Why Every CPO is a “CEO” — But Not the CEO You’re Thinking Of

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As value chains go digital, many enterprises have been trying to take a strategic approach in formulating digital business strategies rather than just translating existing business strategies into IT projects. Organizationally, many have appointed chief digital officers to manage this digital transformation.

But digitization is only one megatrend. Its twin sibling is externalization, which is not just traditional outsourcing but the ability to similarly drive transformation by bringing the (increasingly digital) power of supply markets into the enterprise. You could then ask who would be best suited within the organization to perform the function of chief externalization officer (“CEO”).

You may roll your eyes a bit, but why is this role of externalization officer any less valid than the role of the chief digital officer? Isn’t this exactly what real CEO AG Lafley did at P&G with its Connect and Develop program over a decade ago to open up innovation to third parties? So, why shouldn’t innovation (and total cost reduction, asset variabilization, increased agility, etc.) also be pursued and orchestrated beyond R&D investment and applied to all investment? Hint: the answer is yes.

Who should take point on at least coordinating such third-party management? Well, as you may suspect, I would argue that the chief procurement officer (CPO) should be in the best position to be the chief externalization officer. But this isn't a given. I remember writing over a decade ago that procurement’s role should be “to harness the incredible power of the global marketplace to help the firm deliver unprecedented value to its customers and shareholders.” Yet too often procurement doesn’t have enough influence, nor organizational “permission,” to drive this broader value proposition.

If procurement is to serve as the chief externalization officer, it’ll have to work with not just with the CDO and CIO but also with suppliers and budget holders to stay aligned while pursuing digital transformation and “outside in” transformation. This requires a shift toward strategic supplier management rather than just sourcing, and it also requires that procurement practice what it preaches internally within procurement (i.e., applying digital strategies within procurement).

I’ll be writing some more on this topic, but what do you think? Do you think the “CEO” is critical and requires accountability for this key competency? And if so, do you think the CPO is going to be able to take on this mantle beyond the few firms right now where this is occurring? We’d love to you hear your thoughts and comments below.

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