Your Digital Transformation Timeline is Too Short

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🎣 The Catch Up

Hi there,

Last week was... Interesting…

Our 6-lb dog doesn’t walk up the stairs any more. But she does go up half way…

Wednesday, I noticed she followed me up the stairs and turned around to grab her. As I reached for her, she jolted. I lost balance and ended up on my rear end with my foot in between the banisters…

Ouch.

I’ve been hobbling ever since… I should know whether or not something is broken in my foot tomorrow. Don’t think so but an abundance of caution felt warranted… It just feels like a big internal bruise… Wish me luck!

That being said, I’m finalizing my conference schedule for the year and want to know where all the Pure Procurement readers are going (would love to meet you all). Can you tell me what you’re thinking?

This week’s note is about how to embed *oh so valuable* long-term thinking into your Procurement transformation roadmap, even if your organization is addicted to short-term results.

I hope it proves useful.

Have a great week ahead.

Best,

Joël

P.S. In case you missed it, here was my most popular LinkedIn post of the week:
Once you complete a Procurement Data Cleansing project, you're not done…

🌙 Sunday Night Note

Your digital transformation timeline is too short.

In 2022, the average CEO tenure among the S&P 500 companies was 4.8 years.

The last time average Fortune 500 CPO tenure was measured in 2017, it was 4.2 years.

Furthermore, the average enterprise digital transformation program (company-wide digitalization initiative for firms with over $1B revenue) is around 5 years (although 80%+ of organization still report it didn’t meet initial objectives, so can we really consider it done?).

In the public sector, it’s not uncommon to see digital transformation programs with 20-year timelines (which means they will be longer than that 😅).

Personally, I’ve lived through a few digital transformation programs that lasted anywhere from 7-13 years depending on the size of the business. And while the “core” systems have been modernized, there are still many digitalization opportunities available on the periphery of the business.

So, why am I telling you all this?

Well, these statistics help illustrate two things:

• Company executive tenures are getting shorter. This tells me the pressure for new executives to deliver results quickly is also increasing.

• Digital transformation takes much longer than what people think (and 2-3x longer than the average executive tenure).

Moreover, most big companies I’ve come across operate with a 3-5 year maximum ROI window when evaluating new administrative optimization investment projects.

What dynamic does this create?

Meaningful, strategic digitalization initiatives get pushed aside for ‘quick fix’, ‘quick buck’ initiatives (at least when evaluated on paper).

The Classic Outlier

One flagrant counter example stands out…

The 2003 and 1997 letter to shareholders from Jeff Bezos illustrate what is needed to to overcome this challenge.

The 1997 letter starts out with: “Long-term thinking is both a requirement and an outcome of true ownership. Owners are different from tenants.”

What does this sentence convey?

• Amazon want “owners” in their company and investor pool (people “in it for the long haul”).

• Amazon privileges long-term thinking over short term gains.

How did that work out?

Now I guarantee that Amazon is not working on their 2003 tech stack today… This can only mean they’ve made decisions that defy the conventional 3-5 year payback period for “transformational” administrative optimization investments… And have been handsomely rewarded for it.

This is probably related to the average executive tenure at Amazon. They’ve had 2 CEOs over the years:

• Jeff Bezos - 1994-2021 (27 years)

• Andy Jassy (2.5 years), but an Amazonian since 1997 (26 years)

For all other 31 Senior Vice-President roles, the average tenure at Amazon is 16 years.

This example illustrates the 2 ingredients required to successfully digitally transform an organization:

• Time

• Consistently “beating the drum” on the same vision and values (having long-tenured executives helps)

The bigger the company, the more of these two ingredients you need… You might stumble and adjust along the way. But, then again, that’s the only way to learn…

So What Can You Do?

“That’s all well and good Joël. I’m onboard. BUT, I’m not the CEO of my company. What is this supposed to do except make me feel powerless and frustrated?”

I hear you… We won’t change the “shortcut culture” in most of our businesses.

If I’m telling you this, it’s so that you can adapt how you “play the game” within your own company to drastically improve your Procurement transformation “at bats” and, ultimately, outcomes.

To align the short-term dynamic in most of our businesses with the required long-termism illustrated above, you do two things:

1. You craft a Procurement transformation roadmap on a realistic timeline based on the size and complexity of your company’s current state.

2. You break it down into pieces that meet the minimum threshold for project approval at your company.

Then, you deliver the first piece flawlessly. This legitimizes you to fund the next piece. Over and over again, building a snowball of momentum and benefits.

If your organization is allergic to long-term thinking, nobody really needs to know what you’re long-term vision for the Procurement function is except your inner circle…

You simply play the short-term game with a different set of rules in the background… (this is a fun and challenging game in and of itself!)

However, be very weary… Pressures will be great to “compress” your vision into the company BCase cycle every step of the way… Both from that little voice in your head and external actors… This is classic “Scope creep.”

• “Can we include X into the scope?”

• “Can we find more benefits in the short term?”

• “Can we deliver this faster?”

On paper, tech and process delivery can always be compressed. The thing that can’t be compressed? Employee adoption of the changes you put in place…

The People dimension is ALWAYS the bottleneck and it comes back to bite you when you compress timelines…

If you go down that path, you won’t get a next “at bat” for your Procurement digital transformation… At least for a few years… Until that new executive arrives 😅

Resist the urge to compress the timeline on your vision. Counterintuitively, it will make it a reality much faster.

And if this all sounds too complicated to navigate in your organization… Well, you can always go start your own Amazon 😅

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