Today, I attended a panel discussion on getting innovation from suppliers. It comprised of procurement panelists so the perspective, quite naturally, was a procurement one and much of the conversation centered on how to write innovation specifications into an RFP and innovation obligations into a contract.
There’s an old joke about not starting from here and I was reminded of it as I listened because, procurement heretic that I may be, I am not convinced that the RFP road will ever lead to innovation.
There are two main reasons why I think this:
- To “innovate” means to make something new but the very essence of a contract (from the buyer’s side) is to accept a precisely and well-defined offer in exchange for some consideration. That precision requires something that is known and capable of description. Which is unlikely to be something new. This is perhaps why innovation clauses in contracts are so vaguely drafted. Seldom have I seen these be anything beyond motherhood statements.
- The RFP process is an instrument best used when competition exists between suppliers and the means by which suppliets are made to compete. It deliberately sets out to create as level a playing field as possible by using a written form as its primary means of communication, rather than allowing for human-to-human interaction. That arm’s length design is deliberate so as to prevent one supplier from gaining an advantage over any other. How then do you allow for the opportunity necessary to articulate the nebulous innovation requirement? The collaboration necessary to write down what “innovation” is expected is absent. Whilst innovation requests are often made in RFPs and often contracted for, I’m going to bet very few lead to anything but a few meetings or workshop, at best, or nothing, at worst.
If we are going to talk to suppliers about innovation, let’s first examine the circumstance in which that conversation has a small chance of flourishing. I don’t think the competitive bidding process is it.