Is Your Company Buying for the Wrong Reasons?

Contributed by Jack Quarles

Leo Tolstoy famously started his novel Anna Karenina by writing: “All happy families are alike, but every unhappy family is unhappy in its own way.”

Strong opener, huh? The sentence was later adopted to describe situations where success depended on multiple factors, all of which had to go right.

Let me twist that into another version: there are lots of BAD reasons to spend money and time at your company, but there’s only one good one.

Seven BAD Reasons to Buy

Let’s identify the most common BAD reasons to buy, and illustrate each with a sentence:

1. Inertia

“We had an executive retreat last year, so we should have one this year.”

2. Groupthink

“They have a social media consultant, I guess we need one too.”

3. Politics

“The EVP will be really unhappy if we challenge this research project.”

4. Guilt

“This vendor has given us a lot of free testing, we ought to buy something from them.”

5. Fear

“Let’s buy now before the price goes up, and while they have plenty of stock!”

6. History

“We have already spent $3M on this project, to stop now would be admitting failure.”

7. Cronyism

“Ed’s a good friend, so let’s renew his contract and keep him around.”

Any of these sentences may be worth discussing and may even play a role in the decision. But none should be the main REASON you buy.

Take another quick scan of the list. As you consider your past purchases, have any been driven by one of the unhappy seven? Which two or three are most likely to sway your team?

Could those bad reasons be influencing your upcoming decisions? If so, you can cut through with the one happy, valid reason to buy.

The One Good Reason to Buy

All happy company purchases are alike in this way: they move your organization closer to your goals.

That’s it.

There must be a clear purpose to the purchase. If you can’t make a direct connection between the purchase and the goal, then any price you pay is too much.

Does this strike you as too simple? If it does, then your organization may be exceptionally good at identifying and writing down the objectives and goals associated with major purchases. Most companies are not good at this, so they periodically have to ask themselves: “Now why again did we buy this?”

The Purpose of the Purchase

Here are a few examples following a simple formula:

Formula: The purpose of [the purchase] would be to [the purpose] so that [the benefit – in cost or revenue].

Example 1: The purpose of an executive retreat would be to confirm our strategy and make sure everyone is on the same page so that we don’t spend money pursuing the wrong initiatives. This gets us closer to our goal of reducing costs.

Example 2: The purpose of a social media consultant would be to direct our online efforts so that our content marketing reaches the widest audience. This gets us closer to our goal of bringing in new customers.

If you’re looking for drama, I recommend Anna Karenina or any of the bad buying reasons above.

For clarity and economy, take some extra time to document the purpose of the purchase.

 


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