Why Influencing Change?

Why Influencing Change?

Today’s Supply Chain professionals are facing numerous, varied and complex changes which often occur simultaneously.  Therefore, to be an effective Supply Chain leader, we must be good at influencing change.  We spend a tremendous amount of our time trying to influence the behavior of others – whether it’s up the organization with leadership, down the organization with our direct reports, across the organization with peers or internal stakeholders or outside the organization with customers or suppliers, or in the community, with friends and family.  When you think about it, leadership is really intentional influence.

The problem is we – individuals and organizations – are not very good at it.  An Arthur D. Little study reports that 85% organization change efforts fail to meet quality cost or timing goals.  Deloitte’s Global CPO Survey for 2014 found that “Some 68 per cent [sic] of respondents still describe their internal influence as ‘mixed‘” meaning that there are significant missed opportunities.  The Corporate Executive Board reports that being an Influencer is one of only six behavioral competencies that set strategic procurement staff apart.  Similarly, University of Tennessee’s 2012 white paper entitled “Skills and Competencies That Supply Chain Professionals Will Need” reports that “Inspiring and Influential Leadership” is one of five critical skills.  We must get good at influence!

There is a huge cost if we fail at this challenge.  We risk the vanishing ROI as our project misses quality, cost or timing goals.  There is the lost opportunity cost from the project we neglected while pursuing the failed initiative.  What is the cost of our damaged reputation with leadership, internal stakeholders, customers and suppliers when we fail to influence change?  Since no one likes working on a failed project, deteriorating morale can easily result in regretted turnover.  Finally, there is organization cynicism.  We’ve all heard it: “This is another program of the month.  If I just sit tight, this too shall pass.”  When this attitude becomes pervasive you have organization stagnation which no business can afford.  Unfortunately, research shows that fewer than one in eight workplace change efforts produces anything other than cynicism.

Traditional change management has failed to deliver the degree, speed or sustainability of desired changes.  Why is that?  There are several reasons.  Traditional change management is very project management oriented, focusing on only the tip of the iceberg – things like strategy, systems, process and structure.  While all of these considerations are important, they are insufficient to drive the desired change.  They fail to focus on what’s below the waterline which includes culture, norms and status quo behaviors – all of that organization resistance that undermines and impedes our change effort.  Organization change is really just the sum of changes in individual’s behavior, and that is the neglected area of opportunity.

For most failed change efforts, there is a conspiracy of causes and few of us have a systematic way of even thinking about this fundamental challenge.  We identify one or two causes of resistance and look for a “silver bullet” to tackle them.  Change agents have their favorite strategies to combat resistance such as more communication or training.   The reality is that we typically underwhelm an overwhelming challenge.

For any change to take place an individual asks themselves two questions: 1. Is it worth it (motivation)? and 2. Can I do it (ability)?  Influencing Change training, based on the New York Times bestseller, Influencer, focuses on changing individuals’ behavior utilizing a systematic framework for first diagnosing causes of resistance, and then strategizing how to both motivate and enable change.  It also equips the learner with skills and strategies to be successful.  For example, we tend to rely heavily on verbal persuasion to spur personal motivation.  Unfortunately, this is notoriously ineffective.  When we encounter resistance, we often share more information, putting people into a PowerPoint coma where all they hear is “wha, wha, wha, wha, wha”.  It is the equivalent of talking louder when a person who speaks a different language doesn’t understand.  Instead, we should be seeking Direct or Vicarious Experiences which help people to connect to values they already hold to make change more appealing and sustainable.

Influencing Change employs all Six Sources of Influence™, which address motivation and ability as affected by Personal, Social and Structural forces.  Research proves that by employing four or more sources of influence against the desired vital behavior you increase your success tenfold.

How’s your change management working for you?  If it leaves you wanting, and you want to increase your success tenfold consider Influencing Change.

-----------------------------------------

For more information contact:

Barbara M. Ardell
Vice President & Influencing Change Practice Leader
Paladin Associates, Inc.
BMArdell@PaladinAssociatesInc.com
(770) 315-1581

Making Sourcing Savings Stick

As a sourcing professional, my most difficult negotiations aren’t with suppliers but rather with internal customers. Based on conversations with my colleagues, that experience is not unusual. One measure of this challenge is “savings leakage” (savings negotiated but not realized). Aberdeen Group reports average leakage rates of 21% as Purchasing strives to implement its sourcing decisions. Best In Class companies experience about 14% leakage whereas All Others see 24% leakage ⁽¹⁾. Small companies experience up to 40% savings leakage ⁽²⁾. Net, there is a huge payout for improvement.

There can be several reasons for leakage:

1. Communication. The using organization is unaware of the award and continues buying from the incumbent.
2. Inconvenience. The new supplier’s process is inefficient providing a negative incentive to change (e.g. a travel reservation website which is difficult to use).
3. Fear of the unknown. There may be a long-standing, positive relationship between the supplier and the user. Alternately, the internal customer may not be thrilled with their current supplier, but at least the incumbent is “the devil they know”.
4. Lack of trust. The internal customer organization doesn’t trust the buyer to properly address non-price criteria when making sourcing decisions.

Regardless of the reason, leakage represents innumerable hours of wasted effort and, more importantly, millions of dollars in missed bottom line profit improvements.

Communication breakdown is relatively easy to address, particularly with the use of eSourcing, eProcurement, Spend Analysis and on-line contract management systems. The other three reasons require a deliberate process and up-front planning. It’s all about effective change management! Successful sourcing managers don’t wait until after the award to sell their internal customers. This is particularly critical in companies where business units are relatively autonomous, and not subject to corporate edicts.

Effective sourcing professionals follow Stephen Covey’s advice: “Begin with the end in mind”. What does that mean? It means involving key stakeholders throughout the entire sourcing process so they will support implementation of the ultimate award decision

Specifically, what does this entail?

1. Ensure upper management support for sourcing initiatives and savings goals.
2. Initiate a comprehensive and methodical change management process early on.
3. Work with stakeholders to clearly define decision criteria with appropriate measures.
4. Conduct the RFP/RFQ with stakeholder input and involvement.
5. Gain stakeholder support for a comprehensive implementation plan and enforce accountability.
6. Monitor expenditures over time to identify any leakage.

Sound like a lot of work? It is. However, it often eliminates months of wasted effort on sourcing decisions that don’t stick. Why is it that we never have time to do it right, but we always have time to do it over? Is this formal process necessary for all savings initiatives? No, but the thought process should be applied to all situations. Thinking through this process allows you to determine the extent of the effort required. One size does not fit all.

Addressing stakeholder fear, lack of trust and potential inconvenience through a comprehensive change management effort and improved communication will have a tremendous impact on savings leakage.

Click here to access a more detailed write up or here for a podcast on the topic.

⁽¹⁾ Aberdeen Group. “The Advanced Sourcing & Negotiation Benchmark Report. January, 2007. http://aberdeen.com/aberdeen-library/3857/RA_AdvancedSourcing_3857.aspx

⁽²⁾ Aberdeen Group. “Sourcing Challenges for SMB”. August, 2007. http://aberdeen.com/aberdeen-library/4420/SI-smb-sourcing-challenges.aspx

This article was originally published on E-Sourcing Forum:

http://www.esourcingforum.com/archives/2010/04/13/making-sourcing-savings-stick/

Strategizing for Successful eSourcing Implementations

Your company has wisely contracted for an eSourcing solution. You are relying on it to deliver process improvements and sorely needed cost savings. You’ve trained your people, but you recognize that the challenge has just begun. Internal adoption is key to your success.

The challenge you face is culture change. It is the biggest obstacle in any software deployment. Less than 15% of your user base will be “early adopters”. The majority will take a “wait & see” approach, and 10% or so will be “foot draggers”. There will be resistance because the implementation requires behavior changes for all involved.

Experience across numerous customers representing a variety of industries has identified some levers which can help to accelerate user adoption. These are:

• Goals and Measures – Creating a “pull” enviornment
• Organization – the right structure, roles and responsibilities
• Processes – documented best practices

Leadership creates a “pull” environment by establishing Goals & Measures and holding people accountable. Since everyone has more to do than they can possibly get done, they must set priorities. So how do they decide what gets done and what gets left undone? It is human nature to seek pleasure and avoid pain. Therefore, what gets measured by leadership gets done! That’s why goals and measures are critical for internal adoption.

While goals and measures are important they must be supported by the proper Organization. This is not merely about structure – the boxes on the organization chart. You must also have clearly defined roles and responsibilities with the positions staffed appropriately. Key roles include:

Champion – He/she establishes and communicates goals and measures, provides necessary resources, breaks down barriers and holds people accountable.

Master User – This individual “puts the feet” on the implementation. Required skills include: Leadership, Change Management, Project Management, Sourcing & Communications. He/she is the liaison with the Champion and becomes the on-going center of eSourcing expertise. A strong Master User is a key indicator of success.

Super User – In larger organizations, the Master User can’t do it all. The Super User is typically an on-site resource who teaches tools and tactics, models best practices, coaches other sourcing professionals, shares learnings within and across the organization, and identifies barriers and improvement opportunities.

Sourcing Professionals – The sourcing professionals do what they’ve always done – apply sourcing expertise to deliver cost savings, cycle time reductions and process improvements. However, they perform these tasks with the assistance of an eSourcing solution supported by new processes and best practices under the tutelage of the Master and Super Users.

The third lever for internal adoption is Processes. A quality tool called the P-D-C-A cycle (Plan-Do-Check-Act/Adjust) is useful for this purpose.

Plan includes: creating an implementation project plan, user training and spend analysis which enables sourcing pipeline development. There is a tendency to shortcut planning and jump to action. This typically results in significant frustration and rework.

Do refers to the actual implementation. This involves the application of processes, best practices, templates and checklists to conduct successful eSourcing events. Most eSourcing solutions provide templates and allow you to embed processes and best practices into the project management feature of the solution.

Check relates to tracking your progress. Are you achieving the goals established on both a program and project basis? Your goals must be supported by specific measures against which you track.

Act/Adjust focuses on continuous improvement. This includes periodic reviews where individuals share learnings with each other, identify improvement opportunities, and develop an action plan. The cycle then repeats.

Using the three levers: Goals & Measures, Organization and Processes, helps to embed eSourcing into your organization’s culture. Ignoring these important considerations will impede your efforts thereby delaying the efficiencies and savings that are critical for survival in today’s economic climate.

Barbara Ardell - Vice President - Paladin Associates

This post was originally published on E-Sourcing Forum at: http://www.esourcingforum.com/archives/2010/04/01/strategizing-for-successful-esourcing-implementations/

Making Sourcing Savings Stick

Click here to listen to the podcast on this topic.

As a sourcing professional, my most difficult negotiations aren't with suppliers but rather with internal customers. Based on conversations with my colleagues, this experience is not unusual. One measure of this challenge is "savings leakage" (savings negotiated but not realized). Aberdeen Group reports average leakage rates of 21% as Purchasing strives to implement its sourcing decisions. Best In Class companies experience about 14% leakage whereas All Others see 24% leakage¹. Small companies experience up to 40% savings leakage ². Net, there is a huge payout for improvement.

There can be many reasons for leakage:

1. Communication. The using organization is unaware of the award and continues buying from the incumbent.
2. Inconvenience. The new supplier's process is inefficient providing a negative incentive to change (e.g. a travel reservation website which is difficult to use).
3. Fear of the unknown. There may be a long-standing, positive relationship between the supplier and the user. Alternately, the internal customer may not be thrilled with their current supplier.
4. Lack of trust. The internal customer organization doesn't trust the buyer to properly address non-price criteria when making sourcing decisions.

Regardless of the reason, this leakage represents innumerable hours of wasted effort and, more importantly, millions of dollars in missed bottom line profit improvements.

Communication breakdown is relatively easy to address, particularly with the use of eSourcing, eProcurement, Spend Analysis and on-line contract management systems. See article below for tips on "Stopping Contract Leakage". The other three reasons require a deliberate process and up-front planning. It's all about effective change management! Successful sourcing managers don't wait until after the award to sell their internal customers. This is particularly critical in companies where business units are relatively autonomous, and not subject to corporate edicts.

Effective sourcing professionals follow Stephen Covey's advice: "Begin with the end in mind". What does that mean? It means involving key stakeholders throughout the entire sourcing process so they will support implementation of the ultimate award decision.

Specifically, what does this entail?

1. Ensure upper management support for sourcing initiatives and savings goals.

• Review your corporate and/or business unit objectives, and be sure your sourcing initiatives support them.
• Communicate to leadership how your savings priorities support business objectives. Be sure to quantify and communicate specific goals and results. Enlist your management sponsor. Partner with Finance. Learn to talk like a CFO.

2. Initiate a comprehensive and methodical change management process early on.

• Identify Key Stakeholders. If the number is very large, look for the "thought leaders". These are the people who influence the rest of the pack.
• Identify potential areas of resistance and develop a plan to address. People resist change for a variety of reasons. Therefore, it is necessary to identify the issues and address them.
• Research customer business objectives and pinpoint those that can be fulfilled through your sourcing initiative.
• Have your project sponsor pre-sell the initiative to his/her peers, being conscious to link to customer business objectives.
• Develop a project plan that incorporates specific actions to ensure customer influence in the decision process. Communicate your objectives and project plan to internal customers highlighting their involvement.

3. Work with stakeholders to clearly define decision criteria with appropriate measures.

• Survey stakeholders to identify concerns, and to begin defining savings goals, award strategy (e.g. single source, co-source, etc.) and decision criteria. Decision criteria should include things like projected switching costs and non-price criteria (e.g. quality, service, etc.). Be sure to get agreement on the weighting of the various criteria.
• Summarize measurable decision criteria, and seek feedback from key stakeholders. If working with a subset of stakeholders, broaden the group for this step. Also, have your sponsor communicate this information to his/her cross-functional peers.

4. Conduct the RFP/RFQ with stakeholder input and involvement.

• Develop the RFP including survey questions which address the "must have" decision criteria. Identify survey evaluators. Validate the survey with key stakeholders. Listen to and incorporate feedback.
• Have evaluators score the surveys. Meet with stakeholders to discuss and resolve discrepancies, to identify the bidder "short list" and to determine how the RFP responses will be incorporated into the RFQ.
• Create the RFQ incorporating the RFP data and appropriate non-price decision criteria. Validate the RFQ with stakeholders. Confirm decision criteria and savings goals.
• Collect supplier responses and bids. If you're conducting an auction, invite stakeholders to participate in a practice auction and/or observe the live event. There is nothing like the excitement of a live auction to build enthusiasm and buy-in.
• Develop award recommendation consistent with pre-agreed decision criteria. Review with key stakeholders.
• Management sponsor should share the approved award decision, projected savings and implementation timing with his/her peers.

5. Gain stakeholder support for a comprehensive implementation plan
and enforce accountability.

• The plan should include actions, names and dates. Manage the plan holding people accountable for meeting commitments. Escalate outages through the project sponsor, if necessary.
• When the implementation is complete, CELEBRATE and share the glory! Acknowledge, publicize and recognize the cross-functional success.

6. Monitor expenditures over time to identify any leakage.

• You can't improve what you don't measure.
• Ideally, use a spend analysis solution to facilitate this process.
• Look for "root causes" of any leakage.

Sound like a lot of work? It is. However, it often eliminates months of wasted effort on sourcing decisions that don't stick. We recently followed this process at a client where there was great reluctance to formally source a spend category. The business owner valued their "partnership" with the incumbent and projected huge switching costs and disruption in order to move business. Why bother!?! By following this process, we identified important decision criteria and enlisted support of the business. They were 100% behind the ultimate award that delivered almost 25% savings with virtually no switching costs!

Is this formal process necessary for all savings initiatives? No, but the thought process should be applied to all situations. Thinking through this process allows you to determine the extent of the effort required. One size does not fit all.

Addressing stakeholder fear, lack of trust and potential inconvenience through a comprehensive change management effort and improved communication will have a tremendous impact on savings leakage. Yes, it requires an upfront time investment, but it also delivers a huge back-end payout!

Click here to read a more comprehensive article on this topic.

¹ Aberdeen Group. "The Advanced Sourcing & Negotiation Benchmark Report. January, 2007. http://aberdeen.com/aberdeen-library/3857/RA_AdvancedSourcing_3857.aspx
² Aberdeen Group. "Sourcing Challenges for SMB". August, 2007. http://aberdeen.com/aberdeen-library/4420/SI-smb-sourcing-challenges.aspx