News U Can Use

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

Troops in Afghanistan – a Dramatic Case Study for AEIOU

Posted by thempowergroup on October 21, 2010

Today’s post is from Anne Kohler, COO & Executive Vice-President, of The Mpower Group (TMG) and a contributor to the News U Can Use TMG blog.

What do these historic events have in common?

  • U.S. Invasion on North Korea
  • The Bay of Pigs
  • Watergate
  • Escalation of the Viet Nam War
  • The Hostage Rescue in Iran
  • The Challenger Disaster
  • The Bush Administration’s Invasion of Iraq

This list represents some of the biggest decision-making disasters in history.

A few weeks ago, the famous Washington Post White House author, Bob Woodward wrote an article entitled “Military thwarted president seeking choice in Afghanistan” which was all about the critical nature of decision-making.  What greater decision can there be than deciding the fate of tens of thousands of young U.S. men and women as they are sent into war-torn Afghanistan?   The article chronicles the process that President Barrack Obama undertook in finally deciding to send 30,000 additional troops as opposed to the 40,000 (which came highly recommended by his military leaders) in December 2009.

Obama discovered after months of negotiating with national security officials and being in the middle of a war entering its ninth year that three simple questions could still NOT be answered:

  • What is the mission?
  • What are we trying to do?
  • What will work?

In other words, what is the intended consequence in Afghanistan? . . . . . . . . . . . . . . . .

As it turned out, Obama’s military leaders wanted to provide a solution (40,000 new troops) without defining a strategy – the answers to those three simple questions (obviously not so simple!).  Obama asked for a strategy (the answers to those questions) and asked for options, but the inability to answer those questions kept leading back to NO viable options except for an option that was UNacceptable to Obama.    

Having been well versed in decision-making disasters from the past (see above), Obama chose to follow a more structured decision-making process.  He knew he had many intelligent key stakeholders at his disposal and wanted input, alignment, and buy-in from all of them.  He actually made a meta-decision – he decided how to decide by answering the following:

  • Who needed to be included in the decision-making process (stakeholders)?
  • What role would each stakeholder play in the decision-making process?
  • How would the decision be made – what criteria would they use to decide?
  • When did the decision need to be made?

Obama did a thorough stakeholder analysis to determine who needed to be included in the decision-making process.  He realized that it was critical to include both military and civilian leaders.  He also determined each stakeholder’s role in the process; keeping the final decision for himself.  He then determined the decision criteria and insisted on being provided options by his advisors, which was critical.  Finally, he did not allow himself to be rushed into making a quick decision (his military leaders tried to do just that) which allowed him the opportunity to consider many alternatives.

 At the end, he “sold” his decision to all his stakeholders and insisted that they put their full support behind it.  Obama said, “I don’t want to have anybody going out the day after [the speech] and saying that they don’t agree with this.”   

Time will tell whether or not this was the right decision for the U.S.  BUT what we can glean from this article is the importance of having a disciplined approach to decision making.  Even if all of Obama’s stakeholders did not necessarily agree with the final decision, it appears that they did respect the process.  Right before the decision was announced Obama gave Robert Gates, his Defense Secretary, a final opportunity to dissuade him saying, “Can you support this?  Because if the answer is no, I understand it and I’ll be happy to authorize another 10,000 troops, and we can continue to go as we are and train the Afghan national force and just hope for the best.”  Gates did not take Obama up on his offer.

This is just one example of the importance of decision-making.  This is the one skill that most leaders are never trained in, even though it is the most critical part of their job.  It is one of the elements of our AEIOU model, which stresses that the best infrastructure (people, process, tools, and technology – the consonants) in the world is useless without the glue that holds it together (Adoption, Execution, Implementation, Optimization, and Utilization – the vowels that turn the consonants into a language). 

Some of the most important events in history required effective decision making and yet we spend little to no time on developing the skills necessary to make good decisions.  The recent deaths in the California wildfires have been attributed to poor decision making by the firefighters.  The good news is that this has led to the addition of decision-making to firefighter training.  One of the most critical decisions that affects all of us is that of a jury.  Yet numerous articles have been written about the fact that our present system does nothing to provide jurors with the tools to decide the fate of a human life.

We need to think about this key skill beyond our politicians and public servants.  How about executives of any kind?  Supply chain leaders?  Sourcing teams?  This should be a critical leadership skill that is purposely taught to all professionals – let’s provide the vowels to complete the language!

Thanks Anne!

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Strategic Sourcing Is Ready For A Revolution!

Posted by lowellyarusso on October 7, 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.

In my last blog, I raised the possibility that the “Curse of Knowledge” has significantly influenced the inability of Strategic Sourcing to deliver on its promise to drive Exceptional Business Results.  In that blog, I indicated that there are several steps that should be taken to address that failure.  One of the steps I offered was a reevaluation of the underlying theory that drives Strategic Sourcing.  That is the topic I want to begin to consider here.

The current debate over the life or death of Strategic Sourcing calls to mind the work of Thomas Kuhn who wrote The Structure of Scientific Revolutions in 1962.  His main point was that science does not march forward in linear progress towards ever-increasing knowledge.  Rather, it jumps as the result of revolutions in the paradigm that informs scientific inquiry.  Between revolutions, the periods Kuhn termed “normal science”, the major activity is applying the currently accepted paradigm to address the problems that are most readily solved using the current paradigm.

How this comes about is fairly predictable.  There is an issue, a question, a class of problems that are not well handled by the current paradigm.  During the period of normal science, those issues, questions and problems are less important or considered too difficult to resolve.  Eventually, however, the scientific community is faced with a crisis because of the unresolved tension between the theory and the practice of the science.  In response, a revolution (a new paradigm) is launched.  The scientific community responds in a predictable way.  Most ignore the challenge.  Some respond with vehement defenses of the existing order.  A few wonder if the challenge is viable.  After a good deal of thrashing around, the new paradigm, if it proves to be useful in addressing the tension, the new paradigm is accepted and the scientific community settles back into another period of normal science based on a new theory about the way things are.

How does Kuhn’s work apply to Strategic Sourcing?  Reviewing the debate in a variety of blog sites indicates that the reactions to Dalip Raheja challenge (click here and here for details) of the “Strategic Sourcing Community” is quite similar to the “Community of Science” that Kuhn was attempting to explain.  Briefly, for the past 25 years or so, Strategic Sourcing has been guided by a shared paradigm, the “Sourcing Process”.  During that time, the members of that community have been largely involved with what can best be thought of as “normal sourcing”, i.e., the effort to apply the process to the types of problems that it is expected to address.  Now, the community is responding to Raheja’s call for a new paradigm as Kuhn would expect any group that is guided by a shared world view would respond if that world view is challenged.

To make the point clear, virtually every Strategic Sourcing practitioner understands that, regardless of the way they have defined the process for themselves, the process they propose is derived from a common source, the A.T. Kearney sourcing process.  Whether they have recognized it or not, that process implies a certain paradigm, or theory, about the business world.  Following Kuhn’s thinking, that means that their focus has been on improving the application of the theory, not on demonstrating the validity of the theory itself.  What has that meant?

For most of the past 25 years, a great deal of effort has been expended demonstrating the results obtained from the application of the theory, that is, the Strategic Sourcing Process, in a wide range of venues.  That is the activity of “normal science” and, in this analogy, would be the natural focus of “normal sourcing”.  As a result, we have a great deal of evidence that specific applications yield demonstrable outcomes, i.e., specific ranges of cost savings.  Whether the original theory underlying Kearney’s ground-breaking process did or did not focus on cost is immaterial.  The problem that sourcing was seeking to address was “excessive supply chain cost” and that problem was being successfully addressed by the process driving the sourcing community.

What was largely unnoticed, or at least unremarked upon, was that a cost focus has an inherent limit on the results that can be obtained.  No matter how far up or down the supply chain you apply the process, there is a finite limit on the cost savings that can be obtained.   Now I doubt that any practitioner or any organization would argue that they have approached that limit as a result of applying Strategic Sourcing.  What has happened is that, once organizations pick the low hanging fruit on the cost tree, they find that the return on subsequent applications of the process quickly diminish.  And that is what has led to the current crisis for Strategic Sourcing.  A second order problem has arisen and the current process has had, at best, limited success dealing with it.

Now, back to Kuhn.  In his explanation of what happens in communities of practice, this is as it should be.  While the current world view is achieving the results the community in practice is seeking, the community will continue to apply it and will seek to measure and demonstrate success in the terms defined by that world view.  It is not that the community does not want to go beyond the terms of the world view.  It is that they can’t do so until they find that there are bigger (or at least different) issues that have to be addressed.  If the existing paradigm is sufficient to encompass those issues, there will be no revolution.  If not, tension will gradually build until some individual proposes a competing paradigm that will provide a response to the crisis issue.  And, interestingly, the new paradigm is often LESS successful at addressing some of the old issues.

Kuhn would say that where we are as a community of practice is on the cusp of a new, emerging paradigm.  The theory has not been articulated as yet but the source of tension has been identified.  What is critical at this point is to return to the underlying theory that supports the Strategic Sourcing process and begin to analyze it.  Until now, it has not been necessary to do so and, in fact, Kuhn would tell us that it would be counter-productive to have done so.  So long as the “Theory in practice” allows practitioners to address the problems with which they are confronted, the theory should be unquestioned and the focus should be on improving the results.  If Raheja (and some others) are right, then it is imperative that we re-examine the theory (and not just the process) that informs our collective thinking about Strategic Sourcing (or whatever it may be called under the next paradigm.).  Only when we have evaluated the effectiveness of the theory can we successfully amend the processes, procedures, and tools.  And that is about revolution, not evolution, of a community of practice.

Please share your comments.  If Kuhn is even partially right, the key at this point is to explore the limits of our current thinking so that we can clarify the direction we need to go.

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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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