Tuesday, June 16, 2009

Tactical or Strategic – Not Mutually Exclusive

Tactical or Strategic – Not Mutually Exclusive

As I sit on my cross-country commute and read through my files and to-do lists, I am faced again with that age old Procurement question: “Do I pursue short-term tactical gains to make this year’s targets at the expense of pursuing a longer term more profitable category strategy that may cause me to fall short on this year’s numbers?” I think I’ve been down this road too many times to not know the answer, which is simply: “Do both”.

It’s a simplistic solution to a simple problem, but that’s what senior leadership gets paid for, right? Not so much. That’s what senior managers get paid for (the difference between managers and Leaders is HUGE)…senior Leaders get paid to help people see the way toward the solution, understand the priorities of the business, understand that priorities and business conditions change, and facilitate the change that’s needed to do the right thing. Leaders welcome dynamic changing environments, the challenges they face in trying to anticipate them, and the opportunity they present to establish a competitive advantage for the business. Managers hate environments that threaten the status quo and put targets and metrics in jeopardy…make this year’s numbers, negotiate next year’s numbers, and move on.

All strategies are executed by a well-defined series of tactical moves. The difference between tactical and strategic sourcing is knowing the endgame and aligning the business to the vision of what that endgame represents (and generating a desire to get there). The internal negotiations to get disparate functions of the business aligned to category strategies takes Leaders, not managers, to execute, because they are tougher negotiations than those with suppliers (at least suppliers have the same agenda as you – they want to sell stuff, and you need to buy stuff).. A good Procurement Leader will usually need to spend 80% of his/her time on these internal matters to drive success and alignment within the business (hopefully the Sourcing Managers are spending 80% of their time understanding the markets, the supply base, and how to create breakthrough business solutions that meet business needs).

In the end, it’s all about people and talent. There are those that think that the solution is to follow the process, check off the boxes to show that you followed the process, and make the numbers with some extra to spare. These are the managers. The Leaders think differently. They set huge stretch targets, knowing that falling short of them is not failure. They filter information differently, focusing on the dynamics at play in the marketplace and the timing signals that are constantly flashing. Leaders listen to the problems of their stakeholders, not so that they can jump high enough to meet their desires, but to help them shape their supply strategies in an ever-changing world to deliver business value that far exceeds any savings calculation that may be a proxy for Procurement success. Procurement Leaders know when they have leverage, when they don’t, and what to do (and when) to get repositioned for success.

Sometimes a series of tactical moves is necessary to lay the groundwork for that repositioning – strategies get executed through tactics – but tactics without strategy are wasteful, non-sustainable, and non-repeatable. Strategies without tactics are nothing more than dreams. We don’t get paid to dream…we get paid to create and build.