3min chapter

2Bobs—with David C. Baker and Blair Enns cover image

The Marketing Procurement Problem

2Bobs—with David C. Baker and Blair Enns

CHAPTER

The Inefficiency Principle and the Inefficiency Problem

Do a legal profession hate procurement as much as we do? It's a good question. I actually don't know because I don't know anything about what happens in the procurement of legal services. There's lots of room for efficiencies to be found in clients marketing departments and in the agencies that they hire. But specifically for me, the problem is when you try to procure creative in a more efficient manner, you end up killing that creativity.

00:00
Speaker 2
You've had lots of other conversations. You've been doing research and so on. One question I've always wondered
Speaker 1
about is, is the industry that we serve have
Speaker 2
a unique relationship with procurement or is it pretty much that way across all the professional services? Does a legal profession hate procurement as much as we
Speaker 1
do? It's a good question. I actually don't know because I don't know anything about what happens in the procurement of legal services. I always see there's this contrast in the procuring of and not just marketing because there's lots of room for efficiencies to be found in clients marketing departments and in the agencies that they hire. But specifically for me, the problem is when you try to procure creative in a more efficient manner, you end up killing that creativity. We talked about this in the inefficiency principle podcast. I think we did an episode on that,
Speaker 2
didn't we? We did, yeah,
Speaker 1
a while ago. So we talked about it there. For those who haven't listened to that episode, I've coined this term, the inefficiency principle and the inefficiency problem. Inefficiency, I've taken two words, innovation and efficiency and put them together. And the inefficiency principle is this, innovation and efficiency are mutually opposable goals. You cannot increase one without decreasing the other. And the first time you hear this idea, you'll reject it, but I would encourage you to listen to the episode to dive deeper into it. So in the creative professions, creativity is the idea part of innovation, a procurement department who thinks, okay, I'm going to take this really creative agency that the marketing department wants to hire. And I'm going to extract as much savings from them as I can. They don't care about the impairment on what the agency has to do to be able to deliver these ideas under these cost constraints. The solution is always, well, we put cheaper people on it. If the client beats the agency up on price, when it comes to the first part, the magic part of the engagement, the solution is we put cheaper people on it. So it then follows that the quality of the creativity and the innovation that would stem from that has this downward pressure on it. And procurement doesn't see the problem that way. In fact, I would go so far as to say, most of them don't care that they're impairing that which they're buying because they are incentivized and tasked with delivering savings. And that's the crux of the problem here. So does that happen in the legal profession? Probably I don't think it's as pronounced. But to me, I see the marketing and specifically the creative part of marketing. And then I see the procurement of what's known as direct goods, like the raw materials that go into making the product. And I see too many Fortune 500 companies and smaller, obviously, who are taking those direct goods procurement methods, applying them to the marketing and the creative services that they're buying, impairing what it is that they're buying and not caring.

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