Smart Sourcing: The New Normal

By Bruce Barnes

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In business today the active noun “sourcing” often is preceded by one of a growing collection of adjectives: "global", "strategic", "crowd", "multi", etc.

However, each of these design models and potential pairings is built upon a single premise―no matter how capable each of us might be, in this day and age we simply cannot be successful alone. Consequently, we must all engage in the continuing practice of uncovering, assessing and employing effective suppliers for our goods and services.

There is a lot riding on this. As with any team-building exercise (and this process clearly is that), we are only as good as our weakest link(s). Given today’s competitive environment, extreme care must be taken to assure that these important associations are well built, well measured and well managed. They must also be geared explicitly toward extracting full quantifiable corporate value from the relationships themselves. As a result, it seems very appropriate that yet another adjective must now be added to the equation, "smart".

Core Competency

Without question a must-have core competency for CIOs today is the ability to extract full value, both tactically and strategically, from their vendor community. In that context smart sourcing is indeed very different. However, it is not all that mystical. It begins by remembering the underlying element of any successful well balanced relationship is a true commitment to a win/win result.

It also begins by remembering that relationships are dynamic and require ongoing attention. Being “smart” once will not do, you have to be “smart” on an ongoing basis. If anyone somehow still expects a paint-by-numbers script that they feel will quickly and predictably lead them to a sale or implementation, show them the door.

As a former Fortune 100 CIO, the often-overused word “partner” means that my providers and I will be equitably sharing cost, profit, risk, information and resources, for the purpose of a defined mutual benefit. In pursuing that mutual benefit, behavior matters. In today’s highly time-compressed world of many moving parts, top-tier CIOs will not allow themselves to be subjected to cursory vendor fly-by’s that do little to reduce the complexity in their complicated lives.

Vendors must have done their homework, must always be straight-forward and honest, must be innovative and creative, and must be willing to invest the time needed to ultimately be seen as credible and value-focused if they want to do business with me.

They also must be proven strategic thinkers, driven beyond the superficial quarter-end “deals” and flashy enticements. Similarly, and once again in the spirit of true partnership, I then also know that I, too, will have to behave in the same way. Anything less on either side of the table is unacceptable, non-productive and unneeded.

Simply stated, a smart sourcing environment boils down to having (a) a clear vendor management strategy, (b) an associated underlying vendor management program and value-based metrics, and (c) a solid and effective process for initiating, educating, incenting, rewarding and terminating those relationships themselves.

Six Steps

Here are a half-dozen behavioral tips and must-have principles that will help move you more productively down that path toward smart sourcing, as adapted in part from the leadership philosophies of Tom Malone, Leadership in Games and at Work:

1. Develop, and similarly expect of all parties, the ability to make sense out of unclear or ambiguous situations. This means that the “new normal” behavior for you and your associated vendors will be based on the ability to see your respective (and collective) worlds in new ways, unencumbered by what is or what was, and instead challenged by what could be. As Marcel Proust once said, “The real voyage of discovery consists not in seeking new landscapes, but in having new eyes”.

2. Establish a base level in-bounds/out of bounds framework that will clearly define both the ultimate intended “value” outcomes and the specific performance metrics associated with their pursuit. Note that those governing frameworks must also clearly establish single points of responsibility and accountability on both sides of the relationship, as well as how to address the mitigation of any potential risks that will emerge along the way.

3. Narrow the potential field of play, as well as formally re-assess the players on an annual basis. Create a sense of competition. The growing amount of creativity that will result will ultimately work to your benefit.

4. Develop the ability to create and maintain key relationships across multiple organizations. This absolute key to success begins by having the ability to listen to and understand what others are thinking and feeling, suspending judgment, and then working to understand the patterns of how those others are moved from data to opinions.

It then requires the ability to effectively articulate your own point of view, likewise explaining how you moved from data to interpretation, and then convincing others about the merits of a given perspective. Remember that smart sourcing is never about control, which can be very relationship-destructive. It is instead about the ability to effectively influence behaviors and contributions, as well as leverage mutual strengths where they may lie.

5. Develop the ability to create compelling images of the future. Smart sourcing relationships are strategic, while commodities are more right-now tactical. Smart sourcing attempts to go well beyond supply and demand provisioning, and instead crafts a guiding picture as to where we are going, why we are going there, and when we expect to arrive.

6. Become skilled and predictable in turning visions into reality. Finish the job. As has been reinforced by many experts, the value pay dirt lies not in generating new ideas, but in turning those ideas into money. Nobody buys good ideas, they buy solutions. The essence of smart sourcing will not be based on the innovative processes that you design, but rather on what you can get your company to adopt.

Bruce Barnes has over thirty-seven years of experience as a senior level technology officer, including CIO roles in very influential Fortune companies. He has received numerous industry accolades and is a familiar voice at national industry events and in major industry publications. He is currently the CEO of Bold Vision, a senior level consulting consortium, providing trusted advisory support and executive coaching for senior level corporate leaders. He is a co-founder for the nationally acclaimed CIO Solutions Gallery program series at The Ohio State University’s Fisher College of Business, and he is a graduate of that same university.