CPO Rising 2016 Recap: The CEO’s View of Procurement
On Day 1 of Ardent Partners’ inaugural CPO Rising procurement executive summit, Louie Psallidas, President and CEO of Uno Restaurants, delivered a keynote presentation entitled, “The CEO’s View of Procurement: Strategies to Engage the C-Suite.” Although the audience at the event was predominantly procurement and supply chain focused, Louie delivered what may have been one of the most valuable presentations at the event. All Chief Procurement Officers (“CPOs”) and supply management practitioners serve the greater organization, and who better to advise them on how to succeed at their jobs than the CEO of a successful (and growing) brand?
Readers may recall that we profiled Louie earlier this year in a couple of Q&A articles on CPO Rising. Like many CEOs, he has a strong financial background, having begun his career with Deloitte and Touche as an auditor, before earning his CPA, and going on to serve as Chief Financial Officer (“CFO”) at many regional and international restaurant brands, including Uno Restaurants. In October 2014, after serving as CFO at the company for more than six years, Louie was appointed President and CEO. We were lucky to have him present “The CEO’s View of Procurement” at CPO Rising 2016, a view that was remarkably different from where he previously sat (literally and figuratively) at the executive table as CFO. Here’s a high-level recap.
The CEO’s View of Procurement and the “Commander’s Intent”
Having sat in both the CFO’s and the CEO’s seat at Uno Restaurants, where he developed relationships with the company’s CPOs, Louie’s goal for his presentation was to share “the keys to evolving the role of the procurement function into a strategic partner to the CEO and the business.” Part of the challenge of the CEO-CPO relationship is that of alignment – ensuring that the CPO is in lock step with the CEO in executing their vision. This can be challenging, given that the CPO is in competition with other internal and external stakeholders for CEO mindshare, and it can often be difficult to consult or advise the CEO of significant developments and decisions ahead of time.
To overcome this challenge, Louie shares with his staff the “Commander’s Intent,” which is a military leadership concept discussed in the book, Extreme Ownership: How U.S. Navy SEALs Lead and Win, by Jocko Willink and Leif Babin. The Commander’s Intent “describes the desired end state. It is a concise expression of the purpose of the operation and must be understood two echelons below the issuing commander…. It is the single unifying focus for all subordinate elements.”
With this in mind, Louie paraphrased an excerpt from the book, which described how three SEALs were tasked with planning a simulated mission. Two of the SEALs drafted a lengthy and detailed PowerPoint presentation that covered every possible contingency and what their responses would be. In comparison, the third SEAL drafted a concise, two-page presentation with little more than the mission’s objective. He planned only to achieve the objective, and would rely on his training and resources to improvise, adapt, and overcome the challenges that he would encounter while executing the mission.
This is how CPOs and their staff need to operate in today’s chaotic and turbulent business environment, Louie said, where change is a constant. As a result, he relies on his CPO and procurement team at large to be problem solvers – to operate with the “Commander’s Intent” in mind so that when they are separated from “command and control,” they always make the best decisions for the company and the customer.
Four Strategies to Engage the C-Suite
Here in the presentation, Louie shifted from business concepts to solid strategies that CPOs and procurement teams can leverage to be successful.
- Nail the Basics. For CPOs and their staff, this means tracking key performance indicators, like spend under management, building internal and external relationships, getting engaged sooner in the sourcing process, and increasing spend under management. If you can’t “nail the basics,” the rest will be an uphill battle.
- Transform the Procurement Culture. Ardent Partners often discusses procurement transformation from the perspectives of people, process, and technology. But as Louie said, “We have made some good progress, but we have a long way to go to truly build a culture of amazing. If we don’t make amazing cultural changes, we will continue to fight uphill since as we all know…culture eats strategy for lunch!” Accountability, achieving results, and delivering the best customer experience are key cultural points for Louie.
- Supporting Innovation. For Louie, this means listening to his staff’s ideas, backing their efforts to find better ways to conduct operations, and stepping back and letting them execute. With so many things on his plate as CEO, Louie prefers to let his staff find the best practices and most innovative ways to make their organization run better, and enhance the customer experience.
- Proactively Manage Risk. This strategy hits close to home for Louie, who has been following Chipotle Mexican Grille’s supply chain and safety woes over the past four months and cited it as an example of when bad things happen to good companies. CPOs and procurement teams need to weigh benefits versus risks (e.g., in Chipotle’s case, the benefits of sourcing fresh produce from local farmers versus the risks of sourcing from farmers who may not wash their produce effectively). They also need to get out in front of their risks and manage them before they become bigger problems for the enterprise (e.g., damage to brand, loss of revenue, market share, etc.).
As the President and CEO of a major international restaurant brand, Louie left us with us with a good summation of the CEO’s view of procurement. For him, understanding the “Commander’s Intent” is a critical first step critical in becoming a strategic partner to the CEO. Next, CPOs and their staff need to solve problems and be solutions oriented. Also, the pace of change requires agility in all areas of the business, especially procurement. CPOs and their staff need to nail the basics in their execution while working to transform the culture of procurement from a back-office, internally-facing department to a front-of-the-house partner in delivering top notch customer service. In doing so, CPOs need to support innovative people, processes, and technologies and get behind good ideas. Lastly, they need to get out in front of risks before they hit the wires. There is too much at stake in today’s business environment to be complacent.