Barbara Kux, Siemens, and why senior procurement leaders leave

- January 4, 2013 5:08 AM
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Yesterday we featured recent announcements at Siemens, particularly the planned departure later this year of Barbara Kux, their CPO.  So today we’ll discuss the (hypothetical) reasons for her departure, based on no particular knowledge of the Siemens situation, but purely extrapolating from what we’ve seen before in other businesses and with other CPOs we have known personally.

Of course, the decision to go may be purely hers and hers alone – she may have simply decided that the end of 2013 would be a good time to do something else. Perhaps the endless travel of a top procurement executive in a global firm was getting her down; perhaps there were other personal reasons. I’ve known CPOs who became worn down by the pressure, and finally decided that the rewards weren’t worth the stress of the continual global battling with senior colleagues (the usual life of a CPO), necessary in order to gain influence and make progress.

Then there are scenarios where it is the organisation that makes the decision about the CPO going. And there are many, many possible reasons for this happening. Two frequent causes appear to be diametrically opposite, yet share some commonality.

In the first case, there is the CPO who pushes too hard against the culture, power structures or organisational constraints within the business. A good friend of mine was a CPO for a huge global company, and was tasked with driving benefits from procurement via a strong global category management programme. That would involve procurement in key spend areas being driven centrally, even though he always saw this as a “networked” procurement strategy rather than fully centralised.

However, this started treading on the toes of national and regional level executives who guarded their independence and power very assiduously.  My friend thought he had the backing of the Board to make these things happen, but when it came down to it, he didn’t. So we might characterise that as “the CPO pushing too hard”.

Is that an issue at Siemens? The FT hints that may be the case in their report on the matter – “her departure triggered speculation that she had encountered opposition among Siemens’ managers to her role”.

Procurement Leaders also had some interesting comments. “Ms Kux acknowledged that she was “not everybody’s darling” but insisted that she has worked well with Siemens’ powerful sector chiefs”.

They also reported that Siemens plans to focus more on getting the supply chain involved in “design to cost” during the research and manufacturing stage. This would entail greater involvement of business management in the procurement process – does that comment perhaps support the idea that Kux might have trod on a few toes?  But where I’ve seen this happen, the CPO doesn’t tend to hang around for another year – if they lose out in the fight with senior colleagues, their end, and their departure, is usually pretty sudden and brutal.

CPOs can also suffer if it is perceived they are not moving fast enough.  Most procurement professionals will appreciate that in a firm of Siemens size, their targets we reported yesterday such as “sourcing from emerging countries to move to 25% from 20%” and “reduction of the supply base (20%) 113,000 to 90,000” are quite challenging. But to a non-professional, might they perhaps not look particularly stretching?

So on the back of moderate overall financial performance for the firm, someone may have felt that a more aggressive approach was needed from procurement. We might characterise this as “the CPO not pushing hard enough” issue.  However, given that Siemens are clearly happy for Kux to stay for another year, this option doesn’t seem particularly likely either.

In both cases – the pushing too hard or not hard enough – the commonality is that we see procurement becoming misaligned with the wider organisation. Procurement is either not meeting the overt expectations that the Board has of it, or is a victim of the (often tacit) strategies, organisation and power structures within the organisation.

But coming back to this particular case, and perhaps somewhat unexcitingly, we suspect the fact she’s staying for a further year makes it most likely that, after 5 years in a demanding job, Kux has simply decided the time will be right at the end of 2013 to do something else. And whether that is the case, or there is more behind it, good luck to her in whatever she does next.

 

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Comments

  • bitter and twisted:

    2nd order objectives + arbitrary targets = bullshit

  • Patrick Chabannes:

    “the pushing too hard or not hard enough” are the usual arguments of any mid-managers and their boss working hard to not change anything. Anyone trying to change an organization creates his enemy.

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