The Power of Positive Thinking in Uncertain Environments
by Kelly Barner
Procurement and supply chain managers tend to be realists. We accept that there will always be uncertainty in our work and so we put a great deal of emphasis on quantitative measurements and indicators. At the same time, we are conditioned to recognize opportunities for growth: this is why economic measures like the ISM-New York Report on Business track the six-month outlook of purchasing managers over time.
But optimism is not just a sentiment to be measured so decision makers outside of supply chain can use it to guide their efforts. How we perceive the circumstances that our company operates in plays a large role in how we respond to it. Uncertainty itself is a neutral dynamic that is tipped positive or negative by the point of view of the person factoring it into their decisions. In some cases, a positive outlook becomes a self-fulfilling prophesy, leading supply chain leaders to create (and then seize) their own good business conditions.
For example: Trying a new supplier – especially one that offers innovation potential
While it is possible to capture a reasonably accurate picture of operational switching costs when moving from one supplier to another, there are many other costs that are harder to measure. They include the disruption of the relationship between incumbent suppliers and internal stakeholders, hurdles associated with implementing new ordering and customer service procedures, and the inevitable unknowns of laying the groundwork for a new supply partnership. When innovation is a priority in the supplier selection process, there may be more involvement from small or diversity suppliers in the bid process and a greater chance that they will be being selected for a contract.
When procurement decision makers are optimistic, they see the complications of switching to a new supplier as surmountable, worth what would otherwise be seen as downside risk. They are willing to apply the personal capital they have built up over time to manage stakeholders through the transition. They are also more likely to believe in the potential associated with the new supplier, and invest their own time and energy in making the partnership a success.
Trying a new business model for an ‘old’ product or service
Not only are as-a-Service business models wildly popular today, accessible technology and shared services have lowered the barrier to entry in many markets. The right combination of automation, flexible talent, and cost efficiency allows a relative newcomer to completely disrupt an established market overnight. Traditional adoption curves usually break companies into early, middle, and late adopters, with the vast minority finding themselves in the early adopter role. Most companies prefer to watch and wait and then move forward once early adopters have demonstrated that the new business model is viable.
As with new suppliers, new business models require us to rethink our perspective on the real value associated with a product or service – as well as the associated cost model. When we are confident in our foundational work, however, we are able to consider new possibilities: seeing spend as a means to achieve operational objectives rather than as a simple exchange of currency for materials and time.
Assessing the neutral ground
Doing nothing is still a decision. In many ways, our mindset on change – whether positive or negative – is driven by how we feel about a neutral ‘do nothing’ position. Optimistic thinkers see preservation of ‘the same’ as the greatest risk of all. Negative thinkers view it as the safe move, preferring to stay with the known even if doing so means passing on the potential for gain.
In fact, when companies approach procurement with a growth mindset, they may even feel driven to make a change or try something new so as not to be left behind by their competition. Teams driven by concern are more likely to take a defensive position, protecting what they know and striving to maintain stability, while teams driven by a sense of opportunity are motivated not to stand still in the face of tremendous opportunity.
Where would you place yourself and your team on the optimism continuum?