June 2014 |

The beautiful game

There’s something a little forced about coming up with a World Cup analogy for business and procurement in light of the quadrennial football festival in Brazil. But – you’ve read this far, so it would be remiss not to give it a go.

So let’s think about three things that make a potential World Cup winning side: strong foundations, specialist expertise and teamwork.

The countries that were tipped to succeed in the tournament, certainly have those in spades. Brazil, with its long football heritage. Spain, which has spent more than ten years painstakingly building skills among its young players. Argentina, where the silkiest of attacking options (watching Lionel Messi is mesmerizing even for non-football fans) is backed by the second best defensive record in qualifying.

Getting these foundations right AND having the best infrastructure in place pays big dividends over the long term. That’s a lesson too many companies forget. It’s interesting when the “best” uses for excess corporate capital are share buy-backs (which hit a five year high in the US last year) and increasingly pricey M&A deals (two conventional signs that a bull run for profits may be coming to an end).

At one level, these activities are simply sensible arbitrage, a way of managing cost of capital. But it masks much deeper cyclical shifts for business that, untended, might cause long-term problems. (These companies feel like Portugal – reliant on a Ronaldo, who might play brilliantly, but could leave the team bereft elsewhere).

The great football teams not only develop players from a young age, they acknowledge their team is surrounded by layers upon layers of people and support resourced – enabling the players to do what they do best.

Expertise from back-room operations (fitness, tactics and organization – and often using a coach from a different country if they understand the methods required) ensure the team is focused on playing the game. The same is true for companies.

Failure to invest in world class support resources doesn’t always denude short-term performance, but over time? It can be fatal. Excessive focus on one area – often sales or the bottom line – risks other aspects of the business decaying, undermining the whole edifice.

Remember Roy Keane walking out before World Cup 2002 complaining of shoddy admin? How about, in the world of domestic football, clubs scrambling to avoid falling foul of the Financial Fair Play rules? Companies where crucial functions like procurement are considered non-strategic and left to relatively low-profile teams stuck in departmental silos run similar risks.

It’s telling that six out of ten CEOs wish they had more time to spend on operational efficiency, such as improved procurement. Like national team managers, they wish they could work on the grassroots, too. But, like the managers battling it out in Brazil over the coming month, they stand or fall on the next set of results.

The prescription? As we come out of a period of economy sluggishness, it’s the perfect time to look again at efficiency, cost management and strategic change. Instead of share buy-back, invest in capabilities and bring in expertise that will break down corporate silos and create a lean, integrated business that can deliver again and again over the years.

Strong foundations; skills; teamwork – bring in the right expertise to deliver all three and winning the World Cup should be a doddle!

So, will you be watching the events to come from the side line, or from the forward pack – standing next to your executive team?