drift into talking about problems and challenges from multiple perspectives, seeing a problem like an organization. And then cultivating that person and giving them opportunities to get more insight and understanding into the functionality and the processes and culture, the strategic goals throughout the organization. Then hopefully they express “Hey, I have an interest in pursuing this further or any opportunity for me to contribute, but I haven't been invited to participate.” And then you start getting into, what I think, are issues for organizational leaders to ensure that they are developing the culture that allows for that kind of development opportunities for his or her people. That may or may not exist, but asking: how can we create opportunities for people to own the outcomes of their own work? It’s not always the procurement piece at all, it’s really very much about management issues - how does the organization manage power?  How do organizational leaders influence the environment in which the work is being conducted? Are you helping your people perform in a highly effective manner? Do your people have the desire to go above and beyond?

Edmund Zagorin: That’s a pretty profound set of questions. And we're starting to see a shift in a lot of organizations, where it's about of a culture of opportunity discovery.  If people can find problems, brainstorm creative ways to solve them and then get the backing of leadership to execute, that's the sign of a great culture.  Because sometimes the best ideas in an organization come from people who are closest to the work. A true leader's realizing that suggestions from workers are not a challenge to their authority, and that these suggestions can actually be a source of tremendous value. Now, of course not all of those ideas are going to be that great, but some of them will. And having the patience to hear people throughout the organization on things that they want to try and even create,  in some organizations we're beginning to see the emergence of something like a Chief Innovation Officer or someone who is simply tasked with allowing the organization to execute on opportunities for value. What is that role if not: get some projects, define roles and responsibilities, brainstorm what success looks like, define metrics, define outcome scenarios and then once you've gotten decently close to clarity, then begin executing. I think that that is partly due to the rapid advances in certain sectors of technology, but I think it's also due to just a general recognition that people genuinely prefer to work for an organization that is willing to at least hear them out on an idea and potentially, that could be an area where they can see themselves in the organization as part of having launched an initiative.  Everyone ends up benefiting from that approach..

Brent Maas: Certainly the opportunity to meaningfully contribute to something new or to elevate an existing program is a very rewarding kind of experience.

Edmund Zagorin: Absolutely. I just looked at the time and realize that I want to try and stop close to the top of the hour here. To close out, I had two quick questions which are more take-aways from this larger picture that we're painting.  So the first question is what is one thing, it could be a device, machine, institution, process, really anything that exists in public procurement today that you think won't exist in 10 years?

Brent Mass: This is making my brain spin because, particularly in the public sector, the less well off agencies will hang on longer to legacy everything than would a bolder and well-funded and well-managed agency.  We know demographically there is a higher percentage of college grads than was 30 years ago anyway, look forward 10 years, the number of college grads in management roles will probably be a bit greater than it is today.  There are a number of things I wish would go away, in some manner. What should go away is making decisions in a vacuum - I think there’s no reason that any acquisition decision should be made without having ready access to comparative price data, at a minimum.  There is just so much latent data and should be sufficient to provide an expansive resource to make comparisons. The challenge is to bring together that data from the myriad of disconnected sources and being able to make that data available to whomever might be interested.  I think acquisition decision-making will be gone - people will set parameters but computation will do much of the rest. Anyone who continues to do that will be because they have stuck their head in the sand and refuse to pull it out.

Edmund Zagorin: To me, it seems almost counterintuitive to me that everyone doesn't already have access to at least some form of benchmark for that, but I hear you on that. Procurement that doesn't beat the market, at a minimum, I think will start to receive more scrutiny, especially in the context where it seems like there's an unfulfilled mandate for free and fair competition.  

Brent Mass: I’m speaking about making purchasing decisions with comparative data, whether you are "in procurement" or not.  Anybody might engage in the activity, specifically authorized or not. Overall I think people want to make more informed buying decisions, and I think that will involve a lot of changes.

Edmund Zagorin: Last question here - If you were to make a two or three point checklist for any procurement leader of things to make sure that you're either doing over the next couple of years or are doing regularly, what's on that checklist for you? It could be anything from a type of meeting or a type of administrative procedure to looking at a particular category. In other words, where are some low hanging fruit that you think potentially are no-brainers across some of the portfolio of change management initiatives?

Brent Mass: It really comes down to data.  What am I doing to aggregate the data to be most helpful for me to be able to assess performance. Outcome, as it relates to performance outcomes, as well as procurement specific, what is that data and how can I go about getting it?  And in particular, what I have in mind contextually, is that, at minimum, you should work regionally, whether that’s through local government or if you have to do direct outreach, work with multiple agencies share the data and extract from that data what would be most informative to you in helping your agency.  It’s about data analytics. Number two - How are you aligning your activities with the goals of the organization? Are you talking with your people about that regularly? Do they understand how what they do aligns with what you are trying to do? Number three - What are the ideal activities or things that “if only we could do” this would help us be closer to meeting those goals?

Edmund Zagorin: That last point was particularly helpful - asking: what if. Taking initiatives to look outside your department, lift your head up and see the bigger picture.  Incitements to do that are, in 2018, much needed and as we look towards the future, there's going to be more opportunities for folks who get good at doing that regularly and build a culture that honors and rewards seeing that bigger picture. So I want to just say a big thank you from the team at Bid Ops for your time today.  It's been a pleasure as always, getting to chat.

Bid Ops Interviews Brent Maas for #TheFutureofProcurement #NIGP (Part 1)

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Edmund Zagorin: First, just a quick introduction, Brent Maas has really been the director of partnerships for NIGP for well over 13 years and has been involved with the organization, far and beyond that developing best practices, and building out the community for public procurement officers across North America and then also helping develop and support the development of local, state and regional chapters of the organization across North America. Brent, is there anything that you'd like to add to that introduction just in terms of what you've been up to for the past 20 years in the world of public procurement?

Brent Maas: You covered a substantial chunk of it.  I’m not sure I can add all that much, being involved in processes and working with procurement folks in understanding their challenges and try to apply thought and experience how to help overcome those challenges whether it through practice or tools.

Edmund Zagorin: Absolutely!  I think that intentionality and thought is huge, especially for a community of practitioners.  My first question in that spirit, what is the single biggest change as affecting public procurement over the next 10 years across the board?

Brent Maas: I think as much as anything, a capacity to recognize the value of the technologies that are being developed to support procurement and a capacity to adopt those technologies- the challenge there being many in terms of overcoming internal barriers, be they budget or staff because they either do not understand the value or otherwise are so focused on what would otherwise be process and transaction that they do not realize that the outcomes that reflect the actual effectiveness of what procurement can provide- it just misses them.  That is probably the biggest challenge or change coming in the next decade or two.

Edmund Zagorin: Absolutely.  I think that change management is definitely a theme that we see a lot whether it be getting younger folks involved in the profession or to your point,  adopting some of this technology and actually putting it to work in the procurement shop. Aligned with that, my next question is - how do you think leadership in some of these organizations is going to evolve and change to focus priorities around some of these big changes? How do you see leaders today setting the agenda around that?

Brent Maas: I think, first, to try to break down what we are talking about by leaders.  I think it is not necessarily just that individuals who carry Chief Procurement Officer or a similar title, although hopefully you would find what I would otherwise call “true leaders” in those roles.  Having said that, the challenge of leadership is that real leaders looking forward are not necessarily looking backward to compare themselves to what others are doing and then try to emulate that. Sometimes these things truly are new and innovative that they might, absolutely,  look side to side, but yet look backwards as a point of reference that can suggest things whether they be functions, activities, the quality even, that will inform what they are trying to create. All of that said, I think leaders of procurement, it's not about just how efficient and effective can we conduct the processes, but how can we influence outcomes for our organization to reflect the value that procurement brings.

Edmund Zagorin: For sure, I think that qualification of leadership is important because there are people that take leadership at different parts of the organization; someone setting the budget, for example, may set some some floors and ceilings in terms of the space that people can play in, in terms of trying out new things or being able to experiment with new technologies. One thing that we've seen in some departments is where folks have tried a technology solution once and for one reason or another maybe not had a great experience. And that can have the effect of creating a mentality where they say, “Oh, well, you know, we tried technology and now that didn't work, so we're now going where if it isn't broke we don't need to fix it.” This is the same mentality that views any technology project as part of IT, rather than seeing opportunities to leverage efficiency across tons of processes. If you see the gains that even a small change in process can make in the number of hours folks have to spend doing the type of work that nobody enjoys, the transformative benefits of these projects become obvious, whether you're at the level of the buyer/user or the C-level executive.

It's funny (this is just a very tiny digression) but I knew a couple folks who were doing local government consulting in the UK, right after Google Docs came out and they did a pretty good business that was just showing governments how to use Google Docs as a document management service, which at the time was entirely free. Google offered the service at no cost to anyone. It was just so people could play around with the idea of having their documents on the Internet and in the case of Google Docs on, on someone else's server, which at the time was a very new idea. And if you think about it, “implementing Google Docs” it’s a free service, so all these folks were doing was showing government officials how to use this free service, and making pretty decent money along the way. So you might think, “well, that's a little bit strange, since Google Docs is free” but the thing is that they were providing a very real value: change management for government administration. And at scale, for many of these governments, even using something like Google Docs for one or two projects to manage documents and collaborate on edits/revisions virtually was a total gamechanger in terms of productivity and reducing the number of meetings; it really streamlined their process.

Brent Maas: That's true, I do think there's a huge value from getting a partner that gets your organization excited about exploring new processes. It’s funny, the description of Google Docs, reminded me of early word processing, way before the dominance of Microsoft Word.  I don’t know if you’ve ever had the joy of working in that environment but that’s how it was- there were server based apps and everybody was accessing the same things from dummy terminals.  The principle re-surged thirty years later; cloud computing. We can talk about leadership and the challenges of even developing younger folks in an environment that does not give those types of things in the status quo.  It’s one of the things demographically which has already been recognized- the demographic shift that we're seeing in terms of the number of low level procurement positions that are being eliminated, yet, the incremental gain in the number of positions at the management or senior management level and what is all of that pointing to?  In my mind, it’s a reflection of the processes that can be handled by technology and a demand for the professional knowledge worker who is building their experience in the procurement environment and everything that means. The everything being not just the steps taken to go about awarding a contract or even a contract management but it’s about testing what were the outcomes associated with the process and then the actual “what did we get” and how effectively did that meet the needs that we said that we had.  And did we get any derivative benefit or on the other hand, did we pay more, in the end because there were unexpected issues along the way? Like “We needed to hire staff and pay them. We didn’t think about that.” Even more, on the front end, before processes start, based on what might come to pass. We have to ask: "Is what we’re trying to achieve substantially better than what we achieved before by virtue of doing this, and if we see the benefit then do we need to create a new position in our organization in order to be more successful?”  At least more successful than it could otherwise have been. And that is so much of what procurement is about and yet procurement has been defined, certainly, in terms of transactions. You ask:“Where are we going and how do we go about getting there?”

The other day I came across this job posting for- they did not call it a Chief Procurement Officer, but they called it a Strategic Procurement Officer. I thought that was very interesting. This was a major contract for government. They were looking for a Strategic Procurement Officer and the language they use in there, at its core, is what an ideal procurement professional looks like.  So much of it is aligned with what does a strong manager, organizational leader, look like? In terms of some of the things that they were looking for and it is outstanding strategic capability. “Yes, we need somebody with the procurement background but also someone who is analytical and is outcomes-focused. They need the capacity to be collaborative and influential. It's a total soft skill but it’s called out, it's called out specifically in this job posting. And why would that be? Because you're working across business lines- we need somebody who knows how to assess efficiency and expect to maintain to keep costs down while at the same time, maximizing efficiency and effectiveness and both the financial outcomes and the organizational outcome.  It's not so much about that you know how to put together a solicitation and can you manage a team of people who also will do that for you, no, it's not just those skills. It's really is about creating a role for folks who are extremely analytical, but also have that capacity to be very people oriented as well, at least be good with people and all the while knowing where you are going. What is it you are trying to achieve?. And it starts to blur the line between the traditional view of procurement is versus what it means to be an organizational leader.