The power of passion

The power of passion

Posted by Pete Loughlin in Purchase to Pay 05 Apr 2013

I’m a big advocate of KPIs and I’m a stickler for a sound business case. I don’t do anything without a plan and there’s no resource more valuable than a good project manager. To invest resources, whether it’s time, money or both, without understanding and quantifying the expected outcome, without understanding your route map and without measuring results against a plan is a sure route to disaster. No-one plans to fail – they just fail to plan.

This is what the rule book says and I’ve always told myself that this is the way it should work. In all honesty, I’m just repeating what I’ve been taught by others. It’s what older, more experienced people always said – it seemed to make sense. It’s the received wisdom that has become a part of the way I do things – but I’ve never believed it. Not really. And here’s why.

Purchasing Insight logoWell over 10 years ago, I was reviewing the purchase to pay processes of a large global enterprise. They’re extremely well known and I’d be willing to bet that one of their products is within a few feet of you right now, wherever you’re reading this. Their AP process went something like this:

1. Receive an invoice

2. Create a purchase order based on the details in the invoice

3. Match the invoice with the P.O.

4. Pay the supplier

There are advantages and disadvantages in this approach to P2P. The clear advantage is that you get a 100% match rate. The disadvantage is that you are paying suppliers who have never supplied anything.

Now, I get hung up about suboptimal P2P processes all the time. I get exasperated at the potential and actual waste associated with poor compliance and the retention of old world processes but this was about the worst I’d seen. It was an open invitation to fraud and the thing about P2P fraud is that if it is possible, it already happening. And it was. There were substantial amounts being paid out against highly suspicious invoices.

So you’d think that when I pointed this out there’s be an immediate, shocked reaction and it would be “all hands to the pump” to put better practices in place – plug the hole in the finance system and stem the flow of fraudulent payments. But the reaction was dismissive. Why? Because this was a technology business that was riding on the tidal wave of e-commerce and for them, the passion for growth and global domination blinded them to the relatively trivial back office issues like purchase to pay. Even if they were losing a few million dollars to fraud, that was paltry compared to the shareholder value that was being created during the dot com boom.

They were right. The 90s was a frenetic time – a highly competitive time. There was a land-grab on and to take an eye off the ball to do things properly would have meant lost ground. Of course it’s not right to leave yourself open to fraud but it was all a matter of priority. If they’d have listened to the auditors, if they’d have listened to the accountants, if they had listened to me – they would not be the success and the dominant force that they became. And they did become successful and they still are – because they threw away the rule book and let the passion drive their business.

It’s the same in many businesses – big and small. You see it amongst the tech start ups – a tunnel vision mentality unperturbed by their commercial naivety drives them forward. They’re not totally naive of course – they’d fall at the first hurdle if they completely ignored the rule book but the point is that it’s the passion that’s in charge, not the rule book. They don’t all succeed – but then neither do many that follow the rule book to the letter.

And you see the opposite in many large enterprises. The passion that built the money making machine has long since gone and the accountants and the auditors are making the business decisions. It’s depressing. It’s not necessarily wrong – just depressing.

Business plans, KPIs, quarterly revenue targets – they’re important – but they are not what you are in business for. You’re in business for the reasons that someone was passionate about once upon a time.

Passion is the mother of business. There is not a single business that didn’t start with a passion. A passion for a profession; a passion for creativity; a passion for wealth or success; a passion for technology; a passion to change the world. Businesses are born out of passion. When the business metrics begin to determine the direction of the business rather than the passion that drove the creation of the business in the first place, it becomes like a child that has turned on its parents. It’s ugly and no one is proud to be a customer of a monster like that. And when you have no customers, you have no business.

Pete Loughlin can be found on twitter @peteloughlin

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