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Innovation Through Procurement Contests (Part 1)
This week's Wiki-Wednesday topic is Innovation, and you can click here to read an excerpt or to link back to the Wikipedia article. We chose this topic because of a series of posts being done this week by BMP mentor Jon Hansen on his blog Procurement Insights. He is addressing a growing debate over the benefits of using procurement contests - particularly in public procurement - to innovate without absorbing the direct costs of a major R&D investment.
In today's environment of content overload, we spend most of our time frantically reading fact and opinion just trying to take it all in. It's amazing how hard it is to decide where you stand on an issue. Stopping long enough to think about a single topic, like I'll do this week with Jon's procurement contest posts, makes me sympathize with the neighborhood kids that had to wait at the bus stop this morning for the first day of school. Where did I put my 'thinking cap' after I used it last?
Here's what I'm going to do - in order to give myself a chance to think, and also to benefit from the full week of Jon's posts, I am going to give you my initial reaction to the procurement contest idea now, and then this weekend I'll check back in to let you know if I have changed my mind or altered my opinion on what they mean to procurement. Fair? Good.
Here is the contest scenario as I understand it:
I'm a government procurement professional and I have a problem or a need that I haven't been able to resolve with the vendors currently available to me. Or, to be more specific, I might be able to find a solution but the process is so onerous that by the time I are lucky enough to get myself through it, the solution will be smashed right back into the same old shape that I started with.
But what if I could have a contest to find a solution? I state the problem with detailed requirements. Companies compete, using their own R&D resources (at their own expense) to find an answer. If they are chosen as the contest "winner" they get prestige, maybe a contract, and probably a financial "prize". The government saves money, a problem is solved, business is driven to innovate, marketing people get to put out those press releases they love so much. Everybody wins. Or do they?
Know who I am worried about in this scenario? ME. Not the real Buyers Meeting Point Co-owner me, but the hypothetical government procurement person me. I was either not strategic enough to come up with a good answer or justification for change in the first place or I was willing to accept that my job came with such regulations that I would be punished for having a creative thought AND STILL TOOK THE POSITION!
I fear that I was already a bit of a weak link, and this solution doesn't give me any opportunity to add value. My best bet is to get really really good at articulating problems for other people to solve. Forgive me for being particular, but that seems like a very negative existence.
Now let's extend the same scenario into the private sector - hopefully this situation is one you could imagine yourself in: Your company has a need and none of the suppliers in the market seem to have a solution. So you put out a contese announcement just like your public sector counterpart above and wait for the solutions to come rolling in. How long do you think it will take your manager to realize that you aren't adding any value at all?
The only answer in this case is for you to actually collaborate with your suppliers and become a partial contestant yourself. You may end up working with more than one supplier in the hopes that you'll find an answer from one of the competitors, but hopefully by helping them define and then refine their proposed solutions you will end up with a better result sooner and you will be able to claim part of the victory yourself. At least at the end of that journey you would have an impressive story to tell, to your boss and anyone else willing to listen.
There is no question that the expectation of private sector procurement professionals is that we will continue to upskill ourselves and strive to add measurable value to our organizations. We know what the alternative is: outsourcing. Shouldn't our public sector counterparts want the same for themselves?
So that is my first reaction to the procurement contest idea - good for government, problems, companies, marketing geeks, but a big old thumbs down for procurement. Unless we find a way to roll our sleeves and jump right into the middle of the mess, because...
My experience in trying to drive innovation has been like trying to push a wet noodle. Change is usually occurs when there is either pain or pleasure from the change. If a company has a problem that is causing them pain, like losing money there will always be incentive to change. When I talk about pleasure in the procurement context it's usually tied to recognition or rewards. When it comes to implementation success will always be dependent upon whose idea it was and whether they benefit from solving the pain or getting the recognition or reward from implementing it.
I think contests can work provided that the ideas are reviewed by top management and the implementation of good ideas are driven top down.