Procurement professionals struggle reputationally sometimes with a lot of folks in the business bypassing them, trying to avoid procurement. Philip Ideson helps procurement professionals become a little bit more impactful and think about how to go beyond the process so they can bring value to their organizations. Philip owns CatalystCo and hosts a podcast called The Art of Procurement where he helps procurement professionals elevate the role of their teams. He’s worked with Visteon, Pfizer, Chiquita, Ally Financial, and Accenture before going off and starting his own business. Philip talks us through the mindset of a procurement professional working in an established organization, and shares what a consultant should know about procurement.
I’m excited to have Philip Ideson joining us. Philip, welcome.
Thank you very much for inviting me on to the show.
For those who aren’t familiar with your work, take a moment and explain what you do.
I’m in the procurement space for better or worse. I own a company called CatalystCo and an associated podcast called Art Of Procurement where I help procurement professionals elevate the role of their teams. Procurement professionals struggle reputationally sometimes with a lot of folks in the business bypassing them, trying to avoid procurement. I’m sure many of your audience members are trying to avoid procurement if they can do on the other side. I’m helping procurement professionals become a little bit more impactful. Think about how to go beyond the process so they can bring value to their organizations. People come and want to work with them rather than having to feel they got to throw a process or a mandate in front of somebody.
I want to go back a little bit. You worked with Visteon, Pfizer, Chiquita, Ally Financial and then Accenture before going off and starting your own business.There’s never a perfect opportunity. If you’re waiting until there’s an engagement delivered on a platter, you’ll be waiting forever. Click To Tweet
It’s a broad range and that’s deliberate. I started in the automotive industry and I would see a lot of folks in the automotive industry who were stuck in the industry once you’d been there for several years or so. I wanted to get a much broader set of experiences. You go from an automotive company to a pharmaceutical company and in the procurement world where I am, it’s like chalk and cheese. Automotive has no money. Pharmaceutical has too much money. Their approach to procurement is different, so I wanted to get different experiences.
What was the tipping point for you to go out and build your own business? Why not continue in the corporate world? Clearly, you’re working with well-known organizations and moving up the ranks. Why make that switch?
It’s something that I’ve always wanted to do from an early age. I always felt I had to do it, and if I didn’t there would always be some regrets of not trying it. In terms of why that point in my career, I came to realize there’s never a perfect opportunity. I’d be waiting for the right time. Waiting until I had finances in order. Waiting until there’s an engagement delivered on a platter for me that allowed me to walk straight into something. I realized that if I did that I’d be waiting forever. My last employer was Accenture. I was part of a company that was acquired by Accenture. I spent a couple of years there. It was a good role. It wasn’t something that was particularly challenging and I thought, “Why not? I want to challenge myself. I’m not getting any younger. Let’s do it.”
Your core focus is procurement. You’ve built your business all around that. You have a procurement podcast. Procurement is your world. Did you ever consider working in anything other than procurement when you launched your business? Were you clear from day one on the importance of keeping focused on that specialization?
I stumbled into procurement like a lot of people who are in our profession. When I started in procurement, I had no clue what a buyer was. I knew that I got a chance to travel around the world and somebody would pay for it. That sounded like a good job to me. In terms of my business, it’s not all that I knew. Back in college, I did marketing. I studied finance, more general business but from a professional perspective. Procurement was the only profession that I worked in. It seemed to me that it was a natural fit. Although I have often wondered how can I look at expanding, taking what I have as a transferable skill and applying it somewhere else? I’ve never taken that leap. That’s where my experience is. That’s where I can probably have most impact immediately. I stayed within something that’s more comfortable for me.
It seems like a smart choice from my perspective. I see far too often consultants who don’t try to hone in on any type of specialization. They’re trying to do all things and be all things to all people. That becomes challenging when you’re trying to grow your business. At the early stages, you might benefit and be lucky to get referrals in your network. That can cast you in a direction for a while, but inevitably when that referral well dries up, you need to start reaching out to ideal clients. If you don’t know who your market is or what your real special specialization is, it becomes challenging from a marketing perspective.
It’s always interesting to determine how far do you niche? When I think about niching, I think of it as procurement and maybe there’s a level down, but you’re still more of a generalist within that profession. Do you go further down and end up being perhaps an expert in something that’s extremely niched whether it isn’t a market? That’s a balance that I’m always trying to figure out is how far do you go in niching? I definitely agree when I set out to start the business, it wasn’t all around being involved in the niche that I knew. I didn’t want to be going on thinking about, “Do I know what I’m talking about, even the topic that I know what I’m talking about?” If I went into something that I didn’t, then that would show confidence is such a huge part of being a consultant.
Several of the consultants that we work with who are generating anywhere from $500,000 to over $1 million per year is an independent solo consultant or small consulting firms. Typically, with maybe one assistant or one other person. Even at that stage, they’re still evolving and getting greater clarity around their specialization of who their ideal clients are. Sometimes people who are new to this business or maybe any business think that this is something that you figure out once at the beginning and then never have to come back to it. What I’ve observed is that even as you continue to become more and more successful in terms of the growth of business and on the financial side, you still evolve. You still hone in. You still sharpen your sword. You still find ways to make the message even more relevant and aligned better as your business changes. That’s an ongoing part of the process. I’m putting this out there for everyone in our audience because it’s important to know that you don’t figure things out once then you’re done with them. You’re going to always want to keep coming back and keep improving.
I always have a sense of I’m making this up as I go along and I know that’s not what’s going on. It’s that I’m always looking for new opportunities, new angles, thinking about things in different ways. You mature as you go on this journey. I’m a different person than I was a few years ago when I started on it. Maybe I was naiver when I started on the journey. As you have experiences, good and bad, you don’t stand still. I don’t think means that it’s chaos. It’s that you’re continuing to evolve what you do, how you provide value, why you can be the best fit for somebody. How you talk about what you do that is compelling enough for somebody to want to work with you. Those change as well as you get more and more experience.
We have everyone out waiting with bated breath. They want to know how they can deal with procurement. You have a perspective from both sides of the table. You’ve been working in large organizations in the procurement department, working with consultants. Now you work with people in the procurement department and helping them to become more professional and to do their job better and to excel. A lot of consultants feel the procurement departments don’t understand what the actual consultant is trying to do. They don’t understand the project that they’ve been brought in to help with. Oftentimes, their fees seem to get smashed and take a pounding with that procurement sledgehammer and all kinds of other challenges can pop up. In your experience, what are some of the best practices that consultants should apply when procurement is involved? Maybe we could even start with the mindset. For the average procurement professional or person working in an established organization, what is their priority? What drives them? What should a consultant know about procurement?As you have experiences, you don't stand still. You continue to evolve how you provide value and being the best fit for somebody. Click To Tweet
As I now sell to procurement, I realized how difficult we can sometimes be to work with. It’s different being on the other side of the table. Honestly, procurement professionals typically don’t set out with a singular mindset of, “I want to save money.” It’s driven by their goals and their objectives within their own organization. If they’re working for an organization that is in an industry that has small margins, then cost is going to be important to them. Some of the time the mindset is they want to be involved. They get frustrated when they find out they’re at something at the last minute. It’s not necessarily that there isn’t an opportunity for them to do anything or make a difference. It feels as though they’re being bypassed in the process.
They’re there for risk mitigation more than anything else. Spending too much money can be seen as a form of risk management. Helping their company not spend as much money as they think they should is risk management. You know that he is always going to be picked up when they’re working with smaller companies. A lot of corporate procurement folks have taught that the larger the company, the less the risk and that’s not the case but it’s a perception. One tip that I would always give is be as transparent as possible. Procurement folks typically aren’t there to try and trip you up. I would say if you find a company who acts like that, then maybe they’re not the right company to be a client of.
Let’s walk through and start to apply some of this. What I’m hearing is that the consultants should try and get the procurement person, not necessarily get them involved. Once that connection is made to try and find ways to nurture or create a good relationship. Let the procurement person know that you appreciate their input or to try and focus on working together as opposed to trying to push a proposal through them as quickly as possible.
I would suggest that you look at them as much of a client as your ultimate client is, that is everything you would do to try and nurture that relationship. You want to try and do with procurement professional. There are two ways you can approach any situation where procurement gets involved. One is why do I have to work with procurement? I will end up no doubt being a little bit more of a combative relationship. The vast majority of folks in procurement are broad-minded and entrepreneurial but they’re afraid of risk, which is why a lot of them ended up in procurement. They get a big picture view of the business. They enjoy that, but they don’t necessarily want to be on their own on the other side of the table. Being in a corporate job is a lot safer.
They enjoy working with small companies where they feel as though it’s a collaborative relationship and they will become an advocate. If they are working with you, they believe in what you’re doing, what you’re trying to do. You’re open. You’re not trying to hide anything. You’re talking about outcomes and the outcomes that you’re helping your stakeholder or their stakeholders deliver, then you’re going to have a much more open relationship with them. Where they will go and try and circumvent some of the processes behind the scenes. If they want you to get the business, for better or worse they’ll find a way that you’ll get the business.
This point is important for everyone to look at. What I’m seeing from what you’re sharing is look at it less like a transaction and more as a real relationship and look at procurement as your client. For some people, they might think, “That means I need to sell twice.” It’s a lot more work but in fact, from your experience, doing that is going to help you to get a lot more business and probably make the whole interaction and communication process with that person much more enjoyable.
At the end of the day, one of the metrics that most procurement professionals will have is the number of suppliers that a company has. There’s always pressure to reduce the number of suppliers that business works with. Once you do have that relationship then you’re going to be in a much stronger position to get future business. They don’t want to be going out and finding a new supplier. Finding a new supplier is a lot of work. You’ve got to set things up internally with finance, with accounts payable, with filling in new forms, sometimes justifying a new supplier. It’s a lot of work that a procurement professional doesn’t necessarily have the time to do. Once you’re in there and you’re doing a good job when you’ve built a relationship, they’re going to be looking for ways that they can give you new and more business.
How often in your experience does procurement have the ability or play a role in going out and finding new business? What I mean by that is that someone in the organization says to procurement, “We need help with this issue. We need a consultant to help us with this.” Procurement finds someone, is that a big part of it or not so much?
It’s not a helpful answer, but the answer is it depends. There are a couple of different elements to that. One element is the amount of money that a company is likely to spend on this solution. Most companies have a threshold that if it’s over a certain amount of money, like in a contract or an annual spend, it can vary based on the size of the company. It can be $50,000. It can be $100,000. It might even be $500,000 depending on the size of the company. Anything above that threshold, procurement has to be involved. Anything below that threshold, the stakeholder or the business owner can go and source who they want. Procurement helps to make sure that everything’s in order. That’s one element of it. If they’ve got a solution that needs solving, it’s a relatively high spend, procurement is likely to be dipping into the toolbox to pitch process to help find a solution. If it’s a lower spend threshold and from my experience, at least in the work that I do, a lot of what we do is smaller consulting owners is a smaller number.
A lot of that is relational with the stakeholder and procurement doesn’t want to get too involved in it. You got to the other situation and this is called category management, where somebody has been tasked with working at the consulting category as a whole and looks at it and says, “I’ve got 50 consultants I’m working with here. I want to bring this down to ten.” There’ll be an exercise to go and streamline the list of suppliers that a company can do business with so that they’re working with a smaller number of companies. There may not be an event to source. There may not be a project to source. It’s something that helps them be prepared for when the next business comes along that they’re only going to go out to, “Here are my three specialists in doing X,” versus, “I’m going to send this out to fifteen different companies.”Look at things that are working somewhere else. See how you can bring, adapt, and contextualize them for the area that you work in. Click To Tweet
One area that a lot of consultants find a challenge is they run into a bit of an obstacle with their fees. Especially when you’re not using an hourly rate, which is something a lot of procurement departments or organizations are used to. That’s their status quo. For consultants who are basing their fees more on ROI, more on value, they’re using that hourly or daily rate type of metric. Procurement often looks at that and says like, “We don’t get this. We don’t know where this is coming from.” That causes a real challenge for the consultant using that model. What has been your experience around that specifically? Do you have any thoughts or suggestions for consultants who are in that situation?
That’s been my approach to pricing as well. I always go value-based pricing rather than time material. It’s typically a fixed fee and I tie that to outcomes. What’s important is tying it to an outcome and the outcome is something that can be measured by the business owner. At the end of the day, it’s the business owner that has the budget. If the business owner is comfortable with paying that budget for the outcomes that you’re promising, then there is less that procurement can do to try and negotiate. Why procurement wants to negotiate is because that helps them in their metrics for saving money. It’s not necessarily that they will look at that and say, “You’re too expensive.” It’s that if the first quote comes in and let’s say the first quote is $100,000 and they arbitrarily negotiate that down to $90,000, then they can claim the $10,000 in cost savings. To a lot of procurement folks, they’re not looking into the details any more than being able to say, “I saved $10,000 on that contract.” There is a risk and reward element in the contract.
What a procurement person wants to know if they can’t get transparency into the hourly rates because they will always ask, even if it’s a fixed fee. They will ask, “How would you make that up?” That’s not something you always want to share with them, because then that opens the door if they’re that way inclined to start picking at your fixed fee. They want to mitigate risk. What is there from a risk mitigation perspective in your offer? That if things don’t go the way that everybody wants them to, there’s some recourse. That may be that we’ll put 10% or 15% of our fees at risk based on certain milestones as an example, even if it’s in the type of consulting engagement where that isn’t the traditional norm. An example is one of the things that we do is a learning and development platform in the procurement space. We tie risk and reward to that. We tie outcomes and how people perform as a result of that learning and development opportunity, we give them to fees that we put at risk. It’s very unusual in that space. For the procurement folks we work with, they love it because they feel we’ve got skin in the game.
Back to that example you shared where the consultant goes in and says, “Here’s what the investment is based on value, based on ROI and so forth and outcomes.” Do they get pushed back from procurement saying, “What is your hourly rate? How did you get to this number?” They can talk about, “This is the value to be generated,” and focus on the outcomes and the results. Is there anything else that the consultant should be thinking of? Any wording, approach or examples you could share of how to respond to that when asked by procurement?
Frankly, my approach typically is, and I’ve had people do to me on the other side when I was buying consulting, is that we don’t price them that way. Our business model is to price on a fixed fee basis that’s tied to deliverables. At the end of the day, procurement influences sourcing decisions. Procurement doesn’t make sourcing decisions. I would say the more progressive procurement organizations and those organizations that have been most successful in getting a seat at the table and therefore they’re talking to you. We’ve already had those conversations with their stakeholder that, “I’m here to help make sure that you get value for money. That you’re protected on the downside if something happens.” You the stakeholder, the business owner, you are making the decision on what source that you’re going to go with and I’m here to help you make the best decision possible. At the end of the day, they will have the overall authority of deciding, “This is the supplier that I want to go with.” Procurement can present data to them as you go through this process that suggests that decision may not be the best decision. They’ll have some difficulty internally justifying it, but ultimately the business owner is the one that’s making the decision from a sourcing perspective. If they want what you’re offering, they’re comfortable from a budget perspective, then I would definitely stand your ground that this is your pricing model. This is the way that we price.
This also makes it clear why it’s important to focus on having a relationship with procurement. If you stand your ground, they could share statistics or data or whatever it might be with the actual decision makers to influence the decision one way or another. What data or support do you think they’re going to provide if you have a relationship with them versus if you don’t?
I want to add one thing you can do and it goes down the transparency line. This is something we do as well. You can offer indicative rates from a time material perspective. These are the levels of folks and this is the range of price that we have built in for this level of professional. At least they look at them and say, “That’s in the range of normal.” That’s all sometimes they need to be comfortable. A struggle that procurement folks will have is that when it’s fixed costs, if they’re digging for time and material, at least let them know indicative numbers of hourly rates. It gets them comfortable that they’re not being ripped off because that’s all they’re trying to achieve. They don’t want somebody to come to them and say, “These guys ripped us off. Accept a price that’s high.” That sometimes gives them a comfort level if they’re doing some more digging and asking more questions about that topic.
I’m very interested to learn more about your model. You’re running this community and online learning platform to serve procurement professionals. This is not the standard, not the typical route that a consultant takes. Talk to us a little bit about why you have gone this route. What are some of the challenges that you’ve encountered along the way so far?
When I left the corporate world, the first thing I did was to set up a podcast in the procurement space because there wasn’t any that existed. I did that for a couple of reasons. One was to build my network. Two was to mature my thinking. With the platform, you have the opportunity to talk to people you wouldn’t ordinarily have the opportunity to talk to. Hopefully, build an audience of folks who knew that can trust you. Once you know who that audience is, you can start to understand what some of their challenges are because they’ll start to come to you with some of their challenges. What I found in one of the challenges of our audience is definitely in the development to their people. They looked at traditional methods of training not being effective for all kinds of reasons.
When I was modeling the business, I didn’t want it to be all in consulting. That’s a peak and a trough engagement we have going on. You get into the consulting engagement, you’re forgetting about the business development. How do you try and go away from it being boom and bust? I wanted something that had more of a recurring revenue stream. There seemed to be an opportunity. We had a large Fortune 100 client who asked us to pilot something with them in this space, which we did with them. I presented an opportunity to say, “Let’s go and take this and take it away from the pilots and make it into a product so that we can sell the learning and development platform that we built on a subscription basis.”Business, at the end of the day, is human to human. Injecting more of yourself and what you do into how you portray yourself is powerful. Click To Tweet
That model is a smart one because one of the biggest challenges that consultants face is the rollercoaster of income and the rollercoaster of delivery versus working on the actual business. As you’ve been now building it, what have you been finding? It is a different model that for many consultants they’re not as familiar with. What have been some of the unexpected challenges or maybe even expected challenges that you’ve confronted?
Definitely, the challenge is these things take longer to get off the ground than you may hope. There’s still an awful lot of selling. There are an awful lot of things that aren’t scalable that you have to do at the beginning. Honestly, we’re still in that phase. We’re in the phase of getting people engaged in the platform and we sell this platform to individuals and to corporates. When it gets to a tipping point then it will start to run itself a little bit more. It gets better known. There’s probably a lot less one-on-one personal touch that’s needed. To start with, it’s still personal. This is as much that goes into a sale sometimes of a $700 a year subscription, then there is a $50,000 consulting engagement. You need to be able to put the work in but being recurring, the work that you put it in the beginning then bears fruit later. The objective with this platform is the platform ultimately generates enough revenue to pay the bills. Which then gives us the time and the freedom to be a bit more selective in the consulting engagements that we take on so they more strategic, aligned with growing the business, and projects that we enjoy that we want to get involved in.
You’re doing both. You have the platform and then you’re also still doing custom consulting for organizations.
I don’t think the custom consulting will ever go away. The reason for that, putting aside all financial reasons why we may want to continue to do that, is that what’s great about consulting even if you have a business which is bringing recurring revenue. It helps you empathize with the clients and the prospects because you’re at the ground level. It’s easy what I found, at least in my experience in the last few years, is when you take a step back from the day-to-day, you can easily lose touch with what’s going on or lose some of the empathy of the real day-to-day challenges that your clients and your prospects may have. You come over sounding like those consultants that we all hate that know everything, but they’re not doing anything. I want to continue to be involved in consulting because as things change on the ground, I can react to that in my business.
Those are good experiences to have you share, especially that it takes real work to get this platform that you have off the ground. A previous company my cousin and business partner Sam and I started was a job board business. We sold that at the end of 2017. It took us a long time at the beginning of working all different angles because it was like a chicken and egg. You have to have the users, you have to have all the job seekers, and you have to have the employers. You have to hit it from both angles. It took us a lot of time before the platform and site got to a point where the business ran itself.
It was a nice passive income business for many years for us and we decided to sell so we could focus more on Consulting Success®, which is the direction we’ve been going for many years. It’s also important because a lot of people in the day and age that we’re in, it’s online passive income. Go and build a product. The reality is it’s not that easy. You have to be prepared to put in a lot of work. It’s like any type of business. In some cases, a much more direct path to generate income is going out and getting a consulting client. It’s typically going to generate more revenue for you from one client than you’d have to sell a lot of courses or products or whatever to equal that. The approach that you’re taking by doing both is a good one and one that I’ve employed as well over the years.
It’s definitely an opportunity cost of investing all the time because it does take so much time. However, I’m looking at this from a long-term perspective. There’s a lot of the compound effect that you can take advantage of when you’re building that business. It takes a long time for those very small compounds to turn into anything meaningful. Once they do, then that’s when the snowball starts to get bigger and bigger. At least that’s the strategy with this business.
It’s all about finding something that you enjoy doing that you see is going to provide great benefits into the future as well. Find meaningful work and not chasing it for the money. I’m excited to see where this path continues to take you.
The other approach that I took to this was we’re not doing anything new. We’re bringing things to the procurement profession that the procurement profession hasn’t seen before. It’s not like we’re reinventing the wheel. Something that’s interesting for a lot of our audience when they’re looking for new sources of revenue is there are lots of great ideas. There are lots of great products that are being successful in other verticals that aren’t your own. How can you look at bringing those in rather than inventing something from scratch? There’s already a well-trodden path that people have taken to apply it. At the end of the day, professionals are the same whatever their professional function or department or whatever it is that they’re focusing on. A lot of the tenets and the challenges are all the same, they just have different words, different language. Look at things that are working somewhere else. See how you can bring them and adapt them and contextualize them for the area that you work in.
This has been great, Philip. I appreciate having you come on and share your experience and wisdom in this area of procurement. What book are you reading or maybe have you read in the last little while that you enjoyed?
This one was Rand Fishkin of Moz. It was Lost And Founder, which I listened to it as an audiobook. It’s about the trials and the tribulations of being a startup founder. That along with a couple of other interactions I’ve had with folks bring home the fact that we should all be more open and honest about the journeys that we’re on and the challenges that we have. Far too often, we try and paint a picture of everything in the garden is rosy. We have this brand and everything’s going great. Business at the end of the day, it’s human to human. Injecting a little bit more of yourself and your challenges and what you’re doing into how you portray yourself is powerful. It helps people want to root for you and they want to help you then in any way that they can.
That’s an important statement and a great way for us to end off. Sharing something like vulnerabilities and insecurities and being open. It is all about relationships. It’s human to human. The more you open up, the more that people feel you’re actually connected with them. For everyone who wants to learn more about your work, what you’re up to and see this online portal and community and platform that you’ve built. Where’s the best place for them to do that?
There are a couple of different places. The podcast and anything that you may ever want to know and probably a lot more than you don’t about procurement is at ArtOfProcurement.com. The platform is called the CatalystCo Platform and that’s at CatalystCo.io.
Philip, thank you so much for coming on.
My pleasure, Michael. If anybody would like any tips on navigating procurement or any challenges that they have, I’d be happy to help out.
Thanks so much.