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Harvard Case - OECM: Transforming Public-Sector Culture and Scaffolding for Growth

"OECM: Transforming Public-Sector Culture and Scaffolding for Growth" Harvard business case study is written by Farzad H Alvi, Amir Nematbakhsh. It deals with the challenges in the field of Strategy. The case study is 11 page(s) long and it was first published on : Sep 6, 2019

At Fern Fort University, we recommend that OECM implement a comprehensive strategic transformation plan focused on digital transformation, culture change, and business model innovation to achieve sustainable growth and solidify its position as a leading provider of public-sector procurement solutions. This plan should be guided by a strategic intent to become a disruptive innovator in the public procurement space, leveraging technology and analytics to deliver value creation for both public sector clients and its own stakeholders.

2. Background

OECM is a Canadian organization dedicated to providing procurement services to the public sector. Faced with a changing landscape of digitalization and increasing demand for efficiency, OECM needs to adapt its business model and culture to remain competitive. The case highlights the challenges of transitioning from a traditional, bureaucratic model to a more agile and customer-centric approach.

The main protagonists are:

  • OECM leadership: They are tasked with navigating the complex transformation process and fostering a culture of innovation and customer focus.
  • Public sector clients: They are demanding more efficient and effective procurement solutions, requiring OECM to adapt and innovate.
  • OECM employees: They need to embrace new technologies and adapt to a more collaborative and results-oriented work environment.

3. Analysis of the Case Study

To analyze OECM's situation, we can apply several frameworks:

a) SWOT Analysis:

  • Strengths: OECM possesses strong relationships with public sector clients, a deep understanding of the procurement landscape, and a dedicated team of professionals.
  • Weaknesses: OECM's current model is characterized by bureaucracy, lack of agility, and limited use of technology.
  • Opportunities: The public sector is increasingly embracing digitalization, offering OECM the opportunity to leverage technology for efficiency and innovation.
  • Threats: Competition from private sector players, evolving regulatory landscape, and potential budget constraints pose challenges to OECM's growth.

b) Porter's Five Forces:

  • Threat of new entrants: The public procurement market is relatively mature, but new entrants with digital capabilities could pose a threat.
  • Bargaining power of buyers: Public sector clients have significant bargaining power due to their size and the need for cost-effective solutions.
  • Bargaining power of suppliers: OECM's suppliers have moderate bargaining power, as OECM operates in a competitive procurement environment.
  • Threat of substitutes: Digital solutions and alternative procurement models could emerge as substitutes for OECM's services.
  • Rivalry among existing competitors: Competition in the public procurement market is intense, with both public and private sector players vying for contracts.

c) Value Chain Analysis:

OECM's value chain can be segmented into:

  • Inbound logistics: Managing supplier relationships, sourcing, and contract negotiations.
  • Operations: Developing and implementing procurement strategies, managing tenders, and facilitating contract execution.
  • Outbound logistics: Delivering procurement solutions to clients, providing ongoing support and managing post-contract activities.
  • Marketing & Sales: Promoting OECM's services to public sector clients, building relationships, and securing contracts.
  • Customer service: Providing ongoing support to clients, resolving issues, and ensuring client satisfaction.

d) Business Model Innovation:

OECM needs to explore business model innovation by:

  • Leveraging technology: Implementing digital platforms for e-procurement, contract management, and data analytics.
  • Developing new service offerings: Expanding beyond traditional procurement services to include consulting, training, and data-driven insights.
  • Building strategic partnerships: Collaborating with technology providers, data analytics firms, and other public sector organizations to enhance service offerings.

4. Recommendations

a) Digital Transformation:

  • Implement a comprehensive digital strategy: Invest in e-procurement platforms, data analytics tools, and cloud-based solutions to streamline processes, improve efficiency, and enhance transparency.
  • Develop a digital roadmap: Define clear objectives, timelines, and resource allocation for digital transformation initiatives.
  • Train employees on digital tools: Provide comprehensive training programs to equip employees with the necessary skills to utilize new technologies effectively.

b) Culture Change:

  • Foster a culture of innovation: Encourage experimentation, risk-taking, and continuous improvement.
  • Promote collaboration and teamwork: Break down silos and encourage cross-functional teams to address complex challenges.
  • Embrace customer-centricity: Shift focus from internal processes to client needs and expectations.

c) Business Model Innovation:

  • Develop new value propositions: Offer customized solutions, data-driven insights, and value-added services to differentiate OECM in the market.
  • Explore new revenue streams: Consider subscription-based models, performance-based fees, and data analytics services.
  • Invest in strategic partnerships: Collaborate with technology providers, data analytics firms, and other public sector organizations to expand reach and enhance offerings.

d) Leadership Development:

  • Develop leadership skills: Invest in leadership development programs to equip managers with the skills to drive change and foster a culture of innovation.
  • Promote a culture of accountability: Establish clear performance metrics and hold leaders accountable for achieving strategic objectives.
  • Empower employees: Delegate decision-making authority to employees and foster a sense of ownership and responsibility.

5. Basis of Recommendations

These recommendations are based on a comprehensive analysis of OECM's strengths, weaknesses, opportunities, and threats, as well as the broader trends in the public procurement sector. They are aligned with OECM's mission to provide efficient and effective procurement solutions to public sector clients.

  • Core competencies and consistency with mission: The recommendations leverage OECM's existing strengths in public sector procurement while aligning with its mission of delivering value to clients.
  • External customers and internal clients: The recommendations address the needs of both public sector clients and OECM employees by focusing on customer-centricity, employee empowerment, and a culture of innovation.
  • Competitors: The recommendations aim to create a competitive advantage for OECM by leveraging technology, innovation, and strategic partnerships.
  • Attractiveness: The recommendations are expected to generate significant value for OECM by improving efficiency, reducing costs, and expanding revenue streams.

6. Conclusion

By embracing digital transformation, fostering a culture of innovation, and exploring new business models, OECM can solidify its position as a leading provider of public-sector procurement solutions. This will require a commitment to change management, leadership development, and strategic planning.

7. Discussion

Other alternatives not selected include:

  • Merging with a competitor: While this could provide access to new resources and markets, it could also lead to cultural clashes and integration challenges.
  • Outsourcing certain functions: This could reduce costs but could also lead to a loss of control and expertise.

Risks and key assumptions:

  • Resistance to change: Employees may resist adopting new technologies and processes.
  • Budget constraints: Investing in digital transformation and innovation may require significant financial resources.
  • Competition: New entrants and existing competitors may continue to challenge OECM's market position.

8. Next Steps

Timeline:

  • Year 1: Develop and implement a digital transformation strategy, invest in key technologies, and begin culture change initiatives.
  • Year 2: Expand service offerings, explore new revenue streams, and build strategic partnerships.
  • Year 3: Monitor progress, refine strategies, and solidify OECM's position as a leading provider of public-sector procurement solutions.

Key milestones:

  • Develop a comprehensive digital roadmap.
  • Implement e-procurement platform and data analytics tools.
  • Launch new service offerings and revenue streams.
  • Establish strategic partnerships with technology providers and other organizations.
  • Conduct regular performance reviews and adjust strategies as needed.

By taking these steps, OECM can successfully navigate the challenges of the evolving public procurement landscape and achieve sustainable growth.

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Case Description

In March 2018, Ontario Education Collaborative Marketplace (OECM) was an unlikely high-growth company. From its humble origins as a collaborative experiment to create efficiencies for the education sector-an experiment that had lost money and had to be financially supported by the government-the organization had adopted the culture of a high-growth start-up. OECM facilitated the procurement by universities, colleges, and school boards of everything from pencils to computers. By pooling orders, OECM was able to provide better prices from suppliers, thereby saving taxpayer dollars. OECM aimed to become "the Amazon of education sector" procurement. The total education sector procurement market in Ontario was CA$4 billion. OECM currently facilitated CA$255 million in transactions, but it was looking to control CA$2 billion of the market. Having become profitable under the leadership of a new chief executive officer, and newly independent of government support, OECM's management was now challenged to continue to transform the organization's public-sector culture in order to achieve high growth. What strategy should OECM use to achieve its aggressive growth targets? How should OECM scale up?

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