Why Does It Take So Long?
Why does it take so long from the inception of a deal to getting it signed? And why is it that final negotiations always seem to be rushed, leaving many open items still to be resolved by the implementation team?
This was the gist of questions raised by IACCM member Mark Hope in a recent note. He went on to say: “I wonder whether you have or could research data that identifies the ratio between thinking time and doing time, as I think this would be fascinating and actually get to the nub of delay. There is a part of me thinks we as a community are accepting too much criticism for the overall delay and that we should focus on speeding up the buying decision and selection process more than the execution process”.
Mark’s comments relate to relatively large and often quite complex acquisitions, often related to technology or outsourcing. I am sure they resonate with many. We see initiatives kicked off with a great flurry, only for interest to dwindle as new priorities intervene. Then suddenly, an executive somewhere wakes up, or starts demanding to know the status of ‘their’ project – and suddenly reaching closure becomes urgent and everyone is seeking scapegoats for why it didn’t happen already …
Does this sound familiar to you? And does it seem unfair that often the convenient scapegoat is Procurement, or Contracts / Commercial, or Legal? We know we are innocent victims – don’t we?
Well, perhaps sometimes we contribute to that delay. But even if we do not, isn’t it time that we recognize reality and do something about it? Because in answer to Mark’s question regarding research data, we do have some very interesting facts. For example, we know that complex contracts require the coordination of multiple stakeholder perspectives and the responsibility for orchestrating those (and then reconciling the results) is often rather vague and inconsistent. We also know that the quality of executive sponsorship is key to project speed and almost certainly a major factor in its success. And we know that the lead-times to which Mark refers are highly variable – some companies have typical closure times of 5 – 7 weeks on projects where others take 25+.
Mark is absolutely right to imply that much of the delay in individual transactions is outside the control of the contracts / commercial / procurement organization. However, I would contend that we are at fault, because we know this is happening, we know that fingers will point at us, yet we do little or nothing about it.
Most executives understand the value of time. They would like faster execution on projects. They realise that ‘panic’ action frequently results in corners being cut and a loss of quality in the results. So why are we not responding to those issues by proposing a more rigorous and measured business process, aimed at improving review and approval quality and cycle times? Why are we not collecting and collating the data to find out what causes these recurrent delays? Why are we not benchmarking our company’s performance with that of major competitors or like industries? And why are we not then reporting to executive management on the steps needed to improve cycle times and generate better negotiated agreements? Some of course are doing precisely this – and helping their company to competitive advantage (se for example the results of IACCM’s ‘Most Admired Companies’ surveys and interviews). But many are not; they are simply waiting for someone else to fix the problem.
Mark has asked an excellent question and makes a very pertinent observation. Because in the end, is the answer not to ask ourselves ‘Do we want to be victims, or leaders?’ Is this not a key example of where we have an opportunity to add value to the business and be instigators of change? And just remember what happens to those who fail to lead; in general, at some point, the accusations that they are ‘the problem’ start to stick – and suddenly the group or function faces massive reorganization and loss of power.
So be proactive. Don’t wait for others to find their answers to the question ‘Why does it take so long?’ If you need data to support you in this initiative, then you know who can help you …. it is IACCM.
Commitment Matters 
Mark indeed raises a good question.
In my construction practice we have a nice changemanagement databasetool which provides us graphs and data regarding the time between issueing a change (whether by the customer or contractor), value and acceptance of the change to benchmark and if necessary to improve the changeprocess.
This tool has been developed to alert the management (on customer and contractor side) to show the schedule and money impact on the project by not acting in time.
It sounds silly but when I pointed the management on their poor performance in the change process, they seemed to be not aware of the extra money the can earn by making their descisions in time.
Why don’t we develop a similar tool to monitor the time to take the several procedure steps from inception of a deal to signment of the contract? Contract management has to take the lead in improving the company processes to acertain that the company retains its leadership position.
I will suggest it to the management!
Peter
Thanks so much for this great example of ‘contracting excellence’. I wonder whether you have data on the financial benefits that your initiative achieved? And yes, I wish you success in expanding this approach to other areas of the contracting process.
According to the philosopher John R Searle in his book Rationality in Action, there are three ‘gaps’ which influence ‘rational decision making’ and therefore the time taken to decide a matter is dependent on these gaps being effectively crossed or closed.
The first gap is where you try to make up your mind what you are going to do.
The second gap is that gap between the decision and the action.
The third gap relates to activities and time and is that gap between the initiation of the action and its continuation to completion.
Searle argues that ‘Even once you have started you cannot let the causes operate by themselves; you have to make a continuous voluntary effort to keep going with the action or activity to its completion’.
For the subject of this topic, ‘Why does it take so long?’ there is a naturally arising question in relation to compulsion. What compels a contracting party to execute a contract document?
The short answer could be phrased as follows ‘Those intentional, contextual inputs which create a content that is useful and beneficial to the contracting parties such that the content of the written documentation conveys and aligns the stories of the assenting parties for the purpose of defining and delivering an agreed output’.
If the written documentation is constructed in a complex, complicated or chaotic manner then it is likely that the time to reach, cross or close the three gaps will surely be different to that time to reach the same point of assent, by rational deliberation, if the documentation were constructed in a simple manner.
As for irrational decision making, the hypothesis in relation to gaps is unclear.
Hi Tim,
Having seen significant benefits from improved contracting processes, I completely agree with your call to be proactive in suggesting “a more rigorous and measured business process, aimed at improving review and approval quality and cycle times.”
However, I wonder how best to pursue this in the many organsations where (as noted in your ‘Contracts as a Source of Value’ report) contracting is viewed as a necessary evil. Given the need for strong sponsorship at the executive level to successfully transform contracting into a strategic discipline, your sponsor will have to be a real visionary who views contracting as a high priority issue. And in large, conservative organisations, you don’t always find vision and power residing together; in which case compelling data won’t even get a look-in.
Any thoughts on how to address this issue?
Colin, thanks for taking the time to offer this insightful reply. As you will see, I have taken the liberty of embedding your response into a subsequent blog, because I think you touch on some key points.