It appears that rogue is the new shorthand for scapegoat. We’ve seen a couple of recent events where a large institution has suffered a blow, sometimes fatally, due to what is attributed to the actions of a rogue individual.
In both cases, the rogue activity seemed to have been going on over several years, so not a one-off moment of madness.
Labelling the individual involved as a rogue is meant to send a message of separation between the person and the organisation involved. The viewpoint seems to be it’s better to acknowledge that you have inadequate control into how individuals carry out their jobs than to admit that others knew what was going on and chose to ignore it.
I think both roads lead to that fact that your risk control is insufficient.
Worryingly to me, this seems to be seen as an acceptable state of affairs. Oswald Grübel, UBS’s chief executive (who has since quit), told the Swiss media after the scandal of a rogue trader came to light that he would not quit and did not feel guilty for the losses suffered on his watch: “If someone acts with criminal intent, you can’t do anything,” he said. “That will always exist in our job.” This is bad enough, but the implication that it was an acceptable risk goes further still.
If I translate this back to the world of procurement, I would not expect the default position of a CPO to be “there is nothing we can do to stop criminal behaviour”.
As a profession, we have worked hard to increase professionalism and ethical behaviour at all levels. I would have expected the financial world to be more vigilant around risk mitigation and process transparency.
A gateway for innovation
Another term being thrown around at the moment is “too big to fail”. It’s a concept that translates well to contracts and suppliers. Recently, it was seen as a good thing to identify a supplier who had scale, associating this with lower risk and greater efficiencies. This led to organisations rationalising their supply base to fewer, larger contracts. Impressive cost reductions were delivered and processes streamlined, all in the knowledge we were in safe hands.
Fast-forward to the present and now we need to balance cost leadership and quality of service and products with a desire to be agile, innovative and responsive. Those very attributes that represented the safe decision now present themselves as unwieldy; smaller firms are seen as flexible and innovative. Procurement teams look to balance risk across their supplier portfolio, which is tricky when you only have a few suppliers.
The challenge is how to tailor the sourcing process to allow smaller firms to afford to bid. Our approach to risk, liability and governance needs to be tailored to allow smaller firms the chance of success. The cost of competing means they will limit their resources and only bid on select propositions. Procurement has a chance to lead the way in ensuring they get access to the right suppliers, whatever their size. We should be the gateway for innovation, not the blocker.
☛ Sam Covell is head of IS procurement at AstraZeneca