Procurement in Practice: American Red Cross CPO has key request for each stakeholder — ‘Come to me directly with any problems’ (part 1)

As we journey through our series of individual CPO lessons — for all CPO stories are not the same — we met someone who believes that while playing from a playbook is important, the secret sauce is really “how you apply the playbook” to the situation you are in. In other words, we must make our approach fit-for-purpose because every situation is unique. And as we learn from those situations, we apply those lessons and keep getting better.

“You may have great learnings,” he says, “but they are only useful if you successfully apply them and also know where to find them. And that’s why what the people at Spend Matters do is so important — sharing better practices.”

Tom Nash is CPO of The American Red Cross, a non-profit humanitarian organization that helps those in need following emergencies and disasters and America’s largest blood provider (covering 40% of the US blood supply). It is also an organization with the size and scope of a Fortune 500 company, operating in an FDA-regulated environment, with a turnover of $3+ billion.

Nash is an experienced CPO — having been one four times in four different industries, he has made his mark using a rather unique ‘modus operandi.’

In his previous role he was global process owner for procurement for Shell Services Company, a shared services entity working across all operating units. It was there that Nash helped create a global procurement board where there had been nothing like it before. This business-led board endorsed procurement strategies that were aligned to business initiatives for common spend across Shell and was comprised of senior execs and business vice presidents collaborating with procurement. Nash talked to the procurement and compliance specialists at Beroe about how he metamorphosed that successful initiative into the Stakeholder Advisory Board at The American Red Cross.

In another of his “procurement-profile-changing” success stories, he turned the tables on procurement technology selection by making it a business process initiative, rather than a procurement one. He invited a Spend Matters analyst into a room of key business leaders to walk them through the benchmarks across all industries of the best platforms and to explain the pros and cons of a spend management solution shortlist. He then had the business leaders ultimately choose the solution. At The Hackett Group’s 2020 Annual Best Practices Conference, he explained the process in “Achieving the ROI on Our Digital (Requisition-to-Pay) Investment.”

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Having learned his CPO skills through hands-on experience, as both CPO and CSCO (Chief Supply Chain Officer) in the Global Fortune 500 and large nonprofits, and having had good leadership, Nash is a firm believer in sharing experiences and lessons with others. “Especially for new CPOs,” he says, “so they don’t have to step in the same holes I’ve already stepped in.”

So how does he approach his very first days as a new CPO?

“The first thing I do, before I even walk through the door on my first day,” he says, “is reach out to my stakeholders. It’s something I learned from reading the ‘First 90 Days: Critical Success Strategies for New Leaders at All Levels’ by Michael Watkins. It taught me that when you have been in a role for a while, you get ingrained in that world, so it’s good to remember that other worlds might operate differently.”

‘Talk’ to people early on

“First of all, and I’ve done this in each of my places of work, I discover who the senior stakeholders are: the business leaders, the general counsel, the chief diversity officer, the chief audit officer and so on, basically the key influencers and decision makers. This can typically be a list of 10 to 15 people in a big organization.

“Once I’ve set up a meeting with each of them (and it’s important to call or meet with them, not email) I introduce myself as the new CPO and explain that I’m looking forward to joining the team. Then as part of the same discussion I talk about mutual expectations: their expectations of me and my expectations of them.

“It’s not something most senior execs are used to,” he explains. “Often they have no realization that procurement has any expectations of them. But it’s well received, and sends the right message right from the start. It tells them that they are important to procurement, that you are a team player, and it builds the relationship before you even arrive. It’s simple but effective.

“An experienced CPO knows that you have to become good at this, because it doesn’t matter how senior you are, what matters is how well you are perceived by your stakeholders. Being honest with each other and working well together is vital — and that all starts with relationships. So reaching out early means you’ve already started this before you are even in the chair.”

Gain mutual respect

“Once you are in the chair, you can start to make sure that you and your stakeholders are aligned. I work on the premise that so long as we understand each other, the better our teams will work together. So I talk to them about my goals, and they talk to me about theirs, and we see where we can be aligned. I make it clear that I’m doing this because I’m going to be asking something of them.

“One thing I always ask right from the start is that if they ever have a problem with me or my team, they come to me, not to my boss or someone else. I ask that they extend me the professional courtesy of coming to me first, so I can fix the problem. Many leaders appreciate that, and they then ask for reciprocation. It sets the right relationship then and there, and ultimately it pays a lot of dividends. We all know that the fur is always going to fly, and you want to be sure that when it does, you are the first to know and that they will feel comfortable picking up the phone and be receptive to talking about the problem honestly and directly.”

Understand the goals

The next thing on Nash’s agenda is to establish a mutual understanding that everyone is working toward the same goals — for the business.

“You need to cement the idea that it’s not just procurement working over here, and sales or finance working over there,” he says. “We need to break down those silos so that we are working together toward the same business results. As CPO you need to embed in your team that you are not just concerned with your own results, for procurement’s sake, but with how we improve business performance as a group.

“How do we do that? We share information. It’s a similar concept to talking to senior stakeholders early on. I reach out to my direct reports before I arrive (in my own time). I tell them I’m coming in, I’m excited to meet them, and I tell them this in advance because I want them to know they are important to our collective success. That’s the start, then I move on to mutual expectations in the same way as with senior stakeholders. It’s important for them to know early on what I expect of them, but I want to know what they expect of me as their leader at the same time. Again, this is building relationships and having them on your side before you get the whole team together. It sets the right tone: that you respect their positions — and they appreciate that because it’s not something that is typically done.”

What are senior leaders’ expectations of the CPO?

Nash frames this with an example of a discussion with a key stakeholder he had early on. And it’s the fact that he has initiated the discussion that yields answers that might otherwise not be forthcoming:

• “As a president of this organization,” the president told Nash, “I have to operate within boundaries. Now, I want you to tell me if I’m stepping outside of those boundaries, but, as a president I do get to make the final informed and considered call, and I will be accountable for that.” This is an example of what Nash calls The rules of the road. “As CPO,” he says, “you must respect how the senior team wants to operate, and how they prefer to interact, and accept that while you can advise and inform, the ultimate decision, and therefore the ultimate accountability for that decision, lies with them.”
• Another expectation is that senior executives want to be kept informed. “They don’t want to be surprised by anything from your part of the organization, or caught off-guard by the CEO, because they have the ultimate accountability for their results. Again it’s about appreciating each other’s roles.”
• Something he has also come to learn from senior stakeholders is that they want you to share your vision of how the business organizations will work together. “It’s an expectation not often voiced directly,” he says, “but it’s implied, and you must be ready to answer it.”
• Another is how you measure performance. “The senior team will have a view on that, but they want your leadership here on what the targets should be and how you measure them. This is often more the case when you are reporting directly to the CEO or the CFO, and it shows that they are relying on your leadership. To decode this, it’s important to understand that what they are looking for from you is the facts, with benchmarks to support them.”
• “On that subject, it’s probably best to be ready with the critical few and not the trivial many — because the CEO does not want a lot of metrics, he/she wants the strategic ones.”

And what are the CPO’s expectations of the senior leaders?

Nash’s first question to his new stakeholders is always the same: “What advice do you have for me?”

“That’s a key question,” he says, “because it helps me to be successful.”

“A CEO once told me that if there’s one piece of advice he would share, it’s that the businesses need to see me as being helpful, because if the business presidents don’t see you as being helpful, then you won’t succeed. Now a good CPO knows that, but it’s good to have that validated, and it tells me that my CEO is very alert to this. If I want to work well with the business presidents, and encounter as little friction as possible, they have to like what I’m doing.”

“To achieve this, as I mentioned earlier, my main ask is that they come to me directly with any problems. I can’t fix something if I don’t’ know about it — so I ask they keep me informed with anything that’s going on in their business that might affect procurement.  Even if it’s something that intersects with organizations that touch my business, I need to know about it. It’s often the case in many organizations that CPOs or the businesses don’t think about how what affects them also affects others up- or downstream; they assume it’s automatically understood. It isn’t.”

In a similar vein, he also sees transparency as key.

“I will be very transparent with stakeholders, and I expect the same in return. And as with all of these communications, I always ask that they please pick up the phone and call me if it’s something business-critical. Those conversations are much more helpful when you have a dialogue. It creates responsiveness. A new CPO will never get to the level of honesty and directness if you do everything behind email. Talk directly, but be respectful — that’s my mantra.”

In part 2, we talk with Tom Nash about his first few weeks in the chair, and his advice for others.

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