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Perspectives on Ethics and the Golden Rule

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Ethics is very important in every field, particularly in procurement. I want to first acknowledge the high ethical standards that my colleagues live by in the performance of their duties as public procurement officials. Many states and municipal level governments have adopted their own ethics laws. These laws generally prescribe principles that all public officials must abide by.

Ethics has been talked about since ancient times. In Ancient Greece, Socrates was and still is considered the Father of Ethics. The ancient Greek term for ethics is ethos, which refers to the character. Socrates’ teachings focused mostly on good and bad character traits; virtues and vices. Plato also spoke about ethics from a virtue-based perspective. He argued that happiness and well-being are the highest goals of moral thought and conduct. Well-being is the result of a virtue-based pursuit of higher knowledge and fulfilling man’s social obligation to the common good.

Twenty-five hundred years later, Larry Chonko, Ph.D., Professor of Business Ethics at the University of Texas, Arlington, defines four categories of ethical theory associated with decision making. Not everyone has the same ethics filters when making decisions.

  • Deontology: People should adhere to their obligations and duties when making decisions.
  • Utilitarianism: It is based on one’s ability to predict the consequences of an action.
  • Rights: The highest priority is to protect the rights established by society or the community.
  • Virtues: Focuses on a person’s character rather than any action that may deviate from normal behavior.

Three of these categories deal with the external aspect of ethics and what it looks like to be ethical. One of them focuses on the person and his/her core values.  Our interpretation of ethics is important because there are two different perspectives: policies and people.

The first perspective deals with acceptable behavior based on external parameters, whether law or policy. These laws or policies help define how an action would be interpreted by others and what the potential consequences might be. Organizations have institutionalized ethics to establish principles that govern the behavior expected of its members.  This is often referred to as the code of ethics. In some jurisdictions, ethics is handled by the attorneys. I have nothing against that, someone needs to oversee that function. The point that I want to make is that ethics is not just about what’s legal or not. It is about what’s right and what’s wrong, which the law attempts to codify from the perspective of legality.

A second perspective deals with a person’s character and the values that they live by. Integrity plays a big role in the result of an established ethics code.  Integrity is the person’s moral compass that guides their every action. It guides them in their decisions between what’s right and what’s wrong, even when no one is watching. Without minimizing the value of a code of ethics as guidance based on principles of good conduct and the behavior expected from each individual, people ultimately dictate the level of effectiveness of such ethics policies and laws.

A solid character makes trust possible. Character communicates consistency, potential, and respect. This is true for everyone, especially leaders.  It is hard, if not impossible, to trust a leader who does not consistently show inner strength. A person who is talented but has a weak character is like a time bomb that can cause significant damage. Having talent is not enough because people with weak character are not trustworthy. A person who does not have a strong inner compass cannot earn the respect of others. To achieve ethical behavior in an organization, personal inner values must align with ethical principles.

In some instances, fraud, abuse, misconduct, and overall unethical behavior still occur despite the ethics codes adopted by the organization. We have seen cases come up in the business world, government, media, entertainment, and even in the religious area. Most of the organizations where high profile scandals occurred had a code of ethics of some sort. Yet, those policies did not stop the wrongdoing that cost many of their careers, reputation, and even freedom. Sure, anyone can make a mistake.  But these cases are not the result of a one-time mistake. They were the result of a series of repeated actions… the wrong actions. The State of Illinois took on an ethics reform initiative after corruption at the highest level planted doubt and distrust in government in general. Like Illinois, there have been other states and municipalities that have fallen victim to a scandal and tightened their ethics rules as a result.

These were actions by individuals who perhaps lost their way at some point in time and were overcome with the dark thoughts that they held deep inside. What may lead a person to lose their way? Perhaps it is greed, the desire to get ahead at all cost, the thought that they will not get caught, or simply a weak moral compass. One can only speculate what the reasons might be. I’m not here to judge their actions. I am sure there is more to the story than what’s been shared in each case. Why did they consider deceit as the best choice? Did they think they were choosing between right or wrong or did it not cross their mind? How did they justify the actions in their conscience? Were they not aware that the choice could harm others? These are questions that linger in my mind. In each case, the fraudulent and deceitful actions were kept from public knowledge. I think that the reason why these actions were hidden is that those involved knew they were wrong. Perhaps their motives were stronger than their values, or maybe it is simply a character weakness.

Every profession has a code of ethics. As we have likely all observed first-hand or read about cases of unethical behavior, we know that a code of ethics may not prevent an individual from wrongdoing. But a formalized code provides guidance and a reminder of the type of behavior expected.

Ultimately, ethics is a personal matter. A person’s moral compass must point in the right direction for ethics policies to be truly effective. Having integrity, character, and being trustworthy is about small things. Trust has a compounding effect. If a person can’t be trusted with small things, they definitely can’t be trusted with bigger things. A strong foundation can withstand the challenges of temptation. A reason why some people may struggle with issues of integrity is that they look outside themselves to explain character deficiencies. Integrity commits to character over personal gain. A person of high integrity will adhere to moral and ethical principles whether written or implicit.

I’d like to believe that most people want to do the right thing. They want to live in peace and harmony with others. Then, what is the solution to minimize ethics breaches?  I don’t think that anyone has found the solution yet, but the reactionary approach is to enact more laws and implement tighter policies. These are all external solutions. I don’t think that the problem is that people chose to conduct themselves unethical due to the lack of policies and laws. No, I think it is a values issue. As such, it is an inside job.

It starts with all of us and the behavior that we model for our children, particularly in their formative years. Perhaps we don’t think much of small infractions like cutting a line, forgetting to pay for an item and not rectifying the situation, watching a second movie while at the movie theater without paying for the second one, or telling the little white lies to get by or avoid an undesired task. It is about the little things. If the little things compound to build trust, they can also compound to build distrust. I believe that we should raise our awareness and take inventory of these small infractions. Even though these small infractions from a consequential perspective did not significantly harm anyone, we need to be intentional about taking action to keep these little wrongs from potentially having a negative effect on society. I think that we are all responsible. Do I think there will no longer be a breach? No, I think that there will always be someone whose unchecked ambition will drive him/her to deceive others. But any effort that we make will move our community in the direction of a better future and make this a better place for future generations.

To conclude, people have different filters when it comes to ethics. There is an external perspective that focuses on the actions that we see and judge; and there is the internal factor that relates to our core values. Both perspectives are valid, and they complement each other. I don’t believe that you can have an effective ethics policy without people’s good moral compass. Ideally, external, prescribed behaviors and internal, personal values align to create a self-perpetuating ethical culture. Individual decisions and actions that consistently reflect institutionalized norms and personal values are the basis of integrity. Integrity fosters trust. And trust is the foundation of our relationships, society, and government.

I was reading a book about ethics and it reminded me of the golden rule. I think a better way to look at ethics is by following the golden rule. Do unto others as you would have them do unto you. Ethics is really about the golden rule!

By Lourdes Coss, MPA, CPPO – Oct 2020

Procurement Transformation Blog – www.lourdescoss.com

About the Author: Lourdes Coss is a former Chief Procurement Officer living her purpose. She’s the author of “Procurement Methods: Effective Techniques” and is using the lessons of her 27 years career in government procurement and transformation to coach, train, and provide consulting to leaders and aspiring leaders in the profession. Post-Pandemic, you may find her in a café writing her next book.

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Building a Culture of Collaboration

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What makes a culture? And why should it be considered when developing a collaborative environment? Several factors make up cultures, such as habits, preferences, styles, unwritten codes of behavior, etc.  One thing I learned while leading transformations was that it is the leader that sets the tone. When I hear the saying, “culture eats strategy for lunch,” I can relate. When strategies and culture do not align, change may have a short life span.

The tone set by the leader trickles down to everyone in the organization.  Organizations consist of diverse personalities. Each person will contribute his/her character to the composite of its culture.  If it is a positive tone, people will be inspired to collaborate, care, and add value to each other.  The people will make this part of their daily behavior.

On the other hand, if the tone is of distrust and negativity, It will also trickle down and may be perceived as a toxic culture.  The culture of an organization impacts its customers, both internal and external.   People tend to give what they receive; therefore, this is one reason why it is vital to treat employees the way we want them to treat customers.

Many organizations treat the symptom by providing customer service training.  Although it is a valuable investment, in some cases, not knowing how to treat customers may not be the cause of substandard customer service.  I worked for an agency that had the worst customer service record in the organization.  As a new hire, my task was to turn the organization around and fix the customer service issue.  After brief conversations and observations, I concluded that the customer service issue was merely a symptom of a more significant problem.  The root cause was the leadership style and the negativity that permeated throughout the organization.

Resolving the customer service issue required a fresh start with a new leadership style, shielding staff from the negativity that flowed from higher levels in the organization, and training.  The change in leadership gave everyone the incentive to recommit to their role and approach daily situations with the same consideration and care they were now receiving.  Changing culture is not a quick process.  It requires time for each individual to experience and adopt a new set of unwritten rules for behavior that comes from appreciation, choice, and communication.

Appreciation: One way to start changing a toxic culture is by helping people feel appreciated and supported for their work. Regardless of whether it is their responsibility to perform their respective roles, people need to feel that they contribute to something bigger than themselves, and their contribution matters.  In his hierarchy of needs model, Maslow identified the need to belong and be appreciated as every individual’s psychological needs.  Naturally, individuals are happier about their environment if it meets their psychological needs.

Coming up the ranks, I encounter environments where the person in the leadership position offered a constant reminder that everyone’s job security is in the hands of management. The threat to stability puts at risk a person’s means for fulfilling his/her basic need for food and shelter.  Fortunately, many organizations understand the relationship between treating people with respectful appreciation and customer service quality.  When people are happy, the chances for better customer service increase; it starts with the leader.

Personal choice and commitment:  Everyone must see something in the leader or environment that compels them to recommit to their job. Each person has a choice. It is the leader’s responsibility to gain the trust of the team.  Each person’s commitment to the group will have a positive compounding effect and help change the culture.  It is a one-event at a time process.  It takes time to change the culture of a government organization.  I benefited from being a new sign of hope for the team.  I didn’t expect to see immediate changes, but I offer them hope for a better future and a new organization.  No one will change on command; it is an individual process, and it happens only if the individual chooses to do so.  Getting buy-in is vital to the transformation process.

There are a few examples of organizations that have a collaborative culture.  One of them is Chick-A-Filet.  Just visit their drive-through and experience a happy culture.  I don’t usually eat fast food but became curious after hearing a speaker talk about their leadership effort to create a collaborative culture and cited Chick-A-Filet as an example.

Communication: Communication is essential in any change process, especially when you strive to have a culture where collaboration is at the center of all success.  Communicating freely in all directions within the organization is necessary to develop an environment of cooperation, trust, and excellence.  It is an excellent idea to provide communication training to make interactions more significant, given the diversity of personalities and backgrounds.  When people understand how to communicate more effectively with others, they can develop better relationships.  One way to help people identify how to communicate with others with different personalities is to offer them the opportunity to take an assessment, whether DISC, Whole Brain or any other.  The appraisal’s objective is not to pigeon-hole the person into their style, but to offer recommendations on how to best blend their style to more effectively communicate with people with a different personality profile.

To summarize, culture consists of many factors, including personality styles, leadership cues, and the overall environment created overtime.  To change the culture, it takes time and intentional effort by the leader and every individual that makes up the organization.  Showing appreciation for work performed goes a long way to creating a positive environment, which then translates into the service provided to its internal and external customers. Changing the culture also requires the individual commitment of those in the organization, including leadership. Finally, communication is an important factor throughout the change process and to maintain the level of collaboration desired by the organization.    The team should communicate in all directions to increase the effectiveness of the team and benefit the organization. Communication is the door to change and, therefore, should be consistent and frequent.

By Lourdes Coss, MPA, CPPO – Oct 2020
Procurement Transformation Blog – www.lourdescoss.com

About the Author: Lourdes Coss is a former Chief Procurement Officer living her purpose. She’s the author of “Procurement Methods: Effective Techniques” and uses the lessons of her 27 years career in government procurement and transformation to coach, train, and provide consulting to leaders and aspiring leaders in the profession. Post-Pandemic, you may find her in a café writing her next book.

The ABC Strategies of Procurement Transformation

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A procurement process transformation can be extremely challenging, particularly when resources are scarce. During my 27-year career as a Chief Procurement Officer and later as a Procurement Transformation Consultant, I have developed three steps I have dubbed my “ABC Strategies” for transforming a procurement process successfully. By employing this approach, I am able to achieve progress early in the process to help initiate much-needed momentum and to garner critical support for requests for resources down the road.

Most, if not all, of the transformations I have led, have shared a similar vision: for the procurement team to become a trusted partner in the entity. This vision is a lofty one when considering the dismal starting points of most transformation initiatives. In large part, the procurement team is seen as a roadblock in the organization. My role is to substantially improve the performance of the department with staff the organization already has in place.

A is for Automation. One of the first strategies I implement is to automate repetitive tasks and shift brainpower to procurements. I often see as much as 80 percent or more of a team’s efforts are being directed toward activities that do not add value to the process. This translates to 20 percent or less of staff efforts focused on more complex solicitations. In other words, personnel are busy taking care of repetitive, low value add work, while large and/or complex projects sit idle, waiting for procurement expertise and attention.

The objective is to first maximize any existing technology to reduce manual work and repetitive tasks. In most cases, I am able to win approval for a lower dollar plug-and-play strategy to make significant impacts on speed and/or quality. This strategy varies from agency to agency as it is dependent on what is already available. There is a short window to obtain resources in a transformation process and time is of the essence. Note: Any investment is looked at more favorably when it is presented as an opportunity to “enhance the buying experience of the end-user.”

Automating repetitive tasks is a short-term fix that fosters goodwill that will be critical when seeking funding support for a long-term comprehensive technology solution.

B is for Belief in the Capabilities of the Team. When a team charged primarily with executing tasks is first empowered to think critically, it can be a major shift. Routines can be disrupted, and people often must unlearn and relearn their jobs. During this transition, it is not uncommon for personnel to feel alone or to experience self-doubt and feelings of inadequacy. The team leader must believe in their people and encourage them through the growth period by offering training, personal development, coaching, and mentoring. The leader cannot be indifferent to the struggle of each person on the team. Some are going to struggle more than others of course. Once the first person breaks through some of the barriers that kept him or her performing at the task executor level, others will also be encouraged to do so as well. In the end, critical thinking will help in the quality of the interaction with end-users. Trust will start to develop one project at a time fostering a more collaborative relationship with the end-user and enabling better customer service. This approach, along with training, also helps improve the quality of solicitations, which enables higher quality responses from suppliers. There is a high rate of return on training and empowering the right personnel.

C is for Consistency. Part of the reason why there can be distrust in the process is because end-users often receive contradictory information from procurement personnel. This can be a result of people working like “islands” instead of as a team. A strategy for consistency is necessary upfront. It requires a sequence of internal communication, the progressive standardization of processes, and the implementation of best practices learned through professional training. The adoption of best practices is an opportunity to get everyone on the same page and to work as a team. As end-users begin to receive consistent guidance, their trust in the process will increase.

The three issues I focus on early in the transformation process are speed, quality, and consistency. Utilizing my ABC strategies from the onset allows me to gain quick traction and achieve early buy-in that pays off when recommending long-term solutions.

By Lourdes Coss, MPA, CPPO – Sept 2020
Procurement Transformation Blog – www.lourdescoss.com

About the Author: Lourdes Coss is a former Chief Procurement Officer living her purpose.  She’s the author of “Procurement Methods: Effective Techniques” and is using the lessons of her 27 years career in government procurement and transformation to coach, train, and provide consulting to leaders and aspiring leaders in the profession. Post-Pandemic, you may find her in a café writing her next book.

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Steps to Purposeful and Transparent Supplier Communication

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Procurement officials should develop good supplier relations in order to maximize the benefits to the organization. This is sometimes challenging due to agency practices associated with restrictions on external parties’ communications. The restrictions generally stem from cases where abuse and undue influence have plagued the procurement environment with bad press and public distrust. The result is a high level of caution almost to the detriment of the entity. In some cases, the reaction to experiences colored by improprieties either apparent or real is memorialized through the implementation of laws, rules, or policies or the highly conservative interpretation of such laws, hindering the communication with suppliers.

Procurement officers with a good moral compass understand how to navigate communications in a way that professionalism and high ethical standards are upheld. Likewise, suppliers who are seeking a long-term relationship understand that crossing the line could cost them much more than their business. I agree that ethical behavior should remain front and center when it comes to procurement-related conversations. I also believe that effective communication is the key to success in every facet of our lives, including business.  Unfortunately, in extreme cases, the topics of ethics and conversation with suppliers appear as polar opposite and used as an excuse to avoid vendor meetings. This is not a strategic approach.  Instead, it is a missed opportunity.

Regardless of the industry, effective communication is the key to developing successful business relationships. This is true whether prior to or after entering into a contract. Sharing unrestricted information is beneficial to both parties.

Given the constant complaint of resource insufficiency, procurement professionals need to be more strategic about how they invest their time. Talking with suppliers is a form of primary market research. Leveraging the supplier’s market intelligence, for example, can help the procurement professional be more strategic.

Procurement professionals’ expertise is in process and, with some exceptions, not in the intricacies of product or service details. Rapid changes in technology, goods, and services make it challenging for procurement professionals to stay up to date on the benefits and features of new products. This is particularly the case when procurement professionals claim to be a “jack of all trades” in environments where resources are scarce. The absence of adequate resources may cause procurement professionals to try to juggle too many requests without the necessary tools, leaving very little time, if any, to conduct research to learn about any changes in the market.

The expectation of many procurement professionals is that the end-user should provide a clear and concise scope of services or detailed specifications. The rationale is that the end-user is responsible for providing well-written specifications or at least know the essential requirements that need to be included in the solicitation. It might seem logical to assume that the end-user is up to speed on current trends within their area of responsibility. Sadly, that’s not always the case.

In my experience, receiving high-quality specs is rare. Yet, we should not be too critical. End users are subject to the same time and resource constraints that limit opportunities to learn about market changes and conditions as procurement professionals. Also, like procurement staff, end-user personnel might also be required to restrict their communication with external parties.

Although the expectation is to put the knowledge burden on the end-user, many procurement professionals dislike the thought of end-users going directly to suppliers to obtain information. And when the end-user has done so, the suspicion of unfair advantage for a single or select group of vendors may come into play. I should point out that significantly restricting communication with suppliers whether by mandate or choice conflicts with the expectation of well-written specifications.

Conversations with suppliers are a form of market research. Although market research is a process that procurement professionals should employ frequently, the reality is that many are so overwhelmed with the number of requests that market research falls on the back burner. Realistically, not much market research is done on products or services that we consider routine. This situation is less than optimal particularly when procurement is not successful due to outdated specification requirements.

There is a solution to this dilemma. Develop a written protocol for supplier meetings.

Formalizing Supplier Engagement Practices

A written protocol helps achieve consistency when meeting with suppliers. The protocol should be cross-referenced with the agency’s ethics guidelines or policies and define how to appropriately meet and engage with suppliers to make the best use of each interaction. Adopting the new protocol as part of the written policy and procedures has the added benefit of institutionalizing a practice that ensures a level playing field for all suppliers while giving staff a referenceable structure to guide their communications with suppliers.

Implementing the protocol can be aided by developing a Supplier Meeting Form. The Supplier Meeting Form provides an in-the-moment resource to guide each meeting, capture essential information, and provide documentation that supports transparency. The structure of the form is simple with three primary sections to completed during each meeting: General Information, Market Research Questions, and Action.

  • General Information. Capture the supplier’s name and contact personnel, the industry where they compete, and the category, product, or service that they provide. The form can also include the name of the attendees and the date of the meeting.
  • Market Research Questions. As much as possible, note on the form any topics of interest and specific questions prior to the meeting. Questions may relate to trends, changes, and industry innovations. Possible questions to include:
    • What are some of the trends in the industry, and what should procurement professionals be looking to adjust in their solicitations? (i.e. economic trends, import/export issues, environmental requirements, new technology)
    • Is there any legislation that could potentially impact some of the past requirements included in specifications?
    • What requirements are you not seeing in solicitations that may help agencies obtain more cost-effective products/services?
  • Action. Include information on any actions taken during the meeting. This could include proposed “next-steps” such as follow up demonstration, internal research, additional market research, or any other action taken. It could be that no action is necessary at the time.

Scheduling Meetings to Maximize Time and Opportunity

I liked the strategy that my executive assistant implemented scheduling shorter meetings. Instead of a full hour meeting, she scheduled half-hour meetings, especially if it was the first-time meeting with a supplier. This helped keep the meeting focused on the main topic as opposed to sitting through a half-hour of marketing material.

Suppliers should be advised as part of the meeting confirmation process that they should plan to spend no more than three minutes on company introduction. While the marketing material is often very impressive and showcases the supplier’s market position, the potential for time to be spent in this way discourages already overextended procurement professionals from granting a meeting in the first place.

Some of my colleagues may be interested in a higher level of detail, but I doubt that they have the luxury of time. Time was such a precious commodity for me that it was essential to be as strategic with it as possible. I delegated gathering any needed background details to someone in my team. This is where “leave behind” marketing information became handy.

How Many Meetings? With Whom?

Sound, supplier-neutral specifications are not built out of conversations with a single vendor. Through multiple interactions, I was able to learn and ask better questions of each supplier. When the quality of your questions improves, so does the information that you receive.

Inviting an end-user to the meeting can also be beneficial. Although, I recommend being clear on the potential benefit to the end-user before engaging more people in the meeting. The more people that you involve in a meeting, the harder it is to coordinate and the longer it may need to be. The idea is to keep this process simple and with minimum disruption to an already packed schedule.

I want to emphasize that any process can work provided that those involved proceed ethically. While there are many written ethical standards and guidelines, these are useful to define potential circumstances that may be perceived as problematic. The existence of written guidelines can also help elevate the awareness of individuals in an organization. In the end, it is necessary to rely on each individual’s good values to adopt and model behaviors that ensure transparency, fairness, and good business practices.

To summarize, communication with suppliers is necessary to develop good business relationships and solicitations. Procurement professionals can make communication with suppliers more purposeful and strategic by implementing simple agency-wide protocols. The information gathered may help the procurement professional ask better questions, prepare higher quality solicitations that are better aligned with the market conditions, and reduce unsuccessful procurements due to quality issues.

Meetings with suppliers can be a worthwhile investment of time if the procurement professional chooses to be more strategic and intentional in his/her communication. Ethics, training, and guidelines are helpful, but it is ultimately an “inside job” that determines whether these values are put into practice. Agency leadership need to model and reinforce the importance of ethical practice, and each individual making the commitment to doing the same.

By Lourdes Coss, MPA, CPPO – Sept 2020

Procurement Transformation Blog – www.lourdescoss.com

About the Author: Lourdes Coss is a former Chief Procurement Officer living her purpose.  She’s the author of “Procurement Methods: Effective Techniques” and is using the lessons of her 27 years career in government procurement and transformation to coach, train, and provide consulting to leaders and aspiring leaders in the profession. Post-Pandemic, you may find her in a café writing her next book.

 

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Five Truths About Leadership

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There’s plenty of talk about leadership these days. Whenever you tune into a subject, you seem to attract more of it. Similar to when you purchase a yellow car, you start seeing more yellow cars on the road. The same has happened with leadership. As I started talking more openly about the importance of leadership, I have met people who feel the same way or have thoughts about it. To me, leadership skills are a game-changer when it comes to procurement transformation. I strongly believe that acquiring leadership skills is a critical element in achieving the goal of elevating the procurement profession. I want to share some leadership truths that I have learned along the way and continue to learn as I transition to a new phase in my career.

  1. Effective leadership skills are transferable. Regardless of the environment in which you acquired and practiced leadership skills, they are based on principles as old as time. These principles, when applied in any environment, country, or culture, whether in a small organization of volunteers or in a multi-national company, work just the same. People can learn to become effective leaders if they consistently and intentionally practice leadership principles. These principles include things like connecting with people, showing integrity and a strong character, continued learning and growing, influencing others, helping those around you to develop and succeed, and providing guidance through good and bad times. To become a better leader, you should first learn to lead yourself well and start right where you are. Leadership development is a journey and not a destination; therefore, continuous growth is essential. In his book “21 Irrefutable Laws of Leadership”, Dr. John C. Maxwell lays out 21 principles of leadership. He states that the more a person knows and practices these principles, the higher their leadership skills will be.
  1. Leadership is about service to others. We have learned a thing or two about leadership from great philosophers. Aristotle said that the “ethical role of the leader” is to create the conditions that would help followers achieve their potential. Aristotle believed that in order to be a good leader, it was necessary to be a follower. He said that even after becoming a leader, we still need to follow the concerns and progress of those we serve. Plato thought that leadership should be the role of a philosopher because the greatest self-benefit to philosophers was to live virtuously. That being the case, philosophers would then act out of morality and not out of self-benefit, resulting in benefit to the people they serve.

These timeless lessons taught us that good leaders put people first. That is the heart of leadership. Leadership is not about position or title.  In fact, you can be a leader without an official title. Empowering others and helping people reach their potential is what leadership is about. Zig Ziglar said, “If you help people get what they want, they will help you get what you want.” This statement does not refer to a trade. Instead, it is about helping others succeed simply because it is the right thing to do. That practice is often referred to as “servant leadership”.

  1. An effective leader has willing followers. A position or title serves only as leverage in a leadership situation. The leader must make an effort to connect with people on an individual basis in order to gain their trust. Without it, people will only follow because they have to. People need to know that the leader cares about them and their success. It is up to the leader to inspire the trust of others by modeling good character and high competence. Once this threshold is crossed, the leader has moved to a level of leadership where people follow because they want to. It is then that the leader can tap into people’s “discretionary goodwill”. This “discretionary goodwill” is the potential of individuals beyond what’s expected in the job description.

Perhaps one of the toughest leadership situations is leading volunteers. Unlike a job on which an individual depends to earn an income and make a living, a volunteer situation does not always offer the leader the leverage of holding people accountable for a certain level of performance. There are little to no consequences to the individual for failure to perform or even show up. The leader must appeal to the volunteers’ uncommitted discretionary goodwill all the time. It is the leader’s responsibility to connect with each person in order to keep them engaged and interested in giving their time and talents.

  1. The leader sets the tone for the organizational culture. If the culture is inviting and people feel included, it reflects the values that the leader instills in the organization. If the environment is toxic, it is also a reflection of the leader and the behavior that he/she models and encourages. It is the leader that sets the tone for the culture. People do what people see and they take their cue from the leader.

The leader has the ability to inspire people to go above and beyond the scope of their task or defined responsibility. Getting to that level of leadership requires effort from the leader.  He/she needs to create the right environment. People want to belong and be part of something bigger than themselves. The need to belong is one of the basic psychological needs of every individual according to Maslow’s hierarchy of needs. If the environment is such that people feel excluded or not appreciated, it may result in their disengagement. We are complex creatures!

  1. Leadership happens at all levels of the organization. Good leaders in the ranks make good leaders at the top. For the organization to succeed, it must develop leaders at all levels. Good leaders at lower levels are more likely to become great leaders in positions of authority. As people in positions of less responsibility acquire leadership skills and practice being a leader, they prepare for opportunities of greater responsibility. In other words, they are ready when the opportunity arises. Since modeling is one of the ways through which growth happens, for an organization to develop a good bench of leaders, it should first have a good leader at the top. The leader(s) at the top should encourage, empower, and nurture leaders at the next level. And the leaders in this next level down should encourage, empower, and nurture the leaders at the following level down in the organization, and so on. If within that chain, there is a faulty link, it will be difficult to develop leaders at the lowest level of responsibility in the organization.

In procurement, we have not done a very good job of developing a strong bench of leaders. It took the massive exodus of baby boomers to realize that there isn’t for the most part, a deep bench of strong leaders. If we as a profession paid more attention to leadership skills development, there wouldn’t be as much concern about the “Silver Tsunami”.

Leadership is an integral part of what we do. Procurement professionals lead teams providing expertise and guidance in the procurement process. Yet, leadership has not been a strong part of the skills required for certification. The focus in the past decade or two has been on technical skills and data. It was a necessary focus to establish a stronger foundation for the profession. Unfortunately, as we strengthened our technical skills, we may have missed one key component for elevating the profession to have that seat at the table – leadership. Going forward, as that becomes rectified through educational programs, I hope that communication skills and the ability to connect become part of the educational offerings as well.

Developing leaders at every level of the organization also adds to procurement’s collective influence within and outside the entity. This aligns with the goal of having a seat at the table across all organizations. As mentioned previously, for a leader to be successful, people must follow willingly. This is true for procurement professionals. We want our end-users to follow willingly and not struggle with compliance every step of the way. This is where technical skills intersect with leadership skills.

It is up to the leader, in this case, the procurement professional, to do the things that are necessary to earn that respect and be worthy of the trust of those for whom they are responsible. The posture of procurement in an organization is dependent on modeling character, integrity, and competence, which can result in the necessary trust and respect to position procurement at the highest level in the entity.

To conclude, leadership is about service to others. It is not defined by a position or title. The leader must possess the character to inspire trust and the competence to earn the respect of those led. Trust is a foundational requirement for the leader. Without the trust of the team, the leader does not have the influence at his/her disposal to actually lead others. If you want to develop your leadership skills, start where you are right now. Leadership starts with you. The behavior that you model sets the tone for the culture and determines how far you and your team can get. Lead yourself well and make growth your objective.

By Lourdes Coss, MPA, CPPO – Sept 2020

Procurement Transformation Blog – www.lourdescoss.com

About the Author: Lourdes Coss is a former Chief Procurement Officer living her purpose.  She’s the author of “Procurement Methods: Effective Techniques” and is using the lessons of her 27 years career in government procurement and transformation to coach, train, and provide consulting to leaders and aspiring leaders in the profession. Post-Pandemic, you may find her in a café writing her next book.

Effective Communication: The 3 Things We Should Know and Practice

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It’s been said that communication is the single most important skill to the success of individuals in all aspects of life.  I often listen to the advice that great communicators have to offer, such as Oprah Winfrey, Tony Robins, John Maxwell, Les Brown, and others. I also listen to experts dissect the different communication styles of these great speakers with the goal of learning about patterns, techniques, and their take on “the secret sauce” to effective communication. Even if they don’t use the same terms to express it, I have found that the advice provided by these experts is similar.

Communication is the transfer of information between two or more parties. There are three parts to communication: the message, the sender or message generator, and the recipient of the message. The education system does a decent job of instilling in us the technical aspects when it comes to the message. We begin learning at an early age the rules of grammar, syntax, and even literature. We learn how to craft a message by writing essays, reports, letters, and even poetry. Yet, we don’t graduate being skilled communicators.

There is more to communication than words, grammar, or correct syntax. The skill of communicating effectively is not in the core curriculum of the education system, but I think it should be. Because even with all the years of language education, many do not grasp the concept of how to craft a clear message that has a high chance of being understood by the recipient in the way intended.

To get some perspective on this subject, I want to share one of the interesting things that I learned later in life. Words account for only 7% of the communication. The other 93% is comprised of body language, facial expression, and tonality. So, we spent all those years trying to learn how to write and understand the meaning of words, but their effect is really less than 90%. I will not dive into details on this today, but many of the great speakers talk about this in their talks or their books.

I don’t think that anyone will argue against the need to continue to grow in the skill and art of effective communication. In fact, we should all be required to take a course to set us off on the communication growth journey and to help us avoid some rookie mistakes when we start a job! If you consider your job duties regardless of where you are in the organization, you will at some point be required to communicate with someone, whether an end-user, supplier, a member of an interest group, a member of the governing body, your supervisor, or a colleague.

Communication comes into play as we promote and live procurement values with every project that we handle. Let’s take transparency, for example. It requires clarity. Transparency is manifested in part in the solicitation documents. Requirements need to be clearly articulated. But before the requirements can be clearly articulated in a document, good listening should take place. Procurement professionals provide process leadership and service, but for anyone to follow, there has to be some level of connection that positively influences the stakeholders to follow his/her advice and adhere to the process, policies, and legal requirements. Let me then highlight the three essential aspects of effective communication.

  1. Listen to Understand
    Listening is a skill that we don’t practice enough. Many of us think we listen, but we are truly not. Listening to understand requires that you abandon the need to jump to conclusions, finish the person’s thought, judge the message, or the person communicating the message.  Some great listeners place their index finger on their lips as a reminder to listen and keep them from interrupting the other person. Listening to understand requires an empathic focus on the person’s message. Listening is one of the greatest gifts that you can give another person, particularly if as a result they feel heard, validated, and understood. Everyone wants to be heard.  When a person feels heard, they can be more receptive to your response.
  2. Clear and Concise Message
    A clear and concise message will help to avoid confusion. Avoid using too many words. Sometimes we want to show our expansive vocabulary and end up confusing the other person. If you tend to ramble or get sidetracked, write down the main point is simple, everyday words. Many people stop paying attention if the point is lost in the abundance of words. Also, make an effort to know your audience or learn about them so that you can communicate in a way that they understand. Even when you are using the storytelling technique, it is important to make the point with the least number of words in order to make it effective. So, the advice is to keep it simple.
  3. Connection
    Connecting with people encompasses good listening skills and a clear message. This skill goes beyond verbal communication. It requires you to be authentic but also to meet the person where they are. This may require blending your style or mirroring the style of the person with whom you want to communicate. To connect requires some extra effort. Don’t expect people to adapt to you; instead, help people relate to you by meeting them where they are emotional. From a broader perspective, the goal of communicating is to connect with the other person. When you have a connection, a common ground, or are in rapport, communication becomes a vehicle for trust. If you want to positively influence others, communicate to connect.

When we think about these three aspects of effective communication, it is easy to think that we implement them occasionally. The key is to be consistent in the application of these techniques. Sometimes we lack the awareness that our communication is not optimized perhaps because of the mountain of work at the desk that robs us of the opportunity to intentionally improve our communication. I know many procurement professionals committed to their work and to the service that they provide to their community. Like me, they want to make a positive impact. Over time, they masterfully juggle an insane number of projects particularly if they find themselves in a “solo procurement” scenario. Unfortunately, all the hard work may be overshadowed by their inability to practice tactics that can help them achieve effective communication on a consistent basis.

The ability to communicate effectively and more importantly to connect is key to a successful career. Any successful person may agree that communication is or has been an essential contributor to their success. Perhaps this is why despite all the good and hard work that some professionals do on a daily basis, they may feel that their level of success may not be commensurate with their efforts. There could be many factors why success in the form of promotions may have skipped them, but one that is sure to have an impact is communication.

In his book, “Everyone Communicates, Few Connect“, Dr. John C. Maxwell talks about this. He states that hard work, even when the result is a great job, is insufficient to achieve success. In order to be successful, one must really be able to communicate effectively with others.

Communication is important in all areas of our lives. This is particularly true if you want to lead, especially when leading a transformation process. Since people naturally resist change, effective communication is one of the key enabling factors. So, if you are leading change, there is no option but to be intentional about practicing techniques that help you communicate effectively.

In conclusion, to be successful in the different aspects of life, we need to continue to improve our communication. It’s not enough to work hard or have degrees or certifications. Effective communication requires practice and intentionality. Getting good at consistently communicating effectively is not the result of a one-time seminar or a finite time period for practice. When we consider our limitations, the complexities of human behavior, and the environmental challenges that restrict the way we communicate, it is easy to reason that getting good at communicating is a life-long journey.

lourdes guest profileBy Lourdes Coss, MPA, CPPO – Sept 2020

Procurement Transformation Blog – www.lourdescoss.com

About the Author: Lourdes Coss is a former Chief Procurement Officer living her purpose.  She’s the author of “Procurement Methods: Effective Techniques” and is using the lessons of her 27 years career in government procurement and transformation to coach, train, and provide consulting to leaders and aspiring leaders in the profession. Post-Pandemic, you may find her in a café writing her next book.

procurement tool leading

Ohio Schools Council Way Ahead of the Service, Value Curve

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The Ohio Schools Council is not your typical cooperative program. What sets them apart from other K12-focused councils of government and national public sector group purchasing organizations? OSC understands that delivering the greatest member value cannot stop at their menu of contracted suppliers.

Giving members the ability to easily identify, compare and choose the products they need from multiple supplier catalogs AND have their purchases automatically routed for required approvals, purchase order creation and transmission goes far beyond what the vast majority of cooperatives provide their customers today. While the cooperative industry has been slow to adopt these functionalities, OSC has been providing its members’ online supplier transaction capabilities since the early 2000s. OSC recognized that introducing marketplace and procure-to-pay technologies would streamline their members’ buying and financial processes to shorten purchasing cycle times and give them greater visibility into savings opportunities.

In November 2016, OSC implemented its EqualLevel-powered marketplace, the eBuy Cooperative Purchasing Portal. eBuy gives members both source-to-pay functionality and a customer-friendly environment on par with consumer online shopping sites. Kelly Rocco, OSC program manager, describes eBuy as “a one-stop e-marketplace that’s so easy for members to use.  It’s like shopping on Amazon.” OSC has over 110 contracted suppliers in its online marketplace. From eBuy, members can purchase directly from multiple suppliers on one order or request quotes.

“Other [ERP and financial system] e-commerce solutions we looked at did not have the ability to search across supplier contracts and comparison shop. You had to go to each catalog one-by-one, take notes…Very time consuming and a lot of effort,” said Ms. Rocco. “Plus, for our members who want their own dedicated marketplace integrated into their financial system, we know EqualLevel integrates well with Tyler MUNIS, eFinance Plus, and [USAS] state software. That’s a huge plus for our members, and one reason we were recently contacted by a member who specifically asked for the EqualLevel marketplace.”

The Ohio Schools Council has many business services programs to support school operations. But by providing their members an easy-to-use, visually friendly online portal where they can easily compare products supported by system-identified savings opportunities, and transact with local and nationally-contracted suppliers, OSC takes an active role in connecting their members to greater efficiencies and real-dollar savings. A key message that Ms. Rocco takes on the road when she meets with schools and one that will be front-and-center in an upcoming webinar presentation this fall.

 

♦  To learn more about OSC and how they drive value for their members through the eBuy portal, reach out to Kelly at krocco@osconline.org or (216) 447-3100 x6101.

♦  To elevate your customer procure-to-pay experience with the ELSA-powered Marketplace, contact Cathy Boyd at cboyd@equallevel.com or call (216) 403-8900.

leadership in business

The Five Qualities of a Highly Impactful Team

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It takes a team…! Whenever you see a successful leader, there is certainly a capable team beside that leader. As Dr. John C. Maxwell stated:  “One is too small of a number to achieve greatness”. A leader can accomplish some goals but to reach significance a leader needs a team.  Phil Jackson, the head coach of the Chicago Bulls back in the 1990s, stated: “The strength of the team is each individual member. The strength of each member is the team.” Team members contribute their talents, and the entire benefit from the collective contributions of each member.

Coming together is a beginning
Staying together is progress
And working together is success

–Henry Ford

Creating a cohesive team requires thoughtful consideration to bring together the talent needed to achieve specific goal(s). A team is as strong as its weakest link.  Strong, successful teams have certain qualities in common.

Members of great teams are committed to high performance.

Each team member shares the responsibility for the entire team’s success and each of its individual members. Each team member’s performance determines the team’s success. I read a story that exemplifies the commitment to high performance for the benefit of another team member. The story is about the veteran Charles Plumb, a US jet fighter pilot in Vietnam.

Plumb was ejected from his jet and parachuted into enemy territory.  He spent six years in a Vietnamese prison.  After released and back in the US, he was sitting at a café one day, a man came up to him and said, “You’re Plumb! You flew jet fighters in Vietnam from the aircraft carrier Kitty Hawk. You were shot down!” Plumb was confused and asked how the man knew about that. “I packed your parachute,” the man replied. The man then shook his hand and said, “I guess it worked!” Plumb assured him it had and said, “If your chute hadn’t worked, I wouldn’t be here today.”

The story reveals the importance of skills and the ability to perform at your best when it matters most. In a good team, members are committed to the cause and its members. This story also unveils the element of trust.

In great teams, members develop trusting relationships.

In his book “The Infinite Game”, Simon Sinek makes an interesting observation about the difference between a trusting team and a team. He states that in a team where a group of people come together to achieve a specific result, the relationship amongst the team members tends to be transactional. In contrast, in a trusting team environment, the team members develop a trusting relationship. Trust is a feeling that develops in the layering of situations where team members feel safe to be vulnerable. Trust cannot be imposed, required, or demanded. Trust and vulnerability go hand in hand. A violation of trust essentially eliminates vulnerability, which then shatters the possibility of trust.

In great teams, members are committed to working collaboratively towards a common goal.

The 1992 Olympic Men’s Basketball Team aka “The Dream Team” is an example of collaboration towards a common goal – to bring home gold. The Dream Team was comprised of the best players in basketball history. To win gold, they had to put aside their egos and unite on a common objective. They had to trust each other on the basketball court to attain greatness as an Olympic team. “The whole is better than the sum of its parts.” –Aristotle

Another example is a team that over time has seen the participation of the brightest minds in the world, The Royal Society of London. The Society is committed to a common goal: the advancement of science. Under his leadership in the 1700s, Sir Isaac Newton asserted the Society’s dominant role in science.  With the help of Edmond Halley, the Society published Newton’s Principia Mathematica. It is one of the most influential books of all time describing the action of gravity. Through the Society’s photographic expeditions of the solar eclipse in 1919, astronomers confirm Albert Einstein’s relativity theory. Today, the Society fosters international scientific cooperation, innovative research, and better communication between scientists and the public.

Members of great teams listen, communicate, and connect.

Google led a research initiative on the qualities of the best teams, Project Aristotle, and concluded that the best teams are those whose members listen to one another and show sensitivity.

In NASA 1969 Apollo 11, for example, the team had over 400,000 scientists, engineers, and technicians.  The astronauts of that mission were Whilst Neil Armstrong, Buzz Aldrin, and Michael Collins. These men made it a point of visiting the laboratories where these scientists, engineers, and technicians worked in order to establish the human connection with the people on whose hands they were entrusting their lives.

The Manhattan Project, despite the controversial team’s purpose and extreme secrecy (developing an atomic bomb during WWII), is considered another of the most impactful teams in history.  It is said that communication and collaboration made it one of the most effective teams.

Leadership and clarity are necessary to achieve greatness in a team.

The leader has a role in helping the team achieve greatness. Without effective leadership and clarity, it is very difficult for a team to achieve anything, much less greatness. Even when its members are highly talented and accomplished individuals who have enjoyed “solo recognition”, it is essential for the leader to create the right environment for high performance. Talent can be powerful in a team, but only if there is a commitment to a common goal and collaboration. Where talent is abundant in the team, but self-interest guides team members’ actions, it is impossible to establish trust.

What undermines team success?

Research by The Ken Blanchard Companies concluded that teams fail due to a variety of reasons. Three of those conditions caught my attention:

  • lack of effective leadership and support
  • lack of clarity of purpose
  • lack of talent or training

There are many examples of failed teams even when their members were very talented. Enron, for example, was a highly regarded company.  They violated the trust of many due to greed. They deceived over 20,000 employees who were left to face significant personal financial losses.

Another example is the changes to the LA Lakers Basketball Team after the 2002 championship that the leadership of that organization made. Two very talented team members who enjoyed individual recognition were unable to work collaboratively. There were a number of player trades made by the organization, which essentially created a new team. The new team did not possess the qualities necessary to maintain its champion status in the season that followed. The inability to collaborate was detrimental to creating a cohesive team environment. The organization may have overestimated the value of individual talent and did not put enough attention to the other qualities required to assemble a strong team.

In conclusion, some of the most impactful teams in history attribute their success to a strong foundation of trust, respect, communication, collaboration, and a commitment to a common goal. The qualities that make a team successful are interconnected. The leader must orchestrate well the resources, talent, and environment in order for the team’s efforts to achieve high impact. The leader has an important role in creating an environment that brings out the best of the team collectively and individually. When there is clarity of purpose and effective leadership, the team can move the organization in the right direction.

 By Lourdes Coss, MPA, CPPO – August 2020

Procurement Transformation Blog – www.lourdescoss.com

About the Author: Lourdes Coss is a retired Chief Procurement Officer with 27 years of government procurement and transformation experience; the author of “Procurement Methods: Effective Techniques”; and an executive coach, speaker, leadership & procurement trainer, and procurement consultant

 

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Is a Cooperative “Program” Really Necessary?

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The secret is out. The beans have been spilled. The emperor has no clothes. At least, that’s what a recent blog post from Mariel Reed, CEO of CoProcure, and the 2019 launch of the contract exchange site PPEx by cooperative industry veterans, Steve Hamill and Dave Trudnowski suggests to me.

Like the boy who states what should be obvious to everyone but isn’t (or at least “everyone” won’t say it), Reed points out that “all public agencies including local governments can create cooperative contracts” by including cooperative use language in both the solicitation and contract documents. For cooperatives that have been so successful leveraging the lead public agency (LPA) model, in particular, this candid observation hits a tender spot.

Cooperatives have worked hard over the past 15-20 years to establish their value and differentiate their programs and their contracts from their peers. The prevalence of cooperative programs and similar contract options feeds a view of these offerings as commodities. Pointing out that creating a viable piggyback-able contract is a straight-forward matter reinforces that view. If all competitively awarded agency contracts are piggyback-able, it becomes that much more difficult for programs to promote themselves and their contracts’ value on the basis of scarcity, uniqueness, or quality (by whatever measures are important to an agency).

For cooperatives’ customers, what is important is that a contract they piggyback on is legally compliant and meets their operational requirements. If all cooperatives tout their contracts on the basis of compliance and “meets your needs,” where’s the differentiation? What’s the difference between one contract over another? Differentiation comes only at the level of scrutiny needed by each agency to determine a right-fit. That makes mass-communication of each contract’s relevance to a potential user agency extremely difficult.

Given this state of cooperative contracts as marketplace commodities, the success of a contract provider — be it a cooperative program or an individual public entity — substantially depends on the effectiveness of their promotional efforts and business models. This is another unspoken truth of the cooperative industry. The value of an LPA program may be less about the contracts offered than about how effectively they go to market; how effectively they attract customers to their contract catalog portals and inspire trust in their contracts to drive contract spend volume.

Contracting Convenience Portals

LPA cooperative programs have been the dominant influencers of cooperative agency practices at the national level for two decades, but the combination of their success advocating the practice and educating the marketplace, together with advances in procurement, finance, and e-commerce technologies have evolved their customers’ needs beyond legislative compliance, practice understanding and awareness of contract alternatives[1].

In general, if agencies are just trying to find cooperative contract options as quickly as possible, then being able to easily search and compare contracts from many contract sources is the new value proposition. Going serially from coop or agency website to another is laborious and time-consuming. Given a resource that sidesteps this pain, wouldn’t agencies prefer to use it at the outset of a contracting event? This is what newer procurement-facing companies like PPEx and CoProcure recognize and what gives them the base to challenge cooperative programs, whether LPA or self-contracting.

For Whom the Bell Tolls

But wait. Don’t sound the death knell for coops just yet. Contract portal providers like PPEx and CoProcure are yet in building mode, growing their repository of contracts through outreach to agencies and government contract-holders. And really, at this point, the value of another contract directory is not particularly high given the number of existing portals and directories, a.k.a. cooperative programs.

In this contract-rich environment, for all cooperative programs and contract portal providers, the key to success comes down to having their contracts in a readily accessible, interactive catalog, effectively promoting it, and making it as easy as possible to generate greater contract volumes. In other words, how easy does a cooperative contracting entity make it for agencies to execute a contract and transact with their awarded suppliers?

As yet, neither CoProcure, PPEx, nor the vast majority of LPA cooperatives provides the kind of marketplace environments for their contracts that would provide substantially greater value to agencies than their current passive directories. The functionalities that could truly set them apart from their slower-to-adapt competitors are a reality. Consumer-like marketplaces are already being implemented at the agency level to support their specific contracts. Cooperatives and contract exchange providers need to accept this growing change in customer capacity. To sustain, much less strengthen, ongoing relevance, these organizations need to ensure that their contracts are included in agency environments while also providing e-commerce environments for their customers with more limited procurement infrastructure.

Newer technology offerings that support other areas of procurement practice add to the pressure on cooperatives to elevate their level of service. Agency practices like line-item bidding facilitated by low-overhead solutions make it increasingly simple for organizations to achieve in-the-moment, market-best pricing. This further chips away at the value attributed to market-aggregation-based programs. To continue to deliver on the promise of cooperative contracting value, the organizations whose livelihood depends on ensuring their customers realize its full benefit must adapt to the market.

The transformation can begin today.

Ready to start? Don’t believe it?  Let’s talk.

Brent Maas
Vice President of Marketing
bmaas@equallevel.com

[1] For more perspective on the evolution of the cooperative marketplace and how GPOs need to adapt, check out “Grasping the Grail of Cooperative Program Differentiation.”

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Grasping the Grail of Cooperative Program Differentiation

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Twenty years ago, when national cooperatives[1] were just starting to form and piggybacking contracts and participating addenda were being added to the procurement professional’s toolbox, there was a compelling value proposition that promised these cooperatives’ customers (“members”) great savings of time, effort and the greatest reductions in overall cost. Whether real or perceived, savings across these measures drove the steady growth of early national programs for nearly two decades. Today, roughly twenty percent or $350 billion, of state and local government spending happens through contracts promoted by cooperatives[2] at the local, regional and national level.

With a market channel generating that kind of spend volume, it’s no wonder that we’ve witnessed tremendous growth in the number of cooperatives. The sheer number of cooperative programs, all representing the same value proposition, suggests that the value is there. The entry of private group purchasing organizations (GPOs) and private equity interest in this space in the past three years is further evidence of the success and entrenchment of cooperative programs in the public sector.

For those who championed the cause of cooperative purchasing for two or more decades and advocated for its relevance and value at a national level, there is much to celebrate. And just as we recognize this period as a milestone moment of recognition for GPOs as viable enterprises supporting government procurement, we look to the future and question whether current GPO practices are sufficient to attract new agencies and sustain the engagement of existing customers.

Twenty years equates to generations of people, market and technological development. Today’s public procurement transactional environment demands a higher return on promises of efficiencies and savings. Why? Consider what we have learned over twenty years of experience with national cooperative business models, the expanded capacity provided by ever-evolving technology solutions and new providers across all dimensions of organizational operations, and our individual, non-professional experiences as online consumers. We have collective, first-hand knowledge of how effective well-connected business systems can be and, by contrast, those that are not so well integrated. We know what is possible and realistic, and our expectations have changed accordingly.

Can cooperative contracting due diligence be efficient?

From a procurement perspective, gaining efficiency and/or cost savings justifies considering cooperative purchasing as one possible contracting solution. The challenge is distinguishing the best cooperative contract option from among the many. The more difficult and time-consuming it is to conduct due diligence and discern the best undermines that promise of efficiency and casts doubt on the merit of regularly looking to cooperative programs as a contracting alternative.

The larger cooperative programs have been tuned in to the differentiation challenge for years, prompting more progressive programs in the early-mid 2010s to post all contract formation documentation along with the final contract on their websites. This positive first step helps procurement quickly establish whether a contract is eligible for their use and may satisfy their basic needs. Of course, as with all things normalized, this once program-differentiating service is now a given, an expected base level of service required of a program to be included as an option for consideration.

The Path to Growing Customers, Engagement and Contract Volume

GPOs in the public sector share a marketing problem familiar to many of the suppliers represented in their programs. Specifically, the products they offer are in many ways commodities in the marketplace. Consider that there is nearly as many MRO and office supplies contracts as there are cooperative programs. Not to diminish the offerings of any supplier or manufacturer, but any one contract in a category looks much like another. How can a GPO break through the leveling effect of commoditization?

First, to reestablish their presence as a non-commodity, coops need to acknowledge that their customers’ expectations and the market environment have evolved beyond the context that gave coops their great value and relevance in the first decade of the twenty-first century. Cooperative contracts are no longer unique or scarce. Internet search engines and sourcing technologies have eased supplier identification and contracting efforts. E-commerce sites, ERP- and member-based communities provide substantial price and performance transparency. Sourcing and comparative price information may still be a pain point at times, but anymore that is when contracting for more distinct or complex organizational needs (which generally are not well-suited to cooperative solutions anyway).

Second, cooperatives must become better aligned with their customers, and refine their identities and service levels to bring agencies greater value beyond the foundational value-add offerings of contract portal and market-facilitating activities.

A New Role and Identity for Coops

The traditional view of cooperative programs is defined largely by the contracts they offer; how they are created, their ease of access and how they are supported. But as noted earlier, GPOs need to grow beyond their commoditized functions and products to attract a larger customer base or even just ensure that they can continue to effectively engage and support their existing customers in the future.

To begin that transformation, here are two recommendations:

  • Adopt and deliver a convenience-for-customers orientation
  • Provide contract-based e-commerce functionality

Adopt a Convenience-for-Customers orientation

While every organization strives to be customer-centric, we all know that some businesses are more effective than others at delivering on that intention. To tweak the phrase “customer-centric”  and spark alternative ideas about what that means, consider what it means to create a “convenience-for-customers” culture. How easy are we to do business with? How easy is it for our customers to realize the greatest value from our products?

Cooperatives’ competitive arena is no longer based solely on the contracts they offer. Today, competitive advantage is determined by how effectively programs serve the underlying needs of their customers. Yes, their agency customers need compliant contract options, but what is it that drives them to look to cooperatives? First and foremost, convenience.

“Convenience” for procurement is an expediency, not a luxury. That point is reinforced with every economic downturn. This is why programs that can provide customers greater support throughout the contracting lifecycle have so much opportunity to gain a market advantage among their peers. The easier a cooperative makes it for their agency customers to satisfy their underlying and business operating needs, the more valuable a resource that coop will be to the agency.

To provide an example and identify a specific area of opportunity where cooperatives can deliver greater value and convenience, let us consider the current cooperative contract due diligence paradigm.

Currently, an agency can go to a cooperative’s website to identify a right-fit contract. If one or more is found, they can serially download the contract(s), supporting documents, and participating addendum. That is generally the limit of what a cooperative program offers to their customers from a product perspective. That is helpful to a contract decision-making process, but only to a point. Wouldn’t it be more helpful if there was a capacity to compare contracts and their products and pricing on the program’s website?

Provide contract-based e-commerce functionality

Providing e-commerce functionality is a highly attractive, differentiating offering that would bring added value to government suppliers and to agencies. If a coop provides each customer a transactional environment for the specific contracts the agency has approved, the program could be seen as an important agency resource by all staff, not only those in procurement, with every purchasing episode.

Most large companies have e-commerce capabilities, but for their smaller counterparts who do not, a cooperative marketplace would be the online connection to a government customer they may not otherwise be able to offer. This opens up government business opportunities to a larger and more diverse supplier base, which benefits both the supplier and buyer communities.

Similarly, many large- and medium-sized agencies have the benefit of ERP systems to support their financial operations and, in varying degrees, procurement and warehousing functions. Even so, many ERPs have only a basic transactional environment for buying goods and services. Supplier catalogs, if accessible through the ERP’s purchasing module, can only be reviewed one at a time. Product comparisons have to be done manually, copying and pasting the relevant information from each catalog or external website into a document. Once assessed, the selected product’s information must be transposed back into the ERP’s requisition portal. In contrast to buying “the first product that suits my need” or buying directly from an online retailer or the nearest big box store, this high level of effort deters consistent, responsible purchasing decision making.

For these reasons and others, agencies desire solutions that provide a more consumer-like marketplace experience, both to better serve their internal customers and to improve overall spend management.

Beyond contract directories

Cooperatives that already provide contracts in a directory environment have taken the first step toward a marketplace concept. The former U.S. Communities-sponsored website, SourceConnect, expanded their program’s contract directory to include contracts from other cooperatives and agencies to create a portal making contract identification and document access easier. Though it did not provide users automated contract analysis comparison, “shopping” functionalities, or ERP integration, SourceConnect was a great resource to the many agencies that regularly took advantage of it. Imagine the power of a SourceConnect with modern AI-powered marketplace functionalities that could stand alone or integrate with an ERP. Early-implementing GPOs providing agencies a resource like this would leap-frog ahead of their competitors.

Today, we can count on one hand the programs that have recognized the potential and implementing an e-commerce platform for their contracts. The value proposition for a cooperative-centric marketplace is relevant to all agencies of all sizes, whether or not they have a marketplace of their own. For agencies who have a marketplace, the contracts available from a coop’s marketplace are already e-commerce enabled and can quickly go live in the agency store. Agencies without their own e-commerce portal would now have one, giving them an Amazon-like buying experience for all the approved contracts from that program.

Cooperatives already emphasize the value and savings that can be gained from their contracts. Through a marketplace of contracted suppliers’ catalogs, they can deliver on that promise without qualification.

Time to differentiate and grow

One of the great arguments for including cooperative contracting as part of a procurement strategy is that time saved can be focused on more complex procurements, contract management, supplier relationships, business analysis, and program and people management. Though the public sector market has evolved over the past 20 years, cooperatives have largely not kept pace with the technologies that would save more time and tax dollars for their customers; technologies that would grow the value of cooperative program-public agency relationships and clearly differentiate leading programs from their peers.

With convenience-for-customer as their guiding principle and customer-enabling marketplace technologies, cooperatives can emerge from commodity status, elevate their brand and reestablish their preeminence as leading value generators for public agencies.

The transformation can begin today.

Ready to start? Don’t believe it?  Let’s talk.

Brent Maas
Vice President of Marketing
bmaas@equallevel.com

 

[1] For a foundational understanding of cooperative purchasing and programs, a few articles to reference:  “What is a Public Sector Purchasing Cooperative?”, “Cooperative Procurement: Great Value (Great Confusion)” and “Use of Cooperative Contracts for Public Procurement”.

[2] NIGP: The institute for Public Procurement. Public Procurement Benchmark: 2017 Survey Report. 2017. nigp.org; Onvia Market Research. 2018 State & Local Government Contracting Forecast. 2017.

 

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