News U Can Use

A Supply Chain/Strategic Sourcing learning community devoted to ideas you can use in your work or daily life.

Did the “Curse of Knowledge Shoot Strategic Sourcing?

Posted by thempowergroup on October 5, 2010

Today’s post is from Dr. Lowell Yarusso, Senior Vice-President, Talent Management, of The Mpower Group (TMG) and a contributor to the News U Can Use TMG blog.

As I commented in Six Keys to a Sustainable Supply Chain Advantage, “A number of ‘high promise’ approaches to obtaining goods and services have been introduced to improve supply chain operations. In retrospect, “high promise” techniques such as Strategic Sourcing, LEAN Sourcing, Supplier Partnerships, etc. all have two things in common. First, proponents of each can point to outstanding examples of the tremendous promise they hold. Second, every one of them seems to fall short of expectations far more often than not.”  That failure to consistently achieve expectations seems to be, in general, the most unchallenged premise fueling the “alive or dead” debate around Strategic Sourcing swirling through the blogosphere of late. (See “Strategic Sourcing Is Dead!” for the blog that jump started the debate and “It’s Your Turn To Join The Great Strategic Sourcing Debate” for a recent compilation of the discussion.)

When I came across a recent (brief) article from Harvard’s Program On Negotiations (PON), that summarized some of the findings related to what is called the Curse of Knowledge, I saw some connections.  The article tells us that, “Researchers Colin L. Camerer, George Loewenstein, and Martin Weber have shown that once people know something, they assume that others without access to this knowledge will nonetheless behave as if they share the privileged information.” This phenomenon has been labeled the curse of knowledge. Another key point is that “…individuals who correctly solve a problem overestimate the percentage of their peers who will be just as successful solving the same problem.”

Much of the conversation that has been generated around the issue of life or death for Strategic Sourcing seems to me to be directly related to the Curse of Knowledge.  To put a little more meat on that bone, I’m going to ASSUME FOR THE MOMENT that, if not “alive and kicking”, Strategic Sourcing has, at least, not yet expired.  First, as indicated above, even the defenders seem to accept the premise that Strategic Sourcing efforts frequently “…fall short of expectations.”  Why should that be the case for a process that is relatively well-defined and understood by its proponents?

Simply put, those who attempt to implement Strategic Sourcing have great difficulty overcoming the legacy of their own experiences and knowledge.  As a result, they unintentionally and erroneously assume that every organization and every sourcing professional shares all the key insights upon which Strategic Sourcing success depends.  For example, if, when I speak about “Total Cost of Ownership”, I know that I mean intangible as well as tangible costs, the Curse of Knowledge will make it difficult for me to grasp how few of my listeners don’t get the larger perspective.  In addition, within an organization the Curse also has an impact.  When one sourcing team “gets it right”, the PON article tells us that they will assume the next team will make equally effective decisions and, therefore, achieve equal success in solving the problems they face.  To the extent that proponents of Strategic Sourcing fail to make ALL their knowledge accessible to every stakeholder and do not help others improve their problem solving ability, the process, whether alive or dead, fully developed or fatally flawed, cannot succeed.

If, on the other hand, I ASSUME FOR THE MOMENT that Strategic Sourcing is, indeed, dead, what (or who) killed it?   Here, again, I think that the Curse of Knowledge concept can help us gain some insights.  In my experience, one of the causes for failure to achieve value through Strategic Sourcing is that organizations and their people make far too many assumptions about how others, both within and outside the sourcing group and the enterprise, will behave.  Those assumptions are based on the inability to fully understand the limits of shared knowledge about the impact on culture, politics, processes, procedures, stakeholders, goals, needs, strategies, etc. that Strategic Sourcing requires.  And that inability is a direct result of the Curse of Knowledge.  Strategic Sourcing’s death, then, was both inevitable and predictable so long as practitioners (internal as well as external) have been unable to overcome key gaps in their knowledge, whether because of organizational silos, flawed processes, or the impact of the curse.

Interestingly, it makes little difference if Strategic Sourcing as we know it today is alive, expiring, or dead.  In any case, unless we can address the issue of the Curse of Knowledge more successfully than we have in the past, the promise of Strategic Sourcing will be ever elusive.  If successful Strategic Sourcing is more about overcoming the Curse of Knowledge than about the mechanics of any system or process, then the assassin (or attempted assassin) of Strategic Sourcing is anyone who has ever tried to apply Strategic Sourcing tools, policies, procedures, and processes without finding a way to avoid that curse.

What, then are we to do?  I see several significant steps that need to taken.  Among them are:

  • Reevaluating the underlying theory that drives Strategic Sourcing
  • Revisiting the process derived from the theory
  • Revising the tools that implement the process
  • Refocusing on how to avoid the Curse of Knowledge

I will return to the first three in a later blog.  For now, I want to take a little deeper look at how to avoid the Curse of Knowledge.  We have suggested elsewhere that successful transformations, whether in the Supply Chain or elsewhere, are all about the vowels, i.e., Adoption, Implementation, Execution, Optimization and Utilization.  (See  “Achieve Exceptional Business Results … Buy a Vowel(s)!!! for a detailed discussion.) Everyone “knows” that at one level or another.  Few can grasp how difficult it is to achieve a common level of understanding that will ensure consistent actions across the enterprise.  And, when the focus is on the Strategic Sourcing process, the lip-service paid to things like Stakeholders, Change Management, Alignment, etc. only deepens the impact of the Curse of Knowledge.

In an attempt to avoid the curse myself, I’ll try to take this a little further.  First, it has long been clear that, as Robert Quinn (Deep Change) puts it, “Culture eats process for lunch; all day, every day.”  In other words, you have to change the environment before any process change can gain traction.  (A point that is often overlooked in such other process laden efforts as implementation of new ERP systems, educational reform, and leadership development.)  And that means that the traditional focus on tools, processes, and models is bound to fail UNLESS it is paired with an equally powerful and rigorous approach to spreading and embedding knowledge throughout the organization.  More importantly, it also means that the two efforts, i.e., embedding the process and expanding the knowledge, MUST be integrated and orchestrated to be mutually supportive.

For those who say, “We do that now”, I return to my earlier comment that one of the most intriguing results of the blog storm around the reports of the death of Strategic Sourcing is that there seems to be wide agreement that promise and performance are far apart.  That implies that we really aren’t “Doing that now”, nor have we in the past.  Whether some of the other steps outlined above, such as rethinking the underlying theory behind Strategic Sourcing, will tip the scales to the “Strategic Sourcing lives” side of the argument, there is still the issue that whatever is going on now is not working.

And I am convinced that the focal point of any effort to understand why has to include our tendency to fall victim of the Curse of Knowledge.  We are too quick to assume others are “on the same page.”  We are too anxious to get on to the next big project.  We are too insecure to say, “We can’t fix that overnight.”  As a result, we talk at a high level about techniques like stakeholder analysis, developing push strategies, finding champions, and the like.  But we do not take the time to ensure that our constituents both know what we mean and how we expect them to do it.

The bottom line is that, no matter how successful any particular Strategic Sourcing effort, the Curse of Knowledge, if it is not successfully addressed, makes it impossible for others to understand how to integrate those techniques as an ongoing part of their daily activities.   No matter what we do in the future to address the issue, if we do not figure out how to successfully implement the vowels, we’ll simply end up having this conversation again in 5, 10, 15, etc. years.  As a result, Strategic Sourcing devolves into a set of procedures and falls far short of becoming a way of looking at the Supply Chain in a strategic, holistic way.  And that is why I believe that the Curse of Knowledge shot Strategic Sourcing. We may need to await further developments to find out whether it hit our collective foot or more vital parts of the anatomy.

As always, I’m interested in getting your thoughts and comments.  Please raise the questions you have.  I’ll try to provide an answer and we can all keep the conversation going.

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