Next up on our Procurement Leader Spotlight blog series, we chatted with Hal Good about the key differences between executing procurement strategies in the public and private sectors, and the skills required to be successful in both sectors.
Hal Good has more than 30 years of experience managing procurement for governments on the municipal and county levels. Since retiring from public procurement, Hal has remained busy as the President and CEO of Procurement Pros Group, as an influencer within the IBM Futurist program, and as a content contributor for the Public Spend Forum.
A: Like many people in my generation, I never started out to be a procurement agent. Instead, I kind of evolved into a procurement role. I started in the clinical department at New York University—Langone, in the middle of Manhattan. I worked in the clinical department for a number of years, and we had great people in procurement, but the problem that we had was the people in procurement didn't know the medical language. They also didn't know the use of things like the patient floors and the labs and so forth. So, I transitioned into procurement by simply moving into that niche.
A: It wasn’t planned. I was going to go take the kids to Disney World in Florida. By the time my wife and I both got our vacations booked, all the affordable hotels in that area were filled, so we decided to go to Disneyland in California instead, which led us through Palm Springs. While we were there, a position came along for Director of Procurement and Contracting. I applied for the position the same way you might buy a lottery ticket, thinking that it couldn’t hurt to apply. I ended up working for the City of Palm Springs in procurement and contracting for 21 years.
Timing is everything, and I was extremely fortunate because Palm Springs is a small city that is still pretty big; it has an international airport and a convention center. It also had a celebrity mayor I worked with for four years in Sonny Bono. I got involved in a lot of things along the way that helped me out in terms of my overall career. Plus, it was just flat out enjoyable to be in Palm Springs where you felt like you were on vacation every day, except in my case the vacation lasted 21 years.
A: I think the thing that I enjoy most about procurement has been the ability to affect so many positive changes if you do the job right and if you collaborate with people. I was extremely fortunate—I started out in a medical environment where the results of what you did were immediately known in the organization, and then I moved into local government in a city or county basis. In each of those instances, you could see the results of what you were doing because you can see it's affecting the community and the infrastructure, along with the experiences of people who were coming to visit. To me, it was one of the most rewarding things to collaborate with a lot of people and then to see the results of that collaboration when it all came to fruition.
A: I think by far the most impactful thing has been seeing what you can do with technology, especially digital technology. Because whether you want it to be siloed, whether you're protective of your space, or whether you just couldn't share your information because of the physical or technological challenges, in today's world, you can share information. That makes bringing all sorts of things together in the decision-making process and the collaboration process possible when it wasn't possible before. The digital transformation is real, and it has such a huge impact on where we have come in the last five or ten years, and where we're heading in the future.
A: I think as we become more and more collaborative in procurement as a profession and the edges of it become increasingly more blurred. Therefore, the practitioners within procurement have to be skilled in more disciplines in order to relate to the people that we have to collaborate with. At the same time, we live in a world where it's increasingly risky due to cybercrime and natural disasters. In order to perform the duties of procurement, you have to proactively set yourself up to protect your organization and your customers from risk.
You also have to be very careful who you're doing business with, both from the ability to get the right thing at the right time and also reputation-wise because I think everyone in procurement is very wary of being linked to a supplier that has done something really bad. They don’t want to be getting their raw products or their services from that supplier, and then it rubs off on them. So, managing risk is increasingly important, and goes in a broad spectrum because it involves things like sidestepping shortages, being able to meet demand, being able to predict what's going to be needed in the future, and to avoid the impacts of unforeseen events such as natural disasters or political upheavals.
A: I attend a lot of trade shows, both in the public sector and private sector, and I see one of the biggest concerns in all sectors is getting the right people. It was easier to get people with the narrow transactional skills that are required for working in a transactional environment. Today, we have a premium on people being able to recruit and retain employees that are a lot more multifunctional and who get the big picture. They’re also willing to collaborate, and sometimes that means people are willing to set aside narrow procurement goals in favor of the organizational goals, and then to do everything they can in an agile fashion to support the goals of the organization.
You need people that know marketing, you need people that know supply chain, and you need people that know contracts. You need all those different areas of expertise, and you have to blend them into a cohesive organization, which is a big challenge. Once you find those people, it is really difficult in today's world to retain them, because we've all heard about millennials and how they like to jump around. Once you get a good person, being able to retain them is very difficult. That’s one of the challenges that I see shared across the board by procurement executives.
A: I think they need the ability to be flexible and to collaborate. You need a basic understanding of the capabilities of technology, but you don't have to be a programmer or a computer analyst. You need to understand the benefits that can be derived from technology in order to harvest the benefits of it, so you need someone that is a broad business person with the broad business skills that we've identified with general management, but then you also need to make sure that they realize the contributions that procurement can make to achieving the goals of the organization, and can see procurement’s role in accomplishing those objectives.
One of the rewards of working in procurement is that the work is interesting and you interact with everybody else in the organization. You get involved with marketing, sales, research, manufacturing, and every other department. So you need to find people that recognize that and are really into that if they’re going to be of long-term value to you.
A: There are very few relevant degree programs. Most of them have been in places like the University of Michigan, but more and more programs are springing up. There are also programs where you can get a bachelor's degree in an area like Business Administration, and then you can get certified in something else related to procurement.
It’s helpful to pick up the technological skills to at least be cognizant of the benefits of technology. I think one of the things you can notice is more people are gravitating from procurement into top management, or you notice procurement getting a seat at the executive table. There are some outstanding examples out there where people have made it to the top through procurement, and I think that's only going to increase because if procurement fulfills its natural role of being involved with everything, then that's a value to the organization that is going to be recognized.
A: In defense of procurement, it has been so bogged down by transactional duties in the past. There has been very little opportunity to do the things that we were taught to do. Days and days went by, and you were always troubleshooting the transactional problems and never had the time to devote to other aspects of the business. I think the secret to success is to automate everything that can be automated, including all those transactional duties. They can be turned over to an end-user that's better situated to pull the trigger on what they need to order, and when they need to order it. From there, you have more free time if you take advantage of.
You can't be protective of the procurement space. You have to ask, “What can procurement do to help the overall goals of the organization?” Some of the barriers that need to be broken down in that process involve leaning over backward to understand the needs of marketing, sales, and the other disciplines within the organization because the common criticism of procurement is they don’t understand the needs of the other departments or live in their world. You have to learn to speak the language of those departments and add value to that world. Don’t become an obstacle that they have to get by, which is all too often the way they looked at us in the past, instead of as a partner to help them achieve the goals of the future.
A: I think the impact of automation technology has been felt earliest in areas like supply chain, manufacturing, stocking, and other areas like that. If you look at today's huge superstores, like Walmart, you have a machine going up and down the aisle taking inventory, and the whole process of reordering has been automated. We have manufacturing— including Industry 4.0 right up to 3D printing—which is going to play a larger role in the future. So you have the impacts of those things that lend themselves to the automation process, and then the benefits of those things flow downward.
Ten years ago, we probably would not have imagined what we have seen from some of those supply chain or manufacturing technologies rolling more directly into the soft skills, but I think we need to have our minds open. In the past, in retail, you basically ordered things on the basis of the history of what the customer wanted. Now, in today's world of predictive analytics, you're trying to predict what the customer is going to want tomorrow, and what the customer is going to want three months to a year from now. That's very different, and artificial intelligence now makes that possible. That's going to translate into so many things.
Most of us have seen things that we ordered that linger somewhere in a storage area, and that were ordered with good intentions, but nobody wants to use them anymore. Now, we can basically avoid those mistakes by using analytics more intelligently, and be ready with what used to be needed in the past, along with what will be needed in the future.
A: One of the things that everyone experiences in the public sector is every few years you get different bosses. I've been in procurement in the public sector for over 30 years, and I’ve seen these waves of different factors that are affecting elections. So, you get people that have very different takes on how things should be done as time goes by. It runs the gamut from liberal to conservative, to the middle of the road, and back and forth across all those categories.
Elected officials usually find comfort in low risk. That way, they can say, “We bid it, and we ordered it from the low bidder.” In the past, no one could argue with that, but today's world is a lot more complex than that, especially with technology. You have to look at the best value, and you also have to look at smart-cities efforts. That takes the ability to collaborate with other stakeholders in the community. Then you need to be able to upgrade it and add to it. All those complex things need to be considered.
It’s a challenge to educate elected officials and administrators on the flexibility and resources that procurement requires in order to assist in those decisions, and also on why procurement decisions are a lot more complex and not as simple as they appeared to be in the past. It is difficult to get that education across the barrier, especially when you're trying to transfer it upward, and not downward.
A: I think in the private sector, success is a lot more recognizable, especially when you have a private sector organization with a stock that goes up and down, or dividend payments. In government, the results of someone's decision-making can be delayed. In fact, I've had the sad experience of having elected officials say to me, “I'm only going to be here for four years, and the people after me will have to deal with that.” What they imply is they're only looking for the short-term benefits that are going to benefit them during a re-election campaign. That's a big challenge.
So, the challenge of educating elected officials sometimes is they probably don't want to hear it from you personally. You have to open them to the possibilities of learning new information from someone they respect. In my experience, the one difference is when you have an emergency, all of a sudden everyone pulls together and all bets are off. That's the opportunity for procurement to shine in a public-sector setting. At the same time, you certainly aren't out there wishing for an emergency to happen.
In the absence of an emergency, you have to identify opportunities to educate officials in ways that aren't insulting to them, because the information is coming from someone below them. Sometimes organizations have leadership that lacks long-term focus. If a procurement worker goes to an educational show, learns the right things, and comes back and puts it into practice without that change coming from the top of the organization, the person implementing the change might actually get fired because the change isn’t recognized as beneficial. That’s the reality in today’s world for the public sector and in some agencies.
A: I think I benefited greatly from working in both sectors. One of the things that I see in today's private sector is reputation and risk are playing such a big role, and doing the right things socially and being identified as a responsible social organization comes into play. On the other hand, the rules that the government has are hardcore, where you have a prescribed set of rules and must do things a specific way. The private sector doesn’t have the same hard and fast rules, but they’re voluntarily becoming very similar to the public sector when it comes to managing risk and benefiting the community in a social way.
A: Smart cities are sprouting up all over the world, and procurement has a natural role in that because we get involved in every one of those things that makes a city smart. Yet, I think procurement has been very slow to identify the opportunity. If there is one glowing opportunity for procurement to get a seat at the table, it's to be one of the leaders in making your city or your government smart. It carries over whether you're in a utility, smart grid, smart city or smart county. It's most identifiably manifested by the smart cities program, and I would like to see procurement wake up and identify that they need to take a leadership role in that because it's natural for them to do so.
In a smart city, you have technology that is ideally being shared between the public and private sectors, so the technology you invest in can be utilized in all those different sectors, and certainly lends itself to the kind of processes that procurement workers believe we’re experts at.
I also want to see procurement develop a universal language, because in procurement we try to be a profession, and we want a seat at the table. Well, when you think of other professions like medicine or manufacturing, the terms are pretty much universal. We haven't gotten there yet in procurement. The federal government calls it “acquisition,” but state and local governments call it “procurement.” Somebody else might still call it “purchasing.” We also have “bidding” and “solicitation” and several other terms that really mean the same thing. Maybe we'll never get there in terms of getting everybody to call it exactly the same thing, but I think one of the huge needs in today's world is for someone to draw a map and say, “If you're in this environment, ‘solicitation’ means something specific, and ‘bidding’ means something else.”