Zycus Horizon Dispatch 7 – Why CPOs Get Fired (Part 1)

At Zycus Horizon yesterday, our old friend Bill Michaels (currently running the consulting arm of ISM) gave a great main stage talk centered on the often short-lived tenure of chief procurement officers (CPOs), why they get fired and what they can do about. He began the chat by noting that the average tenure of a CPO is 4.6 years (according to CAPs data), and that in 2013 alone, there were 9 firings of high-profile CPOs.

One of the fundamental challenges Bill suggested is that management expects CPOs to deliver not just ideas, but measurable change through savings and value, which as we all know, can be difficult to measure outside of procurement terms. On many levels, the cards are stacked against CPOs, especially those who come into organizations without the right set of native talent within procurement or the willingness to enter into a more sales-centric internal that makes friends of the function rather than positioning it as an enforcer or gatekeeper.

But why, specifically, do CPOs so often fail to deliver – and ultimately pay with their heads? Bill provided a number of reasons during his talk. For example, CPOs all too often:

  • Focus too much on price rather than enough on cost and value
  • Fail to drive internal collaboration at sufficient levels
  • Fail at external collaboration/SRM
  • Are unable to cope with a matrix-based environment
  • Can’t manage multiple team expectations

But there are other reasons as well. Management often is not patient enough to wait for change (which can take years to go from ideation to realization). People do not change quickly enough (and CPOs fail to change the people on their teams – or don’t have a mandate and budget to up-skill the organization). Moreover, those who don’t cut it fail to develop the right set of skills and change with the times – they get left behind and are “changed out” just like the phasing out of a given production line.

The big question, of course, is what can CPOs do about this and what should their priorities be. For the answer, tune in later today when we share Bill’s suggestions and lessons learned.

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First Voice

  1. b&t:

    4.6 years is pretty similar to other C-X-O roles.

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