The self-disruptive CPO: why we need a new kind of procurement leader

What kind of future-ready procurement leader is needed to survive a rapidly-changing business world? Only a few months ago, the stock market was looking strong and the ongoing trade war between China and the United States indicated future pressure on global supply chains. No one could have predicted that schools and universities would close, companies would tell their employees to work from home and people would be stockpiling toilet paper, of all things.

COVID-19 is causing far more than just financial damage. Chief procurement officers (CPOs) around the world in all industries are scrambling to secure supplies and keep fearful employees motivated to work. And, in some cases, they are seeing their bold strategic plans that have been years in the making fall apart.

This is the real test to all CPOs. An important first point is that managers should acknowledge that they do not have all the answers and that they need to make a move to Plan B, C or even D.

To help CPOs lead through this difficult time, Digital Procurement World’s Matthias Gutzmann spoke to Bernhard Raschke, Senior Client Partner & Head: EMEA Supply Chain Centre of Excellence, Korn Ferry, to understand what kind of future-ready procurement leader is needed to survive a rapidly-changing business world.

The changing role of CPOs in times of disruption and crisis
CPOs always deal with ambiguity – it comes with the job. During crises, ambiguity becomes exponential. As fear becomes contagious across organisations, CPO resilience will be tested to its limits.

The role of the CPO during such times very quickly shifts from driving sustainable supplier value and innovation towards managing supply risks and preserving cash to ensure business continuity.

Knowing what to do when you do not know what to do is important. There is nothing like a crisis to accelerate learning. This is learning agility on steroids – applying lessons from the past to new and unfamiliar situations.

Introducing the self-disruptive CPO
Extensive research by the Korn Ferry Institute across 150 000 executive profiles reveals that the best-prepared leader for tomorrow’s disruptive business environment is the self-disruptive leader.

Self-disruptive CPOs are highly learning agile, self-aware, emotionally and socially intelligent, purpose-driven and assured yet humble. They pro-actively modify their own methods and attitudes, enabling them to keep pace with rapidly-transforming supply chains and risk scenarios.

This model of a high-performing leader incorporates and builds on existing concepts of agile, digital and inclusive leadership. In this model, the source of competitive advantage is a leader who can connect resources and people to build an innovative ecosystem.

Future-ready CPOs need to ADAPT
Anticipate: listen rather than dictate. Listening helps to identify possibilities ahead of others and to secure ‘first-mover’ advantage. The future-ready CPO’s instinct is to create while integrating differing views and making quick judgements to help others reach consensus decisions.

Drive: energise people by fostering a sense of purpose; manage the mental and physical energy of the self and others; and nurture a positive environment to keep people hopeful, optimistic and intrinsically motivated. These leaders are empathetic and can relate to the thoughts, emotions and experiences of others. But they also know that emotions can be contentious, so they watch out for and manage their own.

Accelerate: manage the effective sharing of knowledge to produce constant innovation and desired business outcomes; use agile processes, quick prototyping and iterative approaches to rapidly-implement and commercialise ideas. These leaders grasp how businesses can be gripped by the fear of missing out. They know that innovators may not originate ideas but are the first to successfully execute them, so they act swiftly and courageously.

Partner: connect and form partnerships across internal and external boundaries; enable the exchange of ideas; and combine complementary capabilities to enable high performance. Leaders with the ability to partner effectively understand that innovation is created collectively and by diverse teams, not alone. By avoiding restrictive hierarchy and ‘command-and-control’ leadership models, these leaders facilitate empowered and original thinking. The objective is not always to create team harmony. Productive confrontation can spark original ideas and sometimes needs to be encouraged.

Trust: those who inspire trust understand that diversity is crucial and requires a mindset of inclusivity, sharing goals, sharing responsibility, and sharing power and risk. Leading based on trust means to take considered risks but also to foster dialogue through frequent, high-quality and transparent communication. Sometimes that means admitting to stakeholders that you are afraid and other times it may mean admitting that you do not know everything. “Communication always includes ‘here’s what we know, what we don’t know, and what we’re trying to find out'”, says Andrés Tapia, Global Diversity and Inclusion Strategist, Korn Ferry.

It seems counterintuitive but, in a crisis, CPOs must learn to let go of control which means actively engaging and enabling others so that they can perform. This shift in leadership style requires trust – both in others and in their ability to contribute without being micro-managed as well as in one’s own ability to deal with unexpected outcomes.

Plans are fluid and change day to day. Admitting that the strategy is bound to change too should build trust and improve collaboration. “You need to be clear and you need your team to understand what your priorities are and what you expect of them, but you need to lead from the human side first”, says Ann Francke, Chief Executive of the United Kingdom’s Chartered Management Institute.

In a crisis, CPOs must connect with, motivate and inspire their team, suppliers and stakeholders – and show genuine compassion. In the military, for example, leaders put the safety and well-being of others before themselves.

Do you have what it takes to become a self-disruptive CPO?
We can expect that the COVID-19 crisis will change our businesses and society in many ways. It is likely to fuel areas such as online shopping, online education and public health investment. It is also likely to change how companies configure their supply chains and reinforce the trend away from dependence on a few mega-factories. When the urgent part of the crisis has been dealt with, companies should consider what has changed and what they have learnt so that they can reflect their findings in their plans.

COVID-19 is not a one-off challenge. The CPO who wants to remain in the driver’s seat will start to prepare for the next crisis (or the next phase of the current crisis).

Outlook
Let us hope that the crisis will turn out to be less serious than anticipated, as was the case with the SARS outbreak. The full effect of the virus will not be known for months but it is going to test the adaptability and nimbleness of supply chains in each and every global industry.

While some have drawn comparisons between the coronavirus outbreak and the SARS epidemic of 2002, there is one big difference for business operations: a lot more data analytics are available now. Supply chain leaders that have invested in digital capabilities can track the coronavirus’ influence across a range of data points to better forecast risk and response to the next outbreak.

Goldman Sachs suggests that there will be economic damage from the virus itself but the real damage is driven mostly by market psychology. There is no systemic risk, governments are intervening in the markets to stabilise them and the private banking sector is very well capitalised. “It feels more like ‪9/11 than it does like 2008.”‬‬‬‬

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