A Conversation with the CPO of UCB on Stakeholder Management
(Pic courtesy : Sebastien Bals)
Sebastien Bals—the Chief Procurement Officer of Belgian Pharma major UCB—believes one can draw lessons from various analogies that one may encounter at the most unexpected moments.
In one of the meetings held at the company headquarters in Brussels—tellingly located at Allée de la Recherche, which roughly translates in English as ‘Alley of Research - a visibly upset business stakeholder told a UCB sourcing team that they are “putting the carriage in front of the horse.”
“It was a very interesting debate that we had,” Sebastien Bals told Beroe in an interview.
“In the beginning, we were trying to convince the business stakeholders about the process and were trying to understand their objections to the proposed plan. After the ‘carriage in front of the horse’ analogy, it struck us that we were trying to convince them of our way of working versus trying to understand their needs and address them with solutions out of our value offering.
“The pushback was not because of the unwillingness to involve procurement, but as experts in the category, the stakeholders were able to identify inefficiencies in our plan, which we hadn’t figured out initially.” And a moment later he quipped: “Why should we reinvent the wheel when we already have a solution that works?”
UCB develops medications related to the treatment of neurological, immunological, and bone diseases.
Procurement teams of Pharma companies play a very crucial role in a drug’s speed-to-market. Global pharma R&D expenditure is expected to have increased 4.5 percent to $177.6 billion in 2017, with the U.S. accounting for about $75 billion, according to R&D Magazine.
For example, patient recruitment and retention (PR&R) is an important step in the drug discovery process, and about 20 percent of clinical trials are terminated due to problems in this stage. In a mid- to large-sized pharma company, PR&R typically falls within the ambit of the procurement organization. In other words, more than $2 billion is riding on the sourcing decision: i.e., picking the right PR&R partner alone. Note: UCB’s procurement team is not involved in the area of clinical trials.
This cannot be achieved without better stakeholder management.
Bet on Stakeholder Management
The Procurement team at UCB places stakeholder management high on the list in order to create meaningful impact.
That is a good bet because Procurement has long been blamed for not fully understanding the business needs, and, instead, placing savings before stakeholder interest and dictating standardized processes and policies.
Bals is determined to change that perception within UCB by actively collaborating with and taking feedback from internal stakeholders.
According to Bals, “collaboration begins with listening and understanding what the world is about on the side of the internal stakeholder. It is better not to just come up with a solution or try and sell your standard procurement solution without properly understanding the position of your stakeholder.” Bals has been with UCB Procurement for seven years and has been heading the team for nearly a year and a half now.
Unaware that Procurement can offer value beyond cost savings, internal stakeholders are usually reluctant to openly interact with the purchasing department. Procurement has mostly tried to consolidate the supply base, but the internal stakeholder is not yet accustomed to the ‘new procurement organization.’ At times, they try to bypass the sourcing teams, which can lead to conflicts.
However, Bals has a different viewpoint.
“Internal stakeholders don’t bypass you for the sake of bypassing you. They may want to get things done fast, and at that point in time—given the pressing business needs—they may really just be looking for an efficient decision-making process,” Bals said.
To avoid such scenarios, Bals said, “It’s better to understand the business environment of our stakeholder by being first and foremost an observer rather than actively taking part in the discussion if we want to gain trust. And this needs to happen before any project is even kicked off.”
Operational vs Strategic
UCB has two types of stakeholder management: operational and strategic. Operational stakeholder management deals with standard relationship building with the entire organization where ‘buys’ occur.
On the contrary, strategic relationship management requires a more proactive approach where sourcing managers need to have a deep understanding of the business environment of UCB’s stakeholders in order to be able to identify the appropriate procurement solution, according to Bals.
“Building strategic relationships are far more difficult, and hence—to manage the processes better—we’re creating the role of Purchasing Business Partner (PBP). A PBP is someone who collaborates, observes, and understands the business on the other side at a more strategic level,” Bals said.
Bals followed up with the consulting analogy: The PBP role is similar to a client service partner at consultancy companies.
“Consulting companies have a lot of services to offer—but they don’t straightaway provide you a solution. On the contrary, their client service partners will spend a lot of time at your offices to try and understand the challenges and then creates [sic] a solution to solve the challenges that you are facing. This is the same role we have. Our business partners talk to stakeholders and later draw up a plan that seamlessly connects business need and sourcing strategy,” Bals explained.
Irrespective of meticulous planning, things always do not fall in place. Bals was candid enough to admit that at times his teams have implemented digital solutions into the sourcing process that ironically ended up benefitting the purchasing department instead of the business teams.
Such moves—however inadvertent they may be—will only end up reinforcing the perception of Procurement being a bottleneck.
“You need to be very mindful of the fact that you should always try to strike a balance between the needs of the purchasing and business while you implement a solution,” he added.
Another analogy that Bals likes to draw is that of the sales team. A sales team has access to a customer relationship management (CRM) system, which ideally contains all relevant information relating to their clients as well as prospects. This information can later be leveraged to the advantage of the business.
Bals hopes that someday Procurement can also implement a CRM-like system that would contain all relevant information of an internal stakeholder’s business plans and purchasing patterns. He believes that such a system—if implemented—will increase the value delivered by the purchasing team.
Stakeholder feedback is one of the most essential elements in measuring success. However, as per the Deloitte CPO survey in 2018, there has been an eight percentage-point drop in procurement using customer satisfaction surveys to understand business needs when compared to the previous year.
The UCB Procurement team has implemented the net promoters score (NPS) as a measure to gather feedback from business stakeholders. According to Bals, the department usually gathers feedback twice a year.
Bain & Co, which championed the NPS, has said the feedback mechanism is the business equivalent of the Golden Rule: Treat others as you would have them treat you.
“We mark whether stakeholders are promoters or detractors of our service. It’s the number we look for: How many ‘promoters’ we have as against how many ‘detractors.’ On the other hand, it is an opportunity for us to reach out to the business stakeholders who are unhappy with us. We will try and schedule a meeting with all the ‘detractors’ whereby we collect the information from them, and also to see what we could do to change the perception,” Bals said.
People change their minds often. It is necessary to constantly reassess stakeholder attitudes and adjust the communication plan to deal with the situation.
“Feedback is a very important part of the culture at UCB,” Bals concluded.
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