Viewpoint August 2012

21/08/2012

Future Purchasing Viewpoint  
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Jon Hughes

Jon Hughes
Chairman, Future Purchasing

Welcome to the August edition of our FP Viewpoint, written after the conclusion of the London 2012 Olympics. What a fortnight! The old jibe against procurement is that we know the cost of everything and the value of nothing. On the former, the initial estimate for the Games was £2.4bn, and the claims that it came in “under budget” were only due to its being raised to a final £9.3bn. Of that, it cost £6.7bn to build the Olympic park; £1.02bn for policing and security (alas, with a disappointing supplier screw-up from G4S); with a further £296m to transform the park after the Games. 8.7m public tickets were sold, and the UK viewing figures peaked at 27m. David Cameron believes that there will be a £13bn boost to the economy over the next four years as a result of the Games. We need it!

It will be absorbing to follow the Public Accounts Committee’s reviews into this. Equally, a considered evaluation of the procurement and programme management model developed by the Olympic Delivery Authority and its private sector CLM Consortium makes an interesting study. I’ll be writing a CPO Communique on this subject.

But what about the value? I cannot remember such a morale boosting event. Any scepticism and jaded cynicism evaporated once the torch relay began, and from then onwards the Olympics have been a success story on an extraordinary scale. A nationwide euphoria and roller-coaster of support rapidly got behind Team GB’s 541 athletes as they secured 65 medals, including 29 gold. There can rarely have been such a sense of national pride .... nor so many people spontaneously bursting into floods of tears. Heart-warming stuff. I’m sure that many young people will be more enthusiastic about sport, and the 70,000-strong volunteer network seems to lend credence to the “Big Society” concept. Let’s just hope there is a lasting legacy.

As ever, all views please to:

ejhughes@futurepurchasing.com

Or telephone:

+44 (0) 7958 763159

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“Next Level” Procurement Conference, Copenhagen, 11th September 2012

If at all possible, please come and participate in the conference I’m chairing in the early Autumn. It will illustrate the conclusions drawn from the “next level” procurement project and closely examine a wide range of practical interventions currently being applied by CPOs in leading companies. Keynote speakers include Steen Karstensen of Maersk, Daniel Helmig of ABB, Patrick Scholler of Alstom and Jean-Philippe Collin of Sanofi.

Unlike some conferences, this will be a highly interactive event designed to encourage active participation and real dialogue between speakers and delegates. I look forward to meeting with you during the event.

Performance Lessons from the Olympics

It has been very interesting to reflect on the startling improvement in Team GB from its miserable one gold medal in Atlanta in 1996. Over sixteen years there has been nothing short of a transformation in performance and there are doubtless many lessons here for everyone in the business world to learn from. Our conclusions:

  1. Top-down focus and absolute commitment to success. Initially there was no enthusiasm at all, even to bid for the Olympics. When that changed there was a steely determination to win the Games and deliver them in the right way. Unwavering resolve paid off.
  2. Create delivery vehicles capable of delivering. All organisations are set up for either success or failure. ODA and CLM pioneered an innovative structure of programme management. The Elite Development Programme and £0.5bn of funding were strong catalysts for gold. Transformation didn’t happen without sustained investment and funding, allied with a determination to adopt radically different ways of working.
  3. Performance structures need performance direction. This has been a notable feature. Highly aspirational performance regimes don’t happen by accident. People such as Dave Brailsford and David Tanner assiduously crafted top-class elite programmes over four to eight year time horizons. Indeed their plans for 2016 are well under way. Each sport has already submitted its business plan outlining the “Path to Rio”, including explicit targets and goals for medal-winning. A “no compromise” approach rewards success and reduces funding for failure. Success readily flows from such a regime.
  4. Individual excellence within team cohesion. Superlative sporting achievement appears to be a mix of physique, dedication, training regime and the unbelievably detailed “aggregation of marginal gains”. Team GB’s performance directors see themselves as “conductors” orchestrating a huge network of coaches, athletes and support staff. They all know that they can’t deliver the performance alone, so they need everyone to take responsibility for their own part in success, both individually and within a strong team culture.
  5. Combine mega-initiatives with micro-projects. Top-down planning, governance, programme management and site / infrastructure construction was a huge investment. The total success of the Games however came from the micro-planning within 23 disciplines of the elite sporting programme. This made the difference.
  6. Enthuse the stakeholders and get them behind you. If you see the great British public as the primary stakeholder, then there’s been no doubting whatsoever their enthusiasm for the Olympics. But that is in marked contrast to earlier reactions before the Games began. Building and sustaining that enthusiasm took conscious planning and the careful sequencing of multiple interventions across the UK.

    Lots of food for thought here ... and great memories.
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Procurement’s Performance Improvement

Amusingly, a lot of Olympic-speak has already found its way into business vocabulary. I’m sure many CPOs are talking about “going for gold”, “striving for excellence” and “podium moments”. Hopefully, for this monolinguist, I won’t have to make presentations in French before English.

More seriously, framing a four-year strategy for procurement transformation that really emphasises demonstrable performance improvement goes right to the heart of what we are all trying to do. So, in that spirit, here are five selected pieces from Knowledge Hub echoing that theme:

  1. Performance improvement starts with assessment: “Identifying and Addressing Skills Gaps in the Procurement Team”. Read more here >
  2. The right process sustains performance: “Ten Ways to Improve Strategic Sourcing”. Read more here >
  3. Team motivation and accountability are vital: “Re-energising Procurement Leadership Teams”.
    Read more here>
  4. Performance outcomes frame the goals: “Connecting Suppliers to Growth and Margin: Linking Procurement to Corporate Strategy”. Read more here >
  5. Transformation is definitely a marathon: “Why Public Procurement is Central to the UK’s Economic Performance”. Read more here >
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