What’s better for procurement: Mad Men vs Math Men?
Jonathan Cooper-Bagnall and Guy Strafford
Sep 16, 2014 6:00:00 PM
Many people love to believe the world is driven by “Eureka!” moments – flashes of inspiration or genius leading to a revolution in thinking.
Legend tells that Archimedes exclaimed it when he realized that his body was raising the level of the water in his bath. He saw at that point that he could measure any object’s volume using the amount of water it displaced.
On its own, this does seem like a flash of genius. But the truth is that Archimedes was one of the great scientists of antiquity – a scholar and pioneer of maths, engineering and warfare whose mind was constantly turning on the intricacies of the world around him.
In other words, the “eureka” moment was simply the pinnacle of a long and disciplined journey through complex algorithms, geometry, mathematics and data.
What, you are asking, has this got to do with business? Or even procurement for that matter?
Well, let’s bring our “eureka” story up to date. Last year, WPP chief Sir Martin Sorrell declared that the era of the Mad Men (the genius creatives portrayed on the TV show set in 60s Madison Avenue ad agencies) was at an end. Math men (and women), he said, would become increasingly important.
Sir Martin’s point wasn’t that creativity is dead. Far from it, the “alchemy” of design, writing, planning and executing advertising is very much alive. Rather, the “eureka” moments that tend to strike Mad Men’s protagonist, Don Draper, at the last second before a huge pitch are not part of the landscape any more. We have so much data about consumers, companies and markets that we are compelled to take a more scientific approach.
Procurement has been through a similar journey. In the old days, three Martini lunches, sophisticated schmoozing and a last-minute haggling for discounts might have been the hallmark of the hero procurement executive. Today, that just doesn’t work.
A modern business is a finely tuned machine. It produces (and consumes) vast amounts of data that lay bare its inner workings. Only by understanding that data can we hope to deliver procurement that meets the exacting demands of the corporate strategy.
Sir Martin also thinks static, calendar-driven events (such as traditional campaigns) are dying. Social media and data-driven pricing are but two major technology movements that are increasingly changing the Mad Men’s world even further – demanding real time thinking and constantly up-to-date responsive strategies.
Procurement is the same.
Why would a business casually enter a two-year supply contract for something in an increasingly unpredictable environment – even if they could secure a discount as a result?
Procurement has to be able to flex with events and react quickly to meet the sophisticated demands of stakeholders inside and outside the business. It cannot secure its mandate with a volume discount that isn’t rooted in a deep understanding of the organization’s strategy, its environment and the plethora of data that wraps around both.
Do today’s procurement teams have the real time information to drive a constant flow of "eureka" moments? And how capable are these teams in aligning data with business behavior to elevate themselves higher up into the business – like marketing has done?
* A quick postscript. Not only did Archimedes "eureka" moment come from a painstaking understanding of systems and processes – its application was actually related to procurement. Being able to measure both the weight of an object and its volume (using the displacement method discovered in his bath) meant Archimedes was able to determine whether the contractor who fashioned the crown for King Hiero II of Syracuse had mixed silver with gold to unfairly boost his margins. (He had.)