"I’ve reached the top and had to stop, and that’s what’s botherin’ me.”
Like King Louie in the Jungle Book, CPOs - having reached the top of the procurement tree - can face a fundamental challenge in making the next step: switching species to become a board member. Make no mistake, the cross-business responsibilities of a company director or executive committee member are fundamentally different from running one function within a business.
The issue is not unique to procurement: every function – HR, Communications, Marketing, IT – has a narrative that states it should have a seat on the executive committee, and that the organisation clearly cannot value what they do unless the function head reports to the chief executive. The CEO, however, is unlikely to be impressed by such arguments: she or he will assemble their leadership team as much based on the characteristics of individuals as on their job titles.
Alicia Seoane-Ireland is a Partner at Carbon, an executive search firm specialising in senior appointments: “Truthfully, you need to be able to contribute more broadly than your vertical in order to sit on an ExCo, beyond some short term need. The majority of your contributions will be about the broader strategy of the business, not your functional responsibilities. You mustn’t be seen to be being driven by your own function’s agenda.”
This point is echoed by Lawrence Churchill, a veteran board chair, who currently serves as chairman of the FSCS, the Pension’s Policy Institute, Applegate Marketplace and Prudential’s IGC, and also as the Senior Independent Director of BUPA: “If you’re very good at your function and take a broader view of how it fits into the broader business, then the world’s your oyster.”
Broader experience is key – Seoane-Ireland again: “An HR Director who sits on the product development committee, they’re going to look more like an ExCo member in five years’ time; a CPO who sits on an external board, they can look more like a potential ExCo member. They can give a view on the future which is not narrowly defined by their function.”
A non-executive role is one of the best routes to develop – and evidence – broader understanding of business. Securing such an appointment is often bedevilled by a catch-22: typically board experience is desired when appointing directors. Accordingly, a considered approach is required. “The first thing you should do is think through ‘what am I going to bring to this’, what well rounded experience do I bring to address general business challenges and contribute to those,” Professor Jim Norton was Chief External Examiner for the IoD’s Certificate in Company Direction. “If I’m missing in a particular area, I need to address this. Am I a well-rounded business person – almost nobody is – what are my gaps, how do I fill them. This also helps prepare you for an ExCo role, it forces you to think through how you’ll contribute confidently in the round,”
Norton cites Apple’s Tim Cook as a great example of a supply-chain specialist progressing to the top because of, rather than despite, his functional expertise, “he managed to deliver a supply chain that was at once innovative and low cost – achieved something almost miraculous.” Cook’s route to chief executive via COO fits with Churchill’s view on one future path for CPOs, “procurement specialists are a natural fit for operations director, because what they’re looking at is the efficiency of the operating model.”
The good news is that all agree procurement is given greater weight now. “There’s been a shift in the past decade in the criticality of the CPO function” says Seoane-Ireland, “it’s now seen as much more strategic – no longer just about cost control, but a strategic partner to the business.” Norton concurs, “I would regard procurement as providing a set of strategic business skills. It requires you to understand not where the company is now but where it will be in five years’ time, where the company is being taken in terms of its product or service set, and match the supply chain to that.”