The secret Sauce of successful Sourcing (LAP Nuggets - Episode 1)
Have you ever wondered, why some of the strategic sourcing cases failed and others were successful?-In a series of episodes we gonna introduce you, what we’ve learned from our LAP Alliance networks’ multiple engagements and successful sourcing cases with LAP. With the LAP Nuggets we’ve furthermore developed and assembled applicable tools, that are easy to understand and will reduce your risks during strategic sourcing significantly!
In this episode we’d like to introduce you the secret sauce of successful souring - Strategic Alignment!
Initial position
Today companies run a sequential RfX process with a lot of handovers (1), often not by the people that will do the job and less involvement (1) of the real users or customers of the product/service. With Lean-Agile Procurement (short LAP) we overcome these main issues by setting up an agile, cross-functional product development team, that „will do the job“ and highest possible involve of all stakeholders and potential partners (2).
In both approaches complex, strategic sourcing cases still might fail while others are successful. Why is that?-We believe one of the key driver for success is strategic alignment and we’re very bad in it today.
The challenge
In our mandates we recognize a lot of mis-alignment. It starts, that the various functions have divergent business goals, so that we often run into a challenge getting the right people on board. Often the people don’t know the supported company goal of the sourcing case either, nor the business case of the product and it’s purpose, vision, etc. Even though they’ve got this information it’s often a written document, which lets a lot of room for interpretation. No joke, it happened to me in one mandate as I asked the sponsor to repeat his vision for the new product that the sourcing team responded:
“We understood the written business case 180 degrees different, good you explained it again!”
If you still run a traditional RfX it might be even worse. The business might know it, but it’s mostly intransparent, or gets lost with each handover in the process. And it’s the same thing by providing the potential partners „just“ an tender document: A lot of room for interpretation and that’s then why the proposals look like they do!
The question is, how should anybody find the right partner/product/service NOT knowing the fundamental direction?!-And how should a partner deliver the „right thing“ within time/budget/quality either?!
From idea to impact with the Lean Procurement Canvas
LAP and the Lean Procurement Canvas foster collaboration between all parties throughout the whole lifecycle of a product or service. Having such a visual tool in place helps to answer all the key questions WHY/WHAT/HOW/WHO and creates alignment by default.
When we assemble an agile, cross-functional product development team we always „start with WHY“, as Simon Sinek used to say (3). What’s the purpose of this product or service, what’s the company goal we’re supporting with, etc. You might wonder how many companies had no ad hoc answer to this simple questions!
During the process you might develop a cascading strategic alignment from purpose to action for the product to be sourced :
—purpose
——vision
———mission
————goals
—————needs
——————etc.
All of this could be co-created by the team and all stakeholders - especially the users and customer - and summarized on the Lean Procurement Canvas. More advanced teams even do a color-coding of the elements on the canvas. Find below an excerpt of the Lean Procurement Canvas how it could be interpreted.
Key is the co-creation, even with the potential partners. Without, there will be no strategic alignment!-Eric from AirFrance recently said the following applying LAP in one of their strategic sourcing cases (They co-created 3 proposals simultaneously with 3 potential partners in 1 room using the Lean Procurement Canvas):
To improve each proposal we do need collaboration and for collaboration we first of all need alignment. That’s why we usually need up to 80% of the time with at the buyer side only to agree on the WHY and WHAT internally first. To come to action it’s fundamental important, that the team, including the partner and it’s main stakeholders, have a joint agreement about the ultimate next goal/s. The challenge we’ve observed is, that even everybody knows SMART (4), we’re all very bad in applying it. I personally find it almost impossible to write a business goal, that is specific, measurable, actionable, relevant or realistic and time-bound. It always felt I needed to be a jack of all trades and it seemed our customers had the same issue.
That’s why we’ve put all our expertise together howto write good business goals and developed the „golden“ LAP Nugget „Business Goals & Key Results“ we’d like to share with you in this blog post. More nuggets are about to come in the next episodes of this series of blog posts.
LAP Nuggets: Business Goals & Key Results
If it comes to an internal agreement with our main stakeholders we do exactly need to know when we will have been successful. Same thing is important for the potential partners to create their proposals and to become e.g. a fundamental aspect of a joint contract too.
“Good practices are never the solution, but could be always a source for inspiration.”
In agile I always loved the fact that we slice complex customer needs down to slices, that are achievable within days or hours and could be further prioritised. We furthermore agree on the acceptance criterias even before we start implementation. A similar concept is used some abstraction levels higher with the OKR’s (5). The Objective and Key Results have been one of our main source of inspiration writing better business goals. We enhanced the concept by further aspects specifically for LAP and created the LAP Nuggets „Business Goals & Key Results“.
Please note: Important to understand is that all of our LAP Nuggets are not prescriptive to run LAP or use the Lean Procurement Canvas. Majority of users still use just sticky notes. As every good practice one size doesn’t fit it all, but could always be a source for inspiration!-Btw. You might use them in other contexts as well :-)
If you’re familiar with OKR’s it’ll be obvious to you. Each Business Goal consist of a card „Business Goal“ and one or more „Key Results“. From my point of view is it this seperation, that makes it much easier to define faster, better business goals!
To make it more easy to understand find below a rough example of a startup, that wants to become the #1 eBike rental-service provider.
Business Goal - example
In comparison to the OKR’s we added the:
Strategic classification, which gives the team some background of the strategic areas this case is supporting
Rank / weight, which foster a discussion about priority and weighting of multiple business goals. This gets relevant e.g. if we gather customer needs. In case the business goal is just minor important we shouldn’t waste our time in gathering too much customer needs.
Checklist, which leads us with the most important aspects in writing good business goals
Key Result
In comparison to the OKR’s we added the:
ID, which help us referring to the rank of a business goal, or from e.g. customer needs, etc.
Owner / Progress, which owns and tracks it. The key result could be achieved within hours or days, but also months.
Checklist, which leads us with the most important aspects in writing good key results
As you could imagine we value from an alignment point of view the co-creation and involvement of all sttakeholders more than the result!-Nevertheless it’s also much more effective if it comes to questions with stakeholders, a new person need to be introduced, etc. if the team has all the main informations on the Lean Procurement Canvas hanging at the wall :-)
Learnings
Business Goals give a clear direction for the team and to all it’s stakeholders what to expect from the product/service to be build and/or sourced
Writing Business Goals is hard and patterns such as the LAP Nugget „Business Goals & Key Results“ could help
Development of Business Goals always is a team effort. In other words „the process of development is more important than the result!“
Visualization during Alignment helps coming back to it more easily and getting the big picture on one view
Without an alignment about the WHY we source, nor having an idea about the supporting company goal we better shouldn’t start sourcing as we might head in the wrong direction
FREE Download
All our LAP Nuggets are open source and could be download FREE of charge for self-printing. The nuggets are available in different colors and contains examples, sources.
Please note: During checkout process you’ll be asked for payment details. In case you added just FREE product only you could ignore it.
In the next episode
In the next blog post we'll answer the question “Does Agile Sourcing mean to have no Plan?”. Expect more useful LAP Nuggests and stay tuned!
Author
Sources
(1) Lean-Agile Procurement Alliance, 2019
(2) LAP Approach, https://www.lean-agile-procurement/approach
(3) Simon Sine, golden circle https://www.youtube.com/watch?v=IPYeCltXpxw
(4) SMART creteria https://en.wikipedia.org/wiki/SMART_criteria
(5) Objectives & key results by OKRs Andrew Grove, Intel
Image sources
Head-image https://www.fortheheartskitchen.com/mega-knusprige-vegane-golden-nuggets/
All other images by LAP Alliance