Why the rules of the game are the perfect analogy for understanding procurement's role within the business
Generally, people outside procurement don’t really have much of a clue what we do, says Joe Bakowski, director of procurement and supplier risk at Metro Bank. And to be fair, he was the same, he adds, having moved from an operations role in the bank. He knew little about the function and went “with gritted teeth”. But three months later, he had discovered “actually it’s brilliant – it’s like poker with spreadsheets”.
Fast forward six years and Bakowski has taught 200 Metro Bank colleagues to see it that way too.
To encourage the bank community to engage procurement earlier in the process, Bakowski wanted to demonstrate how supplier interaction works, the dynamics at play, why the exchange of information is important and what might be at stake. And it would help his business colleagues to stop seeing procurement as simply transactional.
Poker is a framework that makes sense, with many analogies to commercial negotiations, he says. “We play one hand of poker, I deal some cards, and we work through the hand using it to illustrate a range of concepts. For example, when we get to modelling [a parallel with calculating the odds in poker, see left], we talk about the possible outcomes, because players don’t know each other’s hands. And in their heads they’re calculating the odds, building a model of the probability – and I’m doing the same.”
Poker games are played with some cards private and some open, just like negotiations, where some information is in the public domain about the market, your business or the suppliers’ business. Private information could include the available budget, costs, or alternatives, and one of the most vital points in negotiations is keeping that information private, he explains. “This information can profoundly influence the nature of the contract and the price that we arrive at. I need to convey the value of this information and the importance of keeping it private to any of my colleagues who come into contact with a supplier.”
Bakowski uses case studies to keep the training relevant, including an example that features two similar-looking software licenses. He runs an auction and asks his colleagues to bid, then shows that one is worth about £50 while the other is in excess of £45bn. “This illustrates that a small change to a contract can have a fundamental impact, so it is important to engage with procurement properly.”
You can’t train the business to negotiate in three hours, he says, but if you can open their eyes to what’s going on in a negotiation, you can make sure they understand what procurement does and why.