Contracts & Innovation

Kevin McFarthing is an innovation ‘guru’ who spoke at IACCM‘s recent European conference. Following his interaction with the IACCM members, he has written a blog that offers some helpful ideas on how to better align contracts and relationships with the desire for innovation. His checklist is certainly worth reviewing – even if (like me) you need explanation of  a few of the items on it!

As Kevin points out, more and more companies are looking to their trading partners as the primary and critical source for innovation, yet few have grasped the impact that the contracting, negotiation and risk allocation process will have on results.

The measurements used to define success for those charged with contracting (buyers, contract managers,. lawyers) rarely include anything about assisting innovation, so as Kevin observes, it is in one sense not their fault if the instruments they design are frustrating this core corporate objective. Yet on the other hand, each professional should be concerned about the contribution they are making and, as the experts, is it not our duty to eplore how contracting and negotiation can benefit innovation and then proactively approach management with our ideas?

Yes, we can sit and wait until someone demands change from us, but is that really the hallmark of a high-value employee? Is that really the best we can do in innovating our own professional contribution?

What ideas or approaches have you encountered or used within the contracting process that have been effective in subsequent innovation initiatives?