Contracting Excellence: Change
The speed of change, the volume of change, the nature of change ….. These lie at the heart of risk and opportunity and today we are experiencing a far more volatile and unpredictable environment than in the past.
To achieve contracting excellence, I suggest that the commercial community must consider change in three contexts:
- within our commercial policies and process
- within our contract templates and agreements
- within our organization and its capabilities
So here are some questions to which I believe we should be seeking answers:
- Are we advocates for change, using the insights we gain from the contracting process and market experience, or do we wait to be told what to do?
- Can we break the syndrome in which contract change is a battle over fee versus free? How do we build collaborative change mechanisms into our contracts, for example based on improved economic value analysis?
- Where do we gain the information and support we need to define and execute on organizational and capability change? How do we make the business case to gain an executive mandate?
There are of course many other possible questions or hypotheses, but I have observed that the groups which are flourishing are those which are prepared to face the need for change and embrace their role in its execution. That is the route to delivering functional value, so if you don’t have questions of your own, start with those i have suggested.
Commitment Matters 
Is contracting a critical business activity? Indisputably Yes! Ergo Contract and Commercial Management should be a community of leaders, empowered by the business with authority – and accountability.
How can we lead business to address change management? I am a supporter of those who advocate having an implementation mindset, from the outset – such as Ertel & Gordon and Lax & Sebenius, the latter of which go one stage further by promoting the use of two streams of contracting activity – the commercial contract and the ‘social contract’, not in the sense of Rousseau, but that invariably buyers and sellers (and the third party ‘experts’ who assist them) will ‘cut and paste’ Schedules such as Governance and Change Management from the last agreement they worked on, and invariably they do not then reflect the implementation mindset within each party, and hence between each party, of how they approach such a critically important subject!
Lax and Sebenius therefore suggest that by having the ‘social’ aspects of the agreement ‘separated’ from the commercial aspects (of course the 2 interplay, this is to establish that the social aspects are of equal importance, not subservient and afterthoughts), that this helps to focus minds in how parties REALLY want to manage the contract through its lifecycle.
An organization will change its approach to contracting and embrace the route to contracting excellence only when there is sufficient understanding of the importance of contracting among the decision makers and key personnel in the organization. Educating of that key support group is a prerequisite to meaningful change.
Too many organizations treat contracting as the responsibility of a small specialist group within the organizatin and do not recognize that the effectiveness of the process and its responsive to the environment depend heavily on a number of stakeholders throughout the organization.
As a consultant, I have aways advocated that one must train for the process. Training the small group in the contract management office is not sufficient. The main stakeholders must also be trained to the extent that they develop an apprepreciation of the process and understand its value to the organization. Then, they too, can assist in driving the change.