Malcolm Harrison is leaving the Crown Commercial Service to join CIPS as CEO. He tells SM why, and how his career has prepared him for this new challenge.
No one could accuse Malcolm Harrison of sitting still. In his 35-year-plus career, he’s made Mars bars, professionalised procurement at Bass Brewers, been part of the team buying and selling multiple entities to create AB InBev, run procurement globally for Nestlé and been CEO of Rexam’s global plastic packaging business.
In 2015, he made the move to the public sector, joining government buying agency Crown Commercial Service (CCS) as an advisor, before becoming its CEO in 2016. And at the end of July, he takes on the challenging role of group CEO of CIPS.
“Having spent much of my career in private sector organisations, an important part of my career in public sector procurement, and being a believer in the importance of skills and capabilities in the profession, the chance to put all that together and lead the preeminent body within the profession is a fantastic opportunity,” he tells SM when we meet in the heart of Whitehall.
Harrison’s background means he brings a wealth of experience to the CIPS CEO role, both as a procurement professional and business leader outside of the function. His first job at Mars was in manufacturing, before he moved to the “supplies function”.
“I learnt quickly that procurement was all about how you match up supply and demand,” he reflects. “A big part of my role was about recognising demand, working with internal customers to make sure they were specifying what they needed, not what they wanted. The other side was understanding supply markets. It’s about how you bring the two together and deliver the best value for money.”
After almost 11 years at Mars in a variety of roles – not just procurement but sales and logistics too – he left to become Bass Brewers’ first head of procurement, his first experience of leading transformation. “I inherited a team of three who were notionally responsible for buying everything,” he recalls. “I asked how many suppliers they had, how much they spent, and they weren’t sure. The answer was 23,312 suppliers – I’ll never forget that number – and a spend of about £750m; they thought it was £600m.”
Over the next four years he built the function, learning the importance of “getting the right people, with the right skills, in the right roles”, before moving into general management.
What did his time outside of procurement teach him? “How other people see procurement. Getting experience outside of procurement is one of the best bits of training to be a good leader inside procurement. You get a wider perspective, and see some of the difficulties of operating with procurement much more clearly.”
He also learnt how vital communication skills are: “When you’re running a number of functions, it’s about how you communicate in a consistent and coherent way, so your message isn’t misinterpreted.”
Harrison probably would have continued on the general management track, if he hadn’t been approached to join what was then Interbrew, a business about to embark on a “very ambitious” M&A plan and without a global procurement function.
Interbrew merged with AmBev to create InBev, the world’s largest brewer, in 2004. Harrison estimates that in his six years there leading procurement, the company completed 15 acquisitions and a few disposals across the globe: “What an incredible experience that was: as soon as you’ve established your function, you bought another company in another continent.”
The acquisition agenda drove home again the importance of communication. “You’re always picking up new businesses, so you’ve got to sell. You can’t just ram [procurement] down people’s throats. Successful procurement doesn’t operate by mandate alone. It operates because people look at it and think ‘these people are going to bring value and help me spend money wisely’.”
In 2006 he was given an offer he “couldn’t refuse”, and joined Nestlé as global CPO. “The biggest FMCG company in the world, with factories in 80 countries, it is unbelievably complex,” he says. “It was probably one of the best companies to prepare me for the public sector. Nestlé is a devolved organisation where the markets hold the power, which is quite challenging for procurement: you’ve got to be able to sell the value you are bringing.”
After four years at Nestlé, and 10 living outside the UK, he decided to return home, and to general management, heading up the global plastics business of FTSE 100 firm Rexam. “That was one of the best jobs I’ve ever done, having the full spectrum of running a business.” He was asked by Rexam’s board to sell the business, adding another string of experience to his bow.
And so to the public sector, and CCS. “What appealed was a chance to work in a sector that has such importance to citizens,” Harrison says. But it’s fair to say it hasn’t exactly been an easy ride.
CCS was established in 2013 as part of a suite of reforms by then Cabinet Office minister Francis Maude. The aim was to coordinate the purchase of common goods and services. At the time Maude said CCS would “ensure a step change in our commercial capability”.
However, a National Audit Office report published in December 2016 said the CCS had “not yet achieved value for money”, that it had failed to integrate or standardise the services brought under its remit, and at times could not demonstrate to its customers that they were getting the best deal. According to the NAO, CCS was only managing the spend of seven government departments, 10 fewer than originally planned, and was managing £2.5bn worth of spend by April 2016, £8bn less than forecast.
Harrison’s belief is that while the concept behind CCS was “the right thing to do”, the original execution and operating model were not. “The reality was, in the desire to get it in place, a lot of other activities got swept up into CCS as well,” he says. “[For example], operational contract management that had been taken away from users and put into a central body, which then had to go to the users in order to manage it – which actually made it less efficient. So a lot of that first year at CCS was about getting the focus on what it is we are really good at: putting in place the right agreements for common goods and services across the public sector, and stopping doing many of the activities that would be far better done by someone else.”
Harrison, with Cabinet Office permanent secretary John Manzoni, appeared in front of the Public Accounts Committee in January 2017. “The challenges were: what was the scope of the commercial service, what was the operating model, and how did that model fit with a regime that was about compliance?”
Compliance v commerce
Balancing compliance and commerciality is a tricky one, in an incredibly complex environment. With 18 central government departments, eight of which are the size of FTSE 250 companies, Harrison likens it to “putting in place a central procurement function for a selection of FTSE companies, who have their own stakeholders and strategies – and you’ve got to sell [procurement] to them.”
In addition to central departments, CCS also serves the wider public sector, operating across local councils, schools and NHS trusts. For these smaller entities, it’s about “finding ways to interact in a more ‘digitally self-help way’”, with a move towards digitisation of service offers to make CCS as easy to do business with as possible.
In his time as CCS CEO Harrison has focused on getting the right operating model in place, implementing category strategies across four pillars (facilities management and utilities, information technology, professional services and corporate solutions – “everything else”) and bringing in a new leadership team.
Work is also ongoing around making it easier for SMEs to supply to government. “We’ve been doing a lot of work looking at our terms and conditions, our tender processes and thinking how we can eliminate or simplify some of the process while maintaining compliance,” he explains. “I’d love to get to a place where whether you’re a large company or SME, you’re able to comply with our bid process in a way that is commensurate with your scale.”
CCS success stories include work done with the government legal department, putting in place panels of lawyers to cover different types of legal activities. The fact this took two years to embed demonstrates the complexity of the environment. Other wins are Crown Hosting Data Centres, a joint venture with an SME to offer secure data storage, which is expected to deliver one local council year-on-year efficiency savings of 60%, and a project to open up the public sector water market. The first public sector water framework agreement brings together 122 bodies and spend of £40m, achieving average savings of 4%, and up to 10% in some cases.
Public sector procurement has been in the firing line of late in the wake of the demise of Carillion, which collapsed in January, taking 450 public sector contracts with it. John Manzoni, giving evidence to MPs as part of the enquiry into Carillion, said recently: “We have allowed an era where companies have spread themselves very thin, bid low just to win contracts, and in part because we have not had the sophistication internally to do much other than go for price.”
For Harrison, the bigger debate is about “how you manage outsourcing”. “You’ve got to be able to specify very clearly what you want your suppliers to provide,” he says. “That’s really difficult when the nature of the service has a habit of changing, sometimes changing based on different political priorities and the public sector procurement regulations are better suited to buying clearly specified goods rather than complex services. You have got to come up with a model for specifying which allows for variation. You might get changes in specification that mean you have to retender the business, so how do you build that into a contract in a public sector environment? These are not simple challenges.
“Then it’s about how well you manage the contract. What the issue of Carillion has brought to life is that we need to clearly specify what the service is, making sure there’s appropriate risk transfer. There’s no point transferring risk to people who can’t manage it – for me that is part of the specification. The second bit is about managing those contracts in a more effective, professional way.”
As Harrison prepares to leave CCS, he acknowledges that “this journey is not finished” – he estimates it’s about 40% complete so far – and that “in many ways this is too early for me to be leaving”. But his passion for the procurement profession means he couldn’t turn down the opportunity to lead its professional body.
“This profession has some fantastic people, and if as a professional body we can provide the technical knowledge and training to both improve capabilities and find ways of helping people feel more confident in their capabilities, and through that confidence be able to deliver more value, that would be a significant step forward,” he says.
One of procurement’s challenges is “making it an attractive profession where great people want to work’, he believes. “Those of us who have ended up in procurement think it’s a wonderful place. But the profession is still seen as ‘the people who generate the savings’, whereas I think procurement should be seen as ‘the people who help us spend our money wisely’. Then it becomes much more about value.”
While Harrison sees technical procurement skills as “well understood”, he thinks there are angles around the skills senior leaders need. “What’s the best way to give procurement leaders the right set of skills to be a great CPO?” he asks. “The skills of a CPO are more similar to those of a chief sales officer or business unit leader than a buyer. There’s work to do on how we equip people at senior levels with the skills and experience they need to be successful.”
It’s an agenda he is keen to get stuck into, come August. Why, despite a career in general management, has he been unable to escape the draw of procurement? “It’s just so broad,” he says. “You’re always dealing with change. You never know what change of demand or variation in a supply market you will next have to find a solution for. There’s never a dull moment in the procurement world.”
Five things Malcolm Harrison can’t live without
1. Walking boots
I like having a destination or objective to aim for, and overcoming whatever challenges or terrain are in my path. I like being outside and being with family, friends and colleagues. The best way to do this is walking.
2. A photograph of my family, and our dog
My family is so important for me and a key reason why I do what I do at work – so I can enjoy times with them.
3. Snickers bars
I like chocolate. Snickers reminds me of my early career at Mars, though back then it was called Marathon! Mars is the best company I have worked for. I learnt an enormous amount from the environment, the principles and the people.
4. Book of Times crosswords
One can always learn something new and crosswords are a great way to do this. Solving conundrums is like creating good supply strategies – it can be just as complicated.
5. Everest the Hard Way
This book by Chris Bonington is about his ascent of Everest in 1975. The planning, the logistics and the team work involved is something I admire and relate to with my limited experience of mountaineering – and as a procurement professional!