“Let's overcome our aversion to risk around procuring innovation that improves the delivery of public services,” says Kostas Selviaridis of Lancaster University Management School. “We must become more open to new ways of working, in order to source and adopt new technologies more effectively.

“The current system doesn’t always work very well,” he adds. “We need to see more innovation because it brings improved quality, efficiency and productivity in the UK public sector.”

Kostas is a Professor of Operations and Supply Chain Management, and is currently working alongside the Innovation Procurement Empowerment Centre to promote the role of intermediaries in supporting public sector organisations to procure innovation.

He is particularly keen to raise awareness of effective practices for connecting small businesses with public authorities who are interested in sourcing new solutions, as part of broader efforts to reform public procurement in line with the ambitions of the Procurement Act.

His research focuses on public contracting and ways to accelerate innovation through supply chains; drawing on experience of working with the National Health Service to examine how digital health solutions can help improve hospital productivity, and the Ministry of Defense.

Kostas argues that public procurement can be used as a lever to stimulate innovation in the economy, and improve resilience and sustainability in supply chains.

Stimulating economic growth

“The UK spends about 14% of GDP on public sector procurement, which can be used help to stimulate innovation in the economy,” he says. “Small firms with innovative technology can make a difference to help tackle societal challenges around healthcare, climate change and Net Zero, and national security.

“Academics need to work closely with the public sector, Government agencies and industry to identify the key challenges for innovative SMEs that want to engage with public sector customers.”

Kostas Selviaridis of Lancaster University Management School

Kostas adds that small companies delivering technological innovations tend to be “agile and flexible” and come up with solutions quicky. He also makes the point that procuring from innovative companies can create social value in local communities, and wants to help public sector buyers place greater weighting on the assessment of innovation in their tenders.

“However, there is often a misunderstanding among suppliers as to what a public authority wants from them. So helping SMEs and buyers to understand each other better is imperative.”

Global knowledge gained

Kostas was born in Thessaloniki, the second largest city in Greece, took an interest in social sciences and the role of Keynesian economic theory in high school, before studying economics at university. “Fundamental to the theory is that Governments should play an active role in steering economic activity, which is something I firmly believe in, and which became obvious after the financial crash of 2008 and during the pandemic.”

He moved to the UK in 2002 to begin a Masters in operations management. “I was interested in how economics can help firms on the ground, which led me to look at supply chains and manufacturing.” His dissertation covered Manchester City Council’s private finance contract for street lighting and how supply risk was managed as part of the deal.

Kostas later studied at Lancaster University, enrolling on a PhD in management science. He was awarded a prize for best doctoral thesis around outsourcing public services; identifying potential problems and improving the effectiveness of the contracting process.

He moved to Sweden to work as a visiting research fellow at the Stockholm School of Economics, after the external examiner of his PhD offered him an opportunity to look at how large corporate firms buy professional services. “The main difference between the UK and Sweden,” he notes, “is that Sweden has a very close link between universities and industry. Research is largely led by industry problems.”

Kostas worked with Volvo and food packaging firm Tetra Pak to help them think differently about how they buy and contract for business services. He introduced teams to the notion of ‘outcome-based’ contracts: rather than telling the supplier exactly what you want, clients define a desired outcome and ask a supplier to suggest a solution.

“At the end of the day, companies are run by individuals, so a buyer / supplier exchange all comes down to managing relationships. My value-add in this instance is my interest in social science and management.”

Kostas spent a year visiting America, the Netherlands and Spain to make new connections and further his understanding of procurement, as part of research sabbatical leave funded by Lancaster University. He rejoined Lancaster in 2014, first as a lecturer then associate professor. He also became an associate editor of three academic journals associated with operations and supply chains. “It's a great way to keep in touch with the community internationally and the new research coming your way.”

Giving something back

Now, Kostas is keen to “give something back” to the procurement community through his work with the Innovation Procurement Empowerment Centre. “Working with IPEC and Connected Places Catapult allows me to engage with a diverse set of actors from academic institutions, industry and policy makers with different perspectives, which allows me to develop a holistic understanding of the issues and different mindsets.

“My aim is to translate my research in a way that can be useful for the Catapult, considering also the links to the new Procurement Act, the National Procurement Policy Statement and the Industrial Strategy. Connected Places Catapult is an excellent forum to do that, because one of the functions of the Catapult is to convene and bring together diverse actors. Bringing an SME together with a buyer, for instance, so they start to understand each other better is rewarding.

“There is a changing culture within the public sector, and a need for the Government to work more collaboratively across departments around innovation and procurement policy and the Industrial Strategy, as sometimes they don’t always talk to each other very well.

“It is here where the role of an intermediary like IPEC comes in, to show buyers new ideas and approaches to work better and source innovation more effectively.

“If implementation of innovation-oriented procurement can be improved, we can ultimately see more innovations that help increase productivity and efficiency.”

Read about the work of the Innovation Procurement Empowerment Centre.