Startup Lessons for Procurement
As a startup, we’re obsessed with making sure that we only build features that people want to pay for — those that solve problems for our customers.
I imagine it’s the same for you.
When you form a team to streamline your procurement processes, for example, you want to be solving problems and truly adding value to your organization — not wasting time on a vanity project.
Innovate through experimentation
The most important thing I have learned in my journey as a startup founder is to build, test, and learn — and iterate quickly.
This is a methodological way to ensure that your innovative ideas are solving substantial problems.
Treat your potential ideas as hypotheses to be proven or disproven.
Select the hypotheses that allow you to learn as much as possible and test them. From your learning, you can decide whether to pivot or to press on. Rinse and repeat.
The aim is to do it as quickly as possible, with as little effort as possible.
We learned the hard way
This isn’t how we’ve always done things, though.
We started off with an idea to create a comprehensive supplier relationship management software with various features that could be useful for supply chain professionals.
But we soon hit a rut: we were having trouble finding a product-market fit.
The turning point came when we started using a hypothesis-driven experimentation framework. We tested 6 value propositions across 10 market segments in just four months.
The countless iteration cycles gave us a massive amount of data that allowed us to quickly and confidently identify a problem-solving proposition.
Today, LVRG drives cost savings for our customers through supplier accountability — by automatically tracking and managing supplier performance.
Viable, not perfect
In the past seven months alone, we’ve embarked on 6 pilot programs to test our ideas.
One key to working fast is knowing that the solution you are testing need not be perfect the first time.
If we had delayed our testing in order to perfect the original software, we would have wasted critical time and money building something nobody is willing to pay for.
Likewise, you don’t want to waste time perfecting an innovation that doesn’t solve a significant problem across your global procurement organization.
What you need is to create a feedback loop. Build your minimum viable product, test, and learn — again and again — until you have a solution that serves your organization well.
Speed requires agility
In order to be fast, we need to be agile. Based on feedback from customers and prospects, we review our development priorities every week — often making major changes.
While agility might be in-built into small startup teams, it is something you can emulate in the corporate setting, too.
You can build small, laser-focused project teams and empower them to make quick decisions, reducing bureaucracy and lengthy approvals.
Dare to pivot
Throughout our iteration cycles, many of the lessons we learned are unexpected. Even ideas that failed didn’t fail in the ways we expected.
But having chosen your hypotheses wisely, you should trust your experiments and learn all you can. Be ready to change direction — even pivot completely and repeatedly — if that’s what your experiments are telling you.
Andrew Stroup is the Founder and CEO of Leverage, an intelligent supply chain management platform that automates sourcing workflows that drive actualized savings, ensure on-time deliveries, and deepen supplier relationships through an intelligent, data-driven platform.