Procurement Innovation – red herring or hot potato? (Part 3 in our series)

We had some very good comments on our series around “procuring innovation” (or is it “innovative procurement”) and the promotion of female owned suppliers to help innovation – see here and here if you missed those posts or want to pick up on the comments.

I must say I have a lot of sympathy with Dan who made this very perceptive comment on our original post:

"You cannot procure innovation – just something that’s innovative in nature. Arguably, if you procure something properly, then you won’t need to concentrate on making sure it’s innovative since you’ll have the best value product/service for your needs anyway. By concentrating on ‘innovation’ as an abstract concept, you’ll simply just be distracting yourself from your objective".

I agree completely - there is a “best” purchase whether it is innovative or not. And I would add that there are some areas where innovation is irrelevant, or may be consciously not wanted or needed by the buyer.

But we might get more general agreement on the idea that, in some spend categories at least, we shouldn’t take action that closes off the possibility of innovative solutions being offered. Solutions that may be, as Dan says, the “best value product/service for your needs anyway”. So there’s a working assumption – that we shouldn’t be actively discouraging innovative suppliers and proposals, which is, in my experience, what our actions through the procurement process often do.

And this takes us back to questions of the composition of the supply base – female, SMEs, black, white or purple suppliers? Again, I would share some readers’ cynicism about aspects of this topic, while defending strongly the idea that we need to be open to different types of suppliers. Clearly, not all of them will prove to be innovative, but equally we’re very unlikely to get innovative ideas from a bunch of identikit providers.

So later this week we’ll look at some of the steps you can take to increase the chance of getting innovation, where you want it – or at least to ensure that you don’t put barriers in the way of suppliers offering what might just prove to be interesting and innovative solutions. And if you’re still a cynic about innovation, don’t worry – I would argue that all the elements we’ll talk about are good practice whether or not innovation is your key driver.

Voices (7)

  1. PlanBee:

    All long term relationships, whether between a husband and wife or buyer and supplier, need to be nutured and worked at, otherwise they go stale.

    When we have lost contracts after long term relationships because of a lack on innovation, too often the buying company’s defintion of innovation is reduced price. Nothing wrong with that as an objective but lets not dress it up as innovation

    And for a selling company, innovation too often actually means we want to sell you something extra and increase our revenue flows from you.

  2. flog:

    I remember many, many years ago, as a young procurement person, providing feedback (within a fortnight) to our legal and banking incumbents who’d both just lost out on re-appointment following tender exercises. As instructed, part of my feedback was that neither was viewed as being proactive (innovative) hence their losing the contract (there were other issues). In both meetings, exception was taken to this element of the feedback. I was told (and, in turn, had to feedback to the Evaluation Panel members) that each incumbent had been trying to get the organisation to look at new ways of working – but they weren’t being listened to. So, while as a client, we may not have beaten innovation out of them; what was obvious (and on reflection, looking back, and knowing the characters on ‘our side’ I’m not surprised) the service providers simply weren’t being listened to.

  3. TimL:

    I agree that the barriers to innovation are often institutional and I have witnessed first hand the ‘get back in your box’ mentality. Indeed I know folks who would rather spend meeting time trying to agree a definition of ‘innovation’ that actual discuss new ideas! To me, any idea that involves my current organisation doing something differently is an innovation, regardless of whether it is old hat elswhere.

    We regularly include provisions in contracts for innovation but to make them work you have to have a very open, receptive mindset. Never dismiss ideas outright but ‘thank’ and ‘bank’. Prioritise the suggestions and try to ensure that some are implemented as encouragement to get more.

    Where significant innovations are accepted, use gainshare provisions to reward the contractor and incentivise the more suggestions.

  4. bitter and twisted:

    To displace a “good” incumbent, a supplier has to be innovative.

    If they were able to do the same thing in the same way cheaper and/or better, they would have won the work in the first place.

    I suspect the benefits of competition have been lost a bit in the vendor-reduction-partnership-supplier dogma of the day.

  5. Andrew:

    I have noticed an interesting apparent trend where the longer you have been working with a supplier then the less “innovation” you tend to get back. This is not always the case but I think it is not untypical. Everyone is aware of the “lazy incumbent” syndrome but I think it might go deeper than this. Some of this tends to be where the customer (procuring organisation) ‘beats’ the innovation out by encouraging the supplier to get back in their box and just concentrate on delivering the terms of the contract, forgetting any additional ideas that they might have (I think this is particularly the case with larger and also public sector organisations). Also some of this apparent phenomenom may be due to the reduced Account Management capability that you tend to experience over time. But why is it that the best innovation tends to come from a new entrant supplier – it shouldn’t be the case?

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