By David Loseby
Behavioural procurement (BP) is a sub-field of behavioural economics and concerns itself with the application of behavioural science, social science, decision science and applied cognitive psychology to commercial activities.
For years the profession has talked about soft skills (I prefer to call them people skills) without a clear definition of what exactly soft skills are, and what should be applied and to what extent in a comprehensive and integrated way. The harsh reality is that the practice of applying soft skills is neither soft, simple nor easy and has often been neglected in terms of training and developing professionals both formally and informally.
Equally, it is clear that the four principal components in the context of supply chain and procurement activities, such as contract management, supply chain management and supplier relationship management, should embrace:
However, while 1, 2 and 3 can be delegated, the people component cannot.
Behavioural economics has largely been the preserve of economics, public policy, marketing and sales, and finance, but has never found a home in procurement and all that it entails, despite the obvious gap. Therefore, embarking on the process of making sense and translating the wealth of material that is available was a clear imperative to making it accessible to the 3-million plus professionals worldwide.
BP was created to fuse elements of known and recognised approaches in stakeholder management, emotional intelligence (EQ), active listening, neuro-linguistic programming (NLP) and effective communication. Combining these with a greater understanding of cognitive biases, heuristics, behavioural assessments, social sciences (including cultural dynamics), relational contracts trust, collaboration, the application of game theory to negotiation, prospect theory, frictionless and cognitive diversity in teams, broaden as well as define which people skills are needed, and how and where they can be applied to drive competitive advantage in organisations.
Challenging professionals to be more self-aware and to avoid confirmation bias and affinity bias to be able to identify bias are all part of the approach to building a more balanced set of competencies. Countering these with practical measures, such as pre-mortems, is all part of a practitioner-targeted approach that I am advocating.
We have successfully applied BP in two multi-billion-pound organisations: driving change in a traditional company car scheme through policy change and reducing energy demand (consumption) in another. The possibilities are endless with tangible cost savings, sustainable practices in reducing CO2 emissions and more. It is clear that early adoption of these actions means a speedier and more efficient route to competitive advantage for almost every organisation.
I launched my book, Soft skills for hard business, to help professionals confront their deeply irrational selves. Yes, everybody is part of the problem as well as part of the solution.
Koen Smets proclaimed in one of his articles that “we are bamboozled by biases, fooled by fallacies, entrapped by errors, hoodwinked by heuristics, and deluded by illusions”. Biases can be construed as a negative descriptor but, in reality, they are merely the label for what is a mix of behaviours that occur naturally and are, by nature, broad and imprecise.
Therefore, we should recognise that each of us has a unique behavioural DNA and we should always recognise that the lens someone uses to see the world through will always be different. Our role must thus be one of making sense of this and translating it into something that we and that someone else both recognise and understand.
David Loseby (MCIOB Chartered, FAPM, FCMI, FCIPS Chartered, FRSA) has spent more than 25 years driving value and change through procurement, organisational transformation and change management at senior executive/director level.