How to Setup a Procurement Innovation Garage

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Hi readers,

What do Apple, Amazon, Google, Disney, Microsoft all have in common?

They all started in garages…

These humble spaces were innovation crucibles where visionaries experimented freely, failed quickly, and iterated constantly until they changed the world.

If the most successful companies in history were born in experimental garage environments, why are we still trying to stimulate innovation in our businesses with traditional project management approaches that have an 80%+ failure rate?

Tonight, I want to talk to you about the "Procurement Innovation Garage" concept.

• What is it?

• How can it solve your Procurement pain?

• How can you get started?

A Procurement Innovation Garage is all about creating a dedicated space where your team can experiment, learn, and build ProcureTech solutions that actually work in your unique environment.

Let me know what you think in the comments.

Onwards!

📰 In this week’s edition:

• 🛠️ Webinar: Unlock Hidden Savings in MRO Procurement (sponsored)

• 📋 5 procurement jobs that caught my eye

• 🏆 The Road to the ProcureTech Cup : Episode 24

• 🌙 How to Setup a Procurement Innovation Garage

Note: Some of the content listed above is only available in the email version of this newsletter. Don’t miss out! Sign up for free to get the next edition.

👀 In Case You Missed It…
My Best Linkedin post this week:

Finding cost savings : You're doing it wrong…

The Journey Continues…

This Friday Tonkean comes on the show to demo their Procurement Intake & Process Orchestration platform. They’ve been doing some very interesting things with AI agents these days.

Come check it out:

Last Episode

SpendHQ was on the show last Friday to demo their powerful Procurement Analytics platform.

If you missed it, I’ve made ALL the replays available for you on YouTube:

What is the ProcureTech Cup? Start Here.

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How to Setup a Procurement Innovation Garage

In the world of procurement transformation, we're facing a persistent paradox…

Despite advancements in technology, methodologies, and best practices, business transformation project failure rates have hovered stubbornly around 80% for decades.

This statistical reality reflects a fundamental misunderstanding of how transformation actually works…

The uncomfortable truth?

Almost every system implementation is effectively a "world first" regardless of how many similar projects your vendor claims to have completed.

Why Every Implementation is Unique

When we embark on procurement transformation initiatives, we often fall into the trap of believing that previous successes in similar organizations provide a reliable blueprint. However, this overlooks the complex web of variables that make your organization uniquely challenging:

• Organizational culture, capacity and readiness for change

• Existing technology landscape and technical debt

• Data quality and governance maturity

• Team dynamics and capabilities

• Strategic priorities and objectives

• Process maturity and standardization

• Stakeholder expectations and engagement

• Etc.

These variables always combine in ways that create a singular implementation environment.

This is why a system that worked brilliantly for a similar company might fail spectacularly in your organization...

And let's not forget another critical variable: vendor implementation teams.

Even when working with the same vendor who has dozens of successful implementations under its belt, the actual team assigned to your project is rarely the same team that delivered those reference projects.

Large vendors routinely cycle solution consultants between accounts, meaning your "experienced" implementation team might be experiencing your unique challenges for the first time alongside you. This further undermines the notion that previous successes can reliably predict future outcomes.

The Project Planning Fallacy

Traditional transformation approaches rely heavily on planning "on paper" — creating detailed project plans based on assumptions that often prove incorrect once implementation begins. The standard process looks familiar:

• Build a business case based on benchmarks and case studies

• Secure capital funding through lengthy approval processes

• Select vendors based on glossy RFP responses and curated references

• Develop detailed project plans with fixed timelines and deliverables

• Express shock when reality doesn't align with the plan

• Enter the cycle of escalations, scope reductions, and deadline extensions

• Eventually deliver something that resembles what was promised (but rarely what was actually needed)

This approach treats procurement transformation as a destination rather than a journey…

It's a CAPEX-heavy model that creates massive pressure to succeed according to predefined metrics, even when those metrics no longer make sense…

The “Innovation Garage” Alternative

What if we approached procurement transformation differently?

Enter the “Procurement Innovation Garage.”

(Honestly… Call it whatever you like…😅 The term isn’t important but the concept is!)

Envision a team whose very existence is centered on procurement innovation. These aren’t “backfilled resources” pulled from their “day jobs” for "point in time” transformation projects, but professionals who make procurement-tech advancement THEIR career in YOUR business.

They operate your “Procurement Innovation Garage.”

But which principles govern their day-to-day?

1. From Projects to Products

   Rather than funding transformation projects, fund persistent teams dedicated to specific value streams within procurement. These teams own outcomes rather than deliverables, allowing them to adapt their approach as they learn what works.

2. From CAPEX to OPEX

   Move away from massive, one-time capital investments in favor of sustained operational funding of innovation. This shifts the focus from "big bang" implementations to incremental improvements that compound over time.

   This doesn't mean eliminating CAPEX projects entirely. You can still pursue "big bet" initiatives that exceed your pre-allocated innovation budget or operational capacity. The critical difference is that these larger investments are now backed by small-scale experimental results rather than untested assumptions.

   When you do request capital funding, you're presenting evidence-based projections from your Innovation Garage experiments, dramatically increasing your confidence level and reducing implementation risk.

3. From Assumptions to Experiments

   Instead of building plans on assumptions, treat assumptions as hypotheses to be tested through small-scale experiments. This creates a learning cycle that builds context-specific digital literacy and informs future investments.

4. From Technology Selection to Technology Exploration

   Rather than committing to a single technology solution upfront, create a laboratory environment where multiple technologies can be tested against real business challenges. Your team might evaluate 15 different tools in a year, implementing only those that demonstrate concrete value. It’s about speed!

5. From Success/Failure to Learning

   Reframe how you measure performance. Not every experiment will succeed, nor should it. The value comes from rapidly determining what doesn't work and pivoting accordingly.

Building Your Procurement Innovation Garage

Here's how to set up an effective Innovation Garage within your procurement function:

• Step 1 : Define the Core Team

  Identify individuals who combine procurement domain expertise with digital curiosity. Your core team should include:

  • A product owner who understands the business needs

  • Technical resources who can rapidly prototype solutions

  • Data specialists who can measure and analyze outcomes

  • Change agents who can translate successful experiments into wider adoption

  If you can’t staff everyone at first, get IT or Change Management to buy into the concept and name a representative who will be included in the Garage with a dotted-line into Procurement.

  These shouldn't be part-time roles… These team members should wake up every morning focused on improving procurement operations.

• Step 2: Create the Physical and Digital Environment

  The Innovation Garage needs both physical and digital space to operate effectively:

  • A dedicated work area where the team can collaborate

  • Development and testing environments segregated from production systems

  • Access to real procurement data (appropriately anonymized)

  • Tools for rapid prototyping and visualization

  • Mechanisms for capturing learnings and insights

• Step 3: Establish Governance That Enables Rather Than Constrains

  Traditional governance often slows innovation. Design lightweight governance specifically for the Innovation Garage:

  • Expedited procurement processes for acquiring test technologies

    • Standard Proof of Concept (PoC) contract template

    • Onboarding/Communication process for software vendors

  • Simplified security reviews for non-production environments

  • Regular showcases to stakeholders rather than formal stage gates

  • Dedicated funding that doesn't require case-by-case approval

• Step 4: Define Your Experiment Framework

  • Create a structured approach to running procurement technology experiments:

    • Set clear functional domains (business process hierarchy), target use cases and business objectives (value levers)

    • Clearly articulated hypotheses: "We believe X technology will improve Y metric by Z amount"

    • Defined success metrics aligned to business outcomes

    • Time-boxed experiments with go/no-go decision points

    • Systematic documentation of learnings regardless of outcomes

• Step 5: Build Feedback Loops with Business Users

  • The Innovation Garage shouldn't operate in isolation from the day-to-day procurement operation:

    • Recruit a network of "early adopters" among curious and motivated procurement users (this also builds your succession pipeline for the Garage)

    • Create mechanisms for users to suggest challenge areas

    • Establish regular demo days where users can interact with prototypes

    • Develop seamless pathways for successful experiments to move into production and/or project mode if applicable

In short, your Procurement Innovation Garage team is responsible for navigating the ProcureTech market and communicating the "nuggets" back to your wider team.

Measuring Innovation Garage Performance

How do you know if your Innovation Garage is delivering value?

Focus on these metrics:

• Experiment velocity. Number of procurement hypotheses tested per quarter

• Implementation rate. Percentage of experiments that graduate to production

• Value delivery. Measurable business outcomes from implemented solutions

• Time-to-value. Duration from hypothesis to value realization

• Knowledge creation. Documentation of insights that inform future direction

It's important to note that the Innovation Garage approach doesn't mean burning through cash without accountability for results...

Rather, it reconfigures the investment runway to maximize the chances of successful takeoff instead of catastrophic failure at liftoff (Think: Lots of small, light planes instead of one huge, heavy one…)

You're still responsible for delivering value, but you're doing so through a series of smaller, lower-risk experiments that collectively reduce the odds of major implementation failures.

The Roadmap to Procurement Innovation

Implementing an Innovation Garage represents a fundamental shift in how organizations approach procurement transformation…

It acknowledges the inherent uncertainty in complex implementations and creates mechanisms to navigate that uncertainty more effectively. By establishing a dedicated function focused on continuous improvement rather than point-in-time projects, you create an environment where procurement can evolve at the pace of business needs rather than capital funding cycles.

The most successful procurement organizations recognize that transformation isn't a destination… It's an ongoing journey of discovery, experimentation, and adaptation.

The Innovation Garage provides the vehicle for that journey, allowing you to navigate the complex terrain of procurement transformation with greater agility and resilience.

The Leadership Challenge

There's a significant caveat to implementing this concept successfully: it requires a fundamental shift in leadership mindset. You need to:

• Give ownership of the garage to experienced people you trust

• Allow them to fail and keep going

• Resist the urge to micromanage their experiments

• Evaluate them on learning velocity rather than perfect execution

This level of trust and autonomy can be deeply uncomfortable for many leaders (and may also be the biggest challenge to selling it to the C-Suite who doesn’t even understand procurement in the first place…)

An Innovation Garage requires relinquishing the illusion of control that comes with detailed project plans and fixed deliverables… It means accepting that some experiments simply won't work - and that's okay.

But consider the alternative… If traditional transformation projects have an 80% chance of failure, perhaps it's time to get over our trust issues and try a different approach.

The Innovation Garage model isn't about blind faith… It's about acknowledging the inherent uncertainty in transformation and creating mechanisms to navigate it more effectively.

Are you ready to build your Procurement Innovation Garage?

Sell the concept, start small, focus on outcomes rather than outputs, measure OUTCOMES and embrace the power of continuous improvement.

Your results might just transform how your organization thinks about transformation at large.

Did I miss anything important to making this concept work?

Let me know in the comments 👇

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