Get to Market 400% Faster with Lean-Agile Procurement

When it comes to procurement in a Lean-Agile context, according to Mirko Kleiner, “It’s not rocket science” – but it does deliver compelling business value. Kleiner wears many hats: a thought leader in Lean-Agile procurement, author, co-founder of Flowdays and the list goes on. Lean Agile Procurement, he says, has some simple tenants that any agilist would recognize:

• Bring everyone together for alignment from legal to procurement to the supplier and the business users to form a cross-functional team.
• Accept uncertainty.
• Empower the team.

The outcomes include a client with a better understanding of what it wants, less re-work or misunderstanding about requirements, and – get this – an average increase of 400% in time-to-market.

Accenture | SolutionsIQ’s Leslie Morse hosts at the 2019 Business Agility Conference in New York City.

Learn more:

• Lean Agile Procurement Alliance
• Lean Procurement Canvas – available for free

Read the full transcript

LESLIE MORSE: Welcome to another edition of Agile Amped. I’m your host, Leslie Morse, and we’re podcasting from the Business Agility Conference in New York City. Today my guest is Mirko Kleiner. He is a thought leader in Lean Agile Procurement, an international speaker, author, and the cofounder of Flow Days. He serves as an Enterprise Agile Coach and as a Certified Scrum at Scale Trainer among many other things. And his guiding principles in life are, “Be the change you wish to see in the world.” As well as, “What if?” That sounds pretty compelling, Mirko. Thanks for joining us today.

MIRKO KLEINER: Thank you, Leslie for having me.

LESLIE MORSE: Yeah, you’re welcome. I’m excited to get into this topic of Lean Agile Procurement. I do lots of procurement stuff in my role at work. So not only are we going to help kind of educate our listeners, but I’m hoping to really walk away with a couple of things that’s going to make a difference for me when I get back to work next week. Can we spend just a little bit of time, kind of talking about sort of those guiding principles and that idea of you be the change you wish to see in the world. And more importantly that question, “What if?” And does that tie to this whole idea?

MIRKO KLEINER: Well, this powerful question was just the start of it because I used to be on the supplier side for more than 20 years and I was just sick of the whole RFP offering process. And more than two years ago we asked this question, “What if?” and what if we have to decide within one day, and how can Agile help us out in this sourcing, offering thing? And imagine if you have to decide within one day you have to bring all the decision takers, all the competencies into one room at one table, and then it might work, we thought. That was the very beginning of it and then we started from there to develop the approach to Lean Procurement canvas and so forth.

LESLIE MORSE: That’s cool. In your session here was sort of couched in, I’m going to call it, a provocative sort of way, right? 400% increase in time to market in an unexpected domain. Like that’s a way to get people engaged and paying attention like, “400% increase? That’s pretty big.” Now is that an exaggeration to catch people’s attention or is that really what you guys have seen?

MIRKO KLEINER: We have formed several cases now since we’ve developed it, and 400% is not something special. It’s even average. We have recently done it. We’ve sourced an ERP system within two weeks, just two days, all the three vendors in one room. And on the second day we had co-created the Agile contract. And in parallel, we even have run a proof of concept. And at the end of the second day, we have signed the contract, we’ve designed it. And then the third day, they continued working. So that’s what we are doing.

LESLIE MORSE: I wish this was a video podcast at the moment so people could actually see the crazy face I was just making. Talk about a high dream of where you want to get, because procurement tends not to be at the first place we look when we’re talking about Agile transformation.

MIRKO KLEINER: Absolutely.

LESLIE MORSE: But it can absolutely slow the business down. So let’s just before we could go so many places, let’s just start like… what’s your definition of Lean Agile Procurement? What does that mean for you?

MIRKO KLEINER: If we bring it just to the point, I would say you’re just bringing the right people together in the right moment, right? This is it. And the approach, the canvas, everything that, those are just tools, guidelines to help the people, guide them through the whole approach. So for them it’s very unusual that business people, people from IT, legal procurement people, that they are sitting at the same table. So that’s really the very first time for them that sometimes they even meet within the company. Right? And that makes really a difference then because we co-create a team, an Agile team, out of them and they are doing the journey together and it’s no more the middle managers or somebody that does the sourcing and does this decision. We ask for the people that will cooperate with the external partner and they get empowered and they will decide.

LESLIE MORSE: Yeah. This sounds like a whole different level of mindset shift because I mean in practically speaking, procurement, and the idea of a procurement discipline, and procurement processes, have existed for longer than technology and software development processes. So these are even more ingrained in kind of corporate culture and dynamics. So what are the real mindset shifts that are needed for these groups as they start looking at these new ways of working?

MIRKO KLEINER: I don’t know where to start. I mean, there are so many mindset shifts. First of all, our approach is not for commodity sourcing. There it’s over hat. But if we are talking about strategic sourcing, if you’re talking about innovation things that we have a lot of unpredictable things, it starts the first mindset shift. Procurement people but also business people tend to … They want to specify the things they want to have clarity, what we want to get, what we going to get. And this is the first mindset shift, accept uncertainty.

So we don’t go into so much detail anymore because it’s waste, right? Writing a hundred pages specification. We even do not do that anymore for business cases. We do the business model canvas, right? And, and there it’s okay. The, that the whole startup community, they put that into their DNA, while all the others, they are at the very beginning with that mindset. And then it’s another question about power. I mean, depends on the topic and the company. But usually the budget lies with procurement, which I don’t know. Makes no sense.

LESLIE MORSE: Yeah.

MIRKO KLEINER: Why is it not in the business?

LESLIE MORSE: Right.

MIRKO KLEINER: And they, they pretend that the final decision with them and we will be usually have then a conversation about that. Why is it? Yeah, we are responsible for the risk. We are responsible for keeping the costs as low as possible. And so to say, “Hey, that’s what is valuable. Come and sit at the table.” But we have other guys, right. You bringing this competence, others bring in … A legal brings brings into the whole legal point of view. IT, IT point of view and so on. So this is, this working together is really fun to see.

LESLIE MORSE: I bet so. So what are some of the things the first time you see groups, right? Start trying to embrace more Agile procurement processes and they’re really sitting down at the table for the first time together. Can you describe to me what those dynamics are like?

MIRKO KLEINER: Yeah, I mean, it’s just, if you look at the lead times we achieve, I mean we are doing things that in the past they had six to 12 months. We’re doing that in weeks, sometimes days. We recently did a sourcing where the partner was, at the tool was given within one hour. Right. So you can imagine what the dynamics, how they can double up within that if the people got this alignment and that’s all about. We recently had a one customer where, one of the board levels, this is the business case. Look for a partner on the project. Right? I’m out.

LESLIE MORSE: Yeah.

MIRKO KLEINER: I insisted that he is part of the first kickoff meeting and he was kind of confused and said, “No, it’s all set. Why you do you need me? And I said, “I need you for the initial alignment of the vision, where you want to go. What are your personal goals? Maybe you have just written down one goal and but there might be more in future and so on.” And he really was confused and rechecked it several times. And I said, “I don’t going to start the project if you don’t show up.” He said, “Okay fine. I can make five minutes. Something like that.”

LESLIE MORSE: Classic executive response.

MIRKO KLEINER: Yeah. And so he joined and the interesting thing was I was asking the people to explain what they understood of the vision and the goals they had to achieve. And he said, “No, no, no, you got, you got that totally wrong. We are heading in the other direction.” And I said, “You see?”

LESLIE MORSE: Yeah, that’s why you’re here.

MIRKO KLEINER: That’s why you’re here. And he stayed the whole day.

LESLIE MORSE: That’s amazing. Well, I mean, I mean what power of like shared understanding, right? Because even if he would have written it down at best you get what’s written down, whether or not it’s what you really intend. And then I just think about like, you have more traditional applications of Agile and like, you know, when our business stakeholders and our product owners start really talking to our developers and the light bulb moments that happen. And like how much more alignment occurs when you get this diverse audience around the table. I don’t think those are light bulb moments. I think there’s are like the sun turns on kind of alignment moments. Like, and people just gain so much insight into how the whole business runs in different kinds of ways. That’s gotta be really powerful.

MIRKO KLEINER: It is. It is. And the people, they get engaged because they say, “Hey, wow. I going to be part of that story. I’m on the table from the first moment. I’m not just a task, the internal supplier, you know. Legal, you have to do this contract now. Go ahead. We don’t care how you do deal with that.”

LESLIE MORSE: Yeah.

MIRKO KLEINER: The legal is on the table, we talk about the vision, about the collaboration model, pricing model and all that stuff. And they get it. They got it. They see, oh, now I understand why you want to work this way. I had no clue about Agile for example. Yeah. Uh, but now I understand what you, and now it’s much more easy for me to create a contract based on what I learned. Right. And so we are speeding up everything just because of the alignment.

LESLIE MORSE: Absolutely. Which is a classic benefit of Agile, right? Like that shared understanding reduces kind of cycle time and complexity and all sorts of things. So I’m thinking about the way some organizations that have like massive, massive teams that focus on procurement and legal and all of this sort of stuff. And then I think about the parallels to that and more, right? Software Development, product development type, Agile transformations where it’s really easy for people to make up a story that goes, “Oh well if the Agile teams are doing all of the work than like where’s my job go?” And like this idea of like, is Agile going to bring job risk to my role? So I could almost see a situation of, if we’ve got all the right people at the table for this conversation, is there, we don’t need as large of procurement teams if we use this approach?? Or is that sort of something that you see happening for organizations that go down this path?

MIRKO KLEINER: Yeah. Let me make an example in a minute. First of all, we need to know where procurement stands currently. They are at risk currently because all the commodity sourcing cases gets digitalized.

LESLIE MORSE: Yeah, true.

MIRKO KLEINER: Right?

LESLIE MORSE: Yup.

MIRKO KLEINER: All the machines taking over AI and other parts. So what is left are complex sourcing cases and they have no idea how to deal with the classic RFI, RFP process doesn’t work with that or it takes so much amount of time.

LESLIE MORSE: Yeah.

MIRKO KLEINER: So we try to give them another tool. So it’s also to staying relevant but it’s not just for procurement. It’s for the business in the end. And in my opinion, procurement professionals, it’s not about, now we can keep our function and build even more procurement people up and so on. It’s, we need their competence, their expertise. You still need to negotiate. You still need to do more market research and so on, all this stuff, what they are doing. We even need a competence to build as I called them adaptive partner ecosystems. Who is able to do that in our organization the best? That’s the procurement people.

LESLIE MORSE: Yeah.

MIRKO KLEINER: All right. So we need their competence, but how are we organize them in scrum teams, in team of teams, in Agile organizations, we will see. I have an opinion on that and we see examples. For example, Barclay’s, we’ve met the CPO, Phil Thomas last year in London and he showed us where they are heading to. So they’re investing a lot in this digitalization for the commodity cases. So they are freeing up resources for the whole strategic sourcing. They have started to build cross-functional teams that currently have 100 people in cross-functional teams, just in procurement.

They are missing the point to include also business IT and all the rest, but they’re on the journey. So they started last January or something. So they did already a great job. And this is an example, and they said, “It’s awesome.” I mean, they’re speeding up and the collaboration goes off and so on. So, so one team, similar to Lean Agile Procurement is … In procurement there is a seven to eight step process, how to run a source in case and they … In the past they just had a lot of, seven to eight silos and handovers and delays and so on. And now one team takes a case and does it from start till the end.

LESLIE MORSE: Just the waste and handoffs through traditional procurement processes. Having one dedicated team from start to finish makes it.

MIRKO KLEINER: Makes sense.

LESLIE MORSE: Got to make sense. Yes. Duh. Like why didn’t we think of that before? But you think about cycle time and cutting out waste. Right? I’m actually, I’m sort of sitting in the supplier seat, right. Work for large consultancy. We’re responding these RFPs all the time. The idea of just being on site for two days, even if you have a team of five people there. Working through it with the client is way less time, effort than the three weeks that we spend passing documents back and forth and revising stuff and having our legal review it before we can send an RFP response and all of that craziness.

So not only are the businesses in the buyer side of the equation gaining tremendous efficiencies, it sounds like and really improving their ability to kind of inspect and adapt and respond quickly.

MIRKO KLEINER: It’s a win win.

LESLIE MORSE: It’s a gift to the suppliers. Like I would say, “Thank you.”

MIRKO KLEINER: They love it.

LESLIE MORSE: Yeah.

MIRKO KLEINER: They love it.

LESLIE MORSE: So, but how do you see the, if you’re going through a transformation for Barclays as an example, not only do their teams have to learn new ways of working and new mindset, but they have to retrain their suppliers too.

MIRKO KLEINER: Absolutely.

LESLIE MORSE: Which is, I’m guessing, part of kind of a viral way to proliferate these practices through more and more organizations quickly.

MIRKO KLEINER: That’s why we started on the procurement side. Because there is the power, right? I did it the other way around 20 years as a software company and we did it. We just said, “If you want to work with us then hey.”

LESLIE MORSE: This is the way.

MIRKO KLEINER: “This is the way.” Right. But you have less power on the supplier side. But I would like to encourage all the people that are hearing this podcast, even if you’re a supplier, start trying it.

LESLIE MORSE: Yeah.

MIRKO KLEINER: So we for example, use the Lean Procurement canvas as a one-page offer. Right. It takes us one hour and and we just send it to the buyers. If they don’t accept it for some formal reasons, they are not our customers.

LESLIE MORSE: Yeah.

MIRKO KLEINER: If they get curious if … I mean, it happened to us, one of the biggest Swiss telco invited us for a huge transformation project and they said, “Could you please come and pitch your story?

LESLIE MORSE: Yeah.

MIRKO KLEINER: I said, “Oh, now we are in deep shit because we even don’t have a company slide deck. So what are we going to do?” And we decided to print out the canvas as a poster. And we made a validation workshop out of it.

LESLIE MORSE: Oh Wow.

MIRKO KLEINER: So we said, “You know, on the left hand side, we have the how, our solutions trainings, uh, uh, competencies and everything. That’s fine. All the others might have that too. But could we talk about what you want to achieve? What are your main needs you want to achieve tomorrow with us so that we can have a mapping if we are the best consultants for that and what are your overall goals?” Right. And then we co create together a roadmap and beside of that, even more important than that is with whom we going to work together?

LESLIE MORSE: Yeah.

MIRKO KLEINER: Right. So we have the people in the room that might have time and are interested to support, but who is on the other side because it’s what people often forget, sourcing has a two way direction.

LESLIE MORSE: Oh yeah, of course.

MIRKO KLEINER: The supplier can reject too, right?

LESLIE MORSE: Oh, yeah.

MIRKO KLEINER: So, and they got blown away. We did it in one hour and we kicked out all the big consultancies, just with this approach.

LESLIE MORSE: That’s really amazing. It makes me a little nervous thinking about the way we go pitch to clients. So one of the great ways to learn is kind of like crash and burn stories, right? So what are some of the things you’ve seen kind of go sideways or go wrong as people try to get started with this type of change?

MIRKO KLEINER: What we recommend is starting small. It’s Agile, right?

LESLIE MORSE: Yep.

MIRKO KLEINER: Take one of your next project. I’m talking on the buyer’s side. Make a pilot, call it into early experiment. Experiments are allowed to fail. It never happened with us so far and get some external help if you have no experienced Agile coaches. It could be also internal ones. And then, just try it. Yeah. You don’t have to apply at full stack. You can take out bits and pieces. For example, we … I mean I wouldn’t start anymore without a vision and goals and stuff, but we for example, created a user workshop.

In almost every case we do that to verify and gather their needs. So we invited 50 or more people in one room, similar thing. And for example, create per persona user story map with their priorities. So what do you can’t live without?

LESLIE MORSE: Yeah.

MIRKO KLEINER: If you run out of budget what you might accept if we deliver later or never?

LESLIE MORSE: Yeah.

MIRKO KLEINER: These are important questions.

LESLIE MORSE: And not unlike the questions we ask when we’re doing our own internal product development with our organizations. So why wouldn’t we ask these same kind of questions in the procurement process?

MIRKO KLEINER: I have no idea. No, how they work today is the business writes a concept.

LESLIE MORSE: Yep.

MIRKO KLEINER: They hand it over to procurement and they create a tender documents out of it and nobody remembers why this deliverables are in the list, who one was asking for it and what’s the priority of it? And it’s all about priority in the end, right?

LESLIE MORSE: Yeah.

MIRKO KLEINER: So what is the most important thing?

LESLIE MORSE: Yeah. The most functionality or the most, I don’t even want to call it the most value for the dollar because it’s not necessarily value. Just because some ERP versus another ERP has more features available in it doesn’t mean that it necessarily creates more value. In fact, I was in a situation where we had business stakeholders said, “Well, the ERP we bought will let us do blah blah blah blah blah. So we should do that.” I’m like, “But that makes no sense for our business. Why would we want to do that?” “Because we can.” “Well, no. Let’s not.” But those are the kinds of things that end up coming up-

MIRKO KLEINER: Exactly.

LESLIE MORSE: -when you go through procurement and more. I’ll say close minded ways. Is that’s, kind of what it is, is landing with me is that it’s closed-minded versus open-minded procurement almost.

MIRKO KLEINER: Yeah. That sounds a bit negative to me.

LESLIE MORSE: Yeah.

MIRKO KLEINER: To be fair, I mean these processes, they just run the standard processes. I think the mistake we do is we do not question those processes anymore. We are just blind, kind of.

LESLIE MORSE: Yeah.

MIRKO KLEINER: Right? So, yeah.

LESLIE MORSE: Well, all right. So ways to get started. You were kind of giving some of the tips and tricks, like pick a small experiment, look for a small thing and let’s just start trying it. But you got to start learning somewhere and really kind of building some of this competency, especially for, you don’t have available Agile coaches to come help you that can figure out the transferable stuff. So where do people go? Where did they learn?

MIRKO KLEINER: We offer trainings and we’ve created a Lean Agile Procurement alliance where we have currently … We are at the very beginning. 10 certified trainers on three continents now. So we want to spread our ideas and I think it’s not rocket science. So experienced Agile coaches, they get it and they just should start. So the, we also decided to open-source the Lean Procurement canvas because hey, it’s a gift. Please take it and go ahead. So take a case, start, get the team empowered.

What is important, what we learned and this is no matter if it’s procurement or any other Agile team, we invite people. This is the vision.

LESLIE MORSE: Yeah.

MIRKO KLEINER: This is the experiment. Who likes to join us? That makes a whole difference.

LESLIE MORSE: Absolutely.

MIRKO KLEINER: And what we also do is, if we have the team empowered, we then just walk the approach. I mean there are some guidelines. But it’s not the receipt. Every case is different and that’s really interesting.

LESLIE MORSE: That’s cool. What are some of those guidelines to keep in mind? We haven’t gotten to that.

MIRKO KLEINER: Some of those guidelines is, I would say if I support such a case, I invest almost two thirds of my efforts is setting up the team properly.

LESLIE MORSE: Okay.

MIRKO KLEINER: And align it. Uh, get the why and what really good. But then we are just preparing a short list with the team. It’s no more, just one person’s task. We going to invite and set up this big room event where we invite the vendors. And there we have some guidelines on how you can do that, what is the next step and stuff like that.

LESLIE MORSE: Very cool. Very cool. So the, tell me the name of the alliance again. It’s the Lean Agile Procurement Alliance?

MIRKO KLEINER: Right.

LESLIE MORSE: Is that right? Okay. Excellent. So, and that’s where we can go get the canvas if we want it.

MIRKO KLEINER: Right.

LESLIE MORSE: Awesome. I’m going to go check it out because I’ve got some procurement stuff coming up. Mirko, thank you so much for spending some time with us today. I think this is going to be eye opening for a lot of people. Like wow, let’s go start having these conversations because I … There’s a lot of cycle-time reduction to be done here for sure.

MIRKO KLEINER: Absolutely.

LESLIE MORSE: Absolutely. So thank you so much. I appreciate it.

MIRKO KLEINER: Yeah, thank you too for having me. Appreciate it a lot and hopefully if I just, since I always say if I just inspire one procurement guy or Agile coach, then we already won.

LESLIE MORSE: Awesome.

MIRKO KLEINER: And maybe it was you.

LESLIE MORSE: Okay. We have checked that box. That has definitely happened.

MIRKO KLEINER: Awesome.

LESLIE MORSE: Excellent.

MIRKO KLEINER: Thank you very much.

LESLIE MORSE: You’re welcome. Thanks Mirko. And thank you for listening to this episode of Agile amped. If you learned something new, please tell a friend, coworker or client about this podcast and invite them to subscribe online in order to hear more inspiring conversations. Thanks for listening.