It’s 8 p.m. You log onto Amazon to watch TV shows, select an episode, click to watch and then click to agree to a fee. Instantly, you’re watching. You didn’t really go through a buying process, and you never interacted with a sales person or mechanism. In the same way, we search out TVs or computer peripherals online, check the reviews, maybe compare a few models on ConsumerReports.org, and then order from Amazon or Office Depot for home delivery. No store visit. No salesperson. No price negotiation. Third-party peer reviews provide credibility and confidence, and convenience seals the deal.
In these everyday ways, people are becoming accustomed to tailored solutions for an on-demand life. They expect to command sophisticated products they need with a click. Conventional considerations such as price, which is assumed and transparent in the Amazon world, take a backseat to getting the precise thing desired in the moment.
As business, too, requires more specialized tasks in more immediate timeframes, the people who make the wheels turn will need and expect specifically designed instruments, or the ability to modify these solutions on the fly. The business world isn’t comprised of buyers and sellers, but rather of users with individual needs and providers with the means to solve them.
Yet buying and selling became central enterprises of business over the course of the last century. Corporations focused on standardization—the Deming ideal—so needs became predictable enough to compare vendors directly, find the greatest price value through the routinized process of request for proposal (RFP), and thereby provide what everyone needed. Buying became the science of squeezing price, sales the art of justifying price, and both functions grew into large organizations.
Business is getting too complex and dynamic for centralized buying and selling machines. What’s more, the strategic sourcing initiatives of the past two decades all but erased margins for high-volume suppliers. When the absolute floor is the baseline, there is no need to sell, per se. There is only a need to serve. In fact, there is a heightened need to serve. The only way to differentiate a company is in helping customers profit through the use of products.
This is a profound shift in orientation. Instead of emphasizing the process of getting products to an organization, business needs to concentrate on delivering value through the use of the products. And that’s where things get really complex and creative.
So business needs to keep up with, and meet, an escalating and changing value demand curve. For starters, the company is likely dealing with a larger, more intricate network of channel relationships than ever before. Because work is getting more specialized, the ways organizations need to get value from products and services are increasing in number and complexity. And as organizations get more multi-faceted, they rely increasingly on temporary and/or virtual staff.
All this changes what it means to sell. Salespeople are not sellers; they are solvers. Increasingly, cost isn’t the friction; it’s availability of applicable capability right now, or the gap between demand and response. The people who make products know them better than the people who use them and far better than anyone centralized in a buying role. As a diversifying workforce creates more ways to use products, more people need to be in direct contact with someone who can actually respond with a solution.
There’s a corollary lesson in consumer products now. Look at Nike and Beats by DRE. A pair of Nike Free sneakers or a pair of Beats headphones can come in myriad colors, far too many to put in a store. If you care about having a particular color, you can try on a pair at a store and then order online, or order online for store delivery and trial. You can design the delivery of the experience the way that works for you now, which may be different six months from now. Increasingly, you’ll expect to be able to meet your evolving need, and that, not a few dollars cheaper, will be the divining criterion.
For corporate sellers, that means embracing the customer ecosystem, not just the base of established buyers. For corporate buyers, it means supporting customization. This is critical to expanding permissions from end users, as well as trust from top management, that everyone is in sync.
Then they need some help from the C-suite. Only the C-suite can redefine what matters and how the company operates. CFOs, in particular, need to step in and give corporations a new lens and meter organizational value. Hard-dollar savings are neither scalable, nor accurate as the mission of procurement departments. Value created through dynamic resourcing is both. Procurement can be developed into a strategic center that provides the specific resources the corporation really needs, monitors the impact of those resources on performance and gets rewarded based on the results.
When the incentives are aligned, resource pros can collaborate with, not negotiate against, solution providers. Together, they can decentralize the specification process and open-source solutions—no more guarding information as leverage in negotiation—so what’s supplied is what various teams actually need. Working on a rolling contract basis, they can end the distraction of forced RFPs every two or three years. They can build the framework for conscious, systematic and repeatable results from resourcing throughout the corporation. And they can deliver the tailored solutions their users are conditioned to expect.
David Clevenger is the senior vice president ofstrategy at Corporate United (www.corporateunited.com), an indirect group purchasing organization.