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6 Lessons Procurement can Learn from Startups

February 14, 2018 by Hillary Ohlmann

Procurement lessons from startupsUber. Airbnb. Spotify. These are only three startups that have become household names in the past few years. And who builds startups?


Entrepreneurs and innovation go together like peanut butter and jelly. Like Mark Zuckerberg and his hoodie. Like Sean Rad and his oversized ego.

But why should entrepreneurs get to be the only innovators?

Where there is room for improvement, there is room for innovation. And there’s always room for improvement. As procurement professionals, you know that. Perhaps what you don’t know, though, is that you don’t have to head out on the Oregon Trail, destined for a dusty garage in Silicon Valley, in order to innovate. You can take some of the rules from the startup handbook, and turn your procurement department into a hotbed of intrapreneurship.

What is intrapreneurship?

Intrapreneurs behave like entrepreneurs but from within the confines of a large organization. It can be the best of both worlds - financial risks are lower since innovation comes with the backing of a large corporation and there’s no need to strike out alone since you can create a team from a ready pool of coworkers.

What can startups teach procurement?

1. Don’t be a “startup.”

Dave McClure, the co-founder of 500 Startups and all-around entrepreneurship guru, says that, “a ‘startup’ is a company that is confused about three things: what its product is, who its customers are, and how to make money.” Change “make money” with “save money” and then ask yourself, Is your procurement function a “startup”?

Procurement often struggles with identifying its customers. Once you acknowledge you have indeed have customers, you’ve taken the first step to transforming from gatekeepers to innovators.

2. Validate the product idea with customers.

So, you’ve identified your customers. Likely, you think they want the product you have to offer - cost savings, improved delivery terms, supplier-enabled innovation, or any other number of things procurement can achieve. However, no matter how strongly you believe in your “product,” you have to validate that belief with your customers. After all, they are the ones you need to please.

3. Your first idea about where pain resides is nearly always wrong.

Steve Blank, serial entrepreneur and creator of the Customer Development methodology, has said, “No business plan survives first contact with customers.” You know procurement, inside and out. When you’re so close to your product, it can be hard to look at it from an outsider’s perspective. You have to put yourself in your customer's’ shoes - or better yet, get feedback directly from your customers - before you will truly understand what their pain is and how they want you to fix it. Just as doctors don’t prescribe medications before performing an examination, you shouldn’t provide solutions for problems you only think are actually there.

4. Proactively look for problems - don't just wait and react.

This is the difference between tactical sourcing and strategic sourcing. Being proactive means understanding your past data and current objectives to the point that you can predict the strategies needed to move you ahead.

It goes beyond sourcing, too. You can look for ways to mitigate the risk of supply chain disruption. You can actively ask customers’ about their problems, and see if Procurement can spearhead a solution. This way Procurement plays a strategic role in the organization, instead of simply reacting to immediate requests.

5. Build. Measure. Learn.

Cliched though it may be, the road to success is often filled with potholes, road closures, and detours. At least it is if you’re in the Midwest during the summer. But I digress. Identify your customers, validate your product, and proactively seek out problems to solve. In other words, build. Then stop, step back, and take a look at what you’ve achieved. You can’t go on building indefinitely - obstacles will pop up, and if they don’t, time will eventually make your solution dated at best, obsolete at worst. Take the time to measure your results at regular intervals. From there, you can decide to continue moving in the same direction or change paths. This is learning; without measuring, you won’t learn what works and what doesn’t.

6. ABC - Always be closing.

Where startups, Sales, and Procurement converge. While Sales and startups know they have to make sales to stay afloat, selling is usually not on Procurement’s radar. However, for Procurement, “closing” means selling your value whenever you get the chance. It’s no secret there are many who don’t quite understand the unique value procurement professionals bring to the table. So shout it from the break room, and explain it in the boardroom. Be your function’s own internal champion.


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Hillary Ohlmann

Written by Hillary Ohlmann

Hillary is DeltaBid's resident writer, copy editor, researcher, and all-around procurement enthusiast. She holds a degree in Journalism and Spanish from UW-Madison.


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