Organizations buy goods and services to solve problems. If there is a subsequent issue with the procurement, if it turns out that what they bought didn’t fix whatever needed fixing, it could be for many different reasons. But the core explanation may be mis-specification of the problem. It is likely that what they sourced was the answer to the wrong question.
Warren Berger is a journalist and speaker who talks about thinking and creativity in a podcast with Farnam Street.
“There’s a great definition that I came across from this group called The Right Question Institute. They’re a non-profit group that studies questioning. They describe questioning as a tool that enables us to organize our thinking around what we don’t know.
“There’s a lot of stuff out there we don’t know. Through questioning, we can attack it, and the different forms of questions you use will allow you to come at this unknown thing from a different angle.”
It is too easy to assume that we know the correct question and to jump into answering it.
Answering may actually be the easy part. The more difficult and more important thing to accomplish is to figure out what the question should be. This is especially true in an Internet age (and now an AI era) where we have what seems like unlimited information (and robotic judgment) at our fingertips.
To get to the right question involves, ironically, asking a whole set of other questions first. We need to fill in the empty areas on our map. We need to add as much dimensionality to our understanding of the problem to be able to say that if we do X, we obtain Y in response, so how do we make X happen? But what we need most is confidence that if we obtain Y, we are acting to improve our situation the way we want it to improve and we realize the underlying goals we set for ourselves.
Ask the wrong question, obtain the wrong outcome.
Let’s consider social procurement.
Here’s the definition from the City of Toronto:
“Social procurement is the achievement of strategic social, economic and workforce development goals using an organization’s process of purchasing goods and services. The City’s Social Procurement Program is comprised of two components: Supply Chain Diversity and Workforce Development.
“What is Supply Chain Diversity?
“Supply Chain Diversity is a business strategy that promotes a diverse supply chain in the procurement of goods and services for any business, not-for-profit, government or private organization. In the City’s Social Procurement Program, Supply Chain Diversity applies to Departmental Purchase Orders from $3000 to $100,000.
“What does Workforce Development mean?
“Workforce development is an interconnected set of solutions to meet employment needs. It prepares workers with needed skills, emphasizes the value of workplace learning and addresses the hiring demands of employers. In the City’s Social Procurement Program, Workforce Development requirements will apply to Request for Proposals and tenders over $5 million.”
What is the problem we are trying to solve by implementing social procurement?
I suspect that a lot of people will wave their hands about the benefits of diversity and the importance of a level playing field in a multi-cultural society. They are correct at a general level. But that doesn’t justify it as a procurement policy, per se. We could address these issues in other ways such as philanthropy, for example.
When it comes to social procurement, the more appropriate question we should be asking is this: how can we reduce risk and increase capacity in our value chain by ensuring that our supplier partners and their contractors have a fair and open process that encourages suppliers from all backgrounds to participate in our third-party spend, directly or indirectly. The ancillary benefits to the disadvantaged communities will come on their own if we get this right. These include economic empowerment, workforce development, and a rise in the general level of welfare. By acting in its economic self-interest to reduce risk and increase capacity, the large purchasing organization will end up doing the right thing.
It’s too easy to rage against the dying of the light and to descry the current inadequate and less-than-proportionate participation of vendors from disadvantaged backgrounds in our direct supplier ken. Buyers need to have visibility into their chains to know how risky they are, in any event. (Something almost none of them has.) With this insight comes the opportunity to de-risk those chains by forcing contractors at every level to compete the business and to develop the capacity, capabilities, and capital of their sub-contractors. Transparency will be the great motivator here. One reason why these supply chains have been slow to diversify is the opacity of the current set-up.
What is the actual problem then?
Buyers don’t have visibility into the supply chains and value ecosystems. What happens if we fix this problem? We can see precisely how diverse our supply chains are. And our contractors can, too. Our contractors will know that we know. So we have an opportunity to de-risk them by fleshing them out, including with diverse suppliers. Our subcontractor will have no excuse. Comply or get off the boat.
This is what we have built with EdgeworthBox. Our set of tools, structured data, and community helps B2B buyers buy the right solution, from the right supplier, at the right price. It also can be used in a way to expose the supply chain on a project or set of procurements with full visibility and interactivity. This leads to lower risk and greater effectiveness when it comes to social procurement by cracking open what are often fixed supply chains to let in suppliers who can develop their capacity and capabilities. Maybe even throw in some mentorship. If you’re interested in learning more or if you just like social procurement, please shoot us an email. We’d love to hear from you.
