Spend Matters welcomes a guest post from Barbara Ardell of Paladin Associates. This is the first in a two-part article.
What qualifies people to be called “leaders” is their capacity to influence others to change their behavior in order to achieve important results.
Have you ever worked on a project that failed to meet quality, cost or, timing goals? Be honest. I suspect that if you’ve been in business for any period of time you’ll answer “yes." Organizations are notoriously bad at change! Conservative estimates indicate that over two-thirds of organization change efforts fail, and procurement is not exempt from this curse. A recent Proxima & Nelson Hall study found that 98% of CFOs view change management to be a critical skill for procurement, yet 60% expressed dissatisfaction with procurement’s change management capability.
Today’s procurement professionals are faced with a plethora of complex change challenges.
Like you, I have battle scars from failed change initiatives:
- When sourcing corrugated containers in a soft market, we reallocated business every six months, identifying multi-million dollar savings. However, these opportunities required qualifications confirming compatibility with automated packing equipment. At the end of the award period, a large percentage of our qualifications were incomplete and the savings went unrealized.
- We had a persistent quality issue with a major supplier upon whom we were dependent. It had a severe impact on line speeds in a market where our product was on allocation. Despite best efforts, the problems went unresolved for months.
- A software initiative was over a year behind schedule with a tremendous cost over-run. This was compounded by the damage to customer “good will” as we announced repeated delays at the eleventh hour.
- Procurement recommended piloting an innovative new approach, Healthcare Savings Accounts, to HR (ca. 2000). No way; no how! Projected savings were 10% of current costs.
Does all of this sound familiar? It’s sobering to think of the wasted dollars, the lost opportunity cost, the frustrated employees, and the increasing organization cynicism. Employees adopt a “program of the month” mentality, digging in their heels with any new initiative because they know it will go away if they just stall long enough. W. Edwards Deming described these as “costs unknown and unknowable."
Change management is not a new discipline. My first exposure was in the early ‘70s working with organization effectiveness pros at Procter & Gamble. These were the folks who were instrumental in converting hardline paper mills to high commitment work systems. I studied at the feet of these masters and dutifully applied what I learned to numerous change initiatives. Some were more successful than others, and I achieved better than average results. But there was definitely room for improvement!
So what’s so different about the VitalSmarts’ methodology? Traditional change management focuses on strategies, systems, processes, and structure. While these are important, they are insufficient. They address only the tip of the iceberg, forgetting that it’s what’s below the water line that kills you. We typically neglect the underlying organization culture and status-quo behaviors that subvert change. Think of a change initiative as an app on your smartphone. It can be a great app, but if it’s incompatible with your phone’s operating system, it won’t work effectively. We often spend our time programming the app (fine-tuning strategies, systems, processes, and structure) without addressing compatibility with the underlying cultural operating system. This incompatibility causes poor results and fleeting change or even complete failure.
Successful initiatives recognize that organization change is the sum of individuals’ behavior changes. We must target the root causes of individual behaviors to achieve desired results. When pursuing change, we often dilute our efforts with too broad a focus. We can’t change 20 things at once! We need to zero in on the vital (high-leverage) behaviors – those few behaviors that, if routinely enacted, will result in the greatest amount of change. A vital behavior might be an internal stakeholder’s willingness to engage procurement in the sourcing process for marketing or legal services.
How do we identify vital behaviors? They lurk in crucial moments – the point in time when an individual decides to change, or not. Perhaps it’s when the time-pressed category manager decides whether to use e-sourcing or continue with email and spreadsheets. Or maybe it’s when the storeroom supervisor decides to order from his favorite supplier rather than the one under contract. Vital behaviors can also be identified by studying positive deviance – situations where there is unexpected success. Is there a particular individual or location that has demonstrated success where others have failed? Perhaps the Atlanta plant has significantly less savings leakage. What can you learn from these aberrations? Finally, vital behaviors can be uncovered by spotting culture busters -- behaviors that are currently taboo or punished, or challenge cultural norms. For example, is it acceptable to speak up when management dictates an unreasonable deadline? Does your department confess when you’re behind schedule, or do you play “organization chicken," hoping that another function will admit their incapability before you have to? Culture busters like these point to vital behaviors.
Another shortcoming of traditional change management is the tendency to “underwhelm” the challenge. Change agents often look for a “silver bullet” to drive change. We all have our favorites. According to research documented in the MIT Sloan Management Review article “How to Have Influence," the vast majority of leaders apply only a single influence strategy. Fewer than 5% use four or more sources of influence. Our research further shows that employing Six Sources of Influence™, which address motivation and ability from personal, social, and structural forces, increases success tenfold! The difference between effective and ineffective change makers is that they marshal several sources simultaneously to get superior results.
In Part 2, I'll cover how you can use the Six Sources of Influence to diagnose resistance and identify actions that will make change inevitable.
Paladin Associates has partnered with VitalSmarts tailoring their Influencer methodology to address Procurement’s change challenges. For further information on Paladin’s Influencing Change offering, please contact Barbara Ardell (BMArdell@PaladinAssociatesInc.com).