Change management in a time of chaos
In previous blogs, I have highlighted the challenge of managing change in today’s contracts. The frequency of change has increased, the causes of change are more varied, yet the mechanisms through which change requirements are identified and managed have failed to keep pace.
Today I read two articles that illustrate the scale of the uncertainty faced by contract and commercial managers. In Strategy+Business, Eric McNulty suggests there is no more ‘business as usual’. He cites the volatile nature of today’s society and politics, with widespread disillusionment resulting in turbulent market conditions. This, he suggests, not only makes it difficult for Corporate leadership to predict where they should invest, but it also places individual businesses at risk. Who knows what issue might inflame local opinion? Whether it is Coca-Cola and water usage or Starbucks and tax avoidance, issues can arise almost without warning and rapidly become viral.
McNulty highlights three areas for focus:
– Understanding society as a system
– Managing the tension between urban have’s and have-not’s
– Leading in an era of short supply
There are many implications for anyone negotiating or managing contracts. For example, what impact will a particular contract or project have on people’s lives and how will it be perceived or (mis)represented? What effect might this have on the structuring or performance of the agreement? What mechanisms may be used to address previously ignored stakeholders – for example, can we gain local support through creating employment opportunities or by investing in local infrastructure projects as a by-product of the contract? What supply risks must be managed in order to ensure delivery against contract commitments?
Overall, just as society is starting to operate as an interconnected system, contracts and commercial managers will need to become far more astute in anticipating and understanding interconnections in their project or markets. Buy side and sell side integration must occur within the enterprise. Commercial solutions must be more creative and more inclusive than in the past, engaging and managing complex stakeholder ecosystems. Project economics will need to evaluate the social balance sheet because this will increasingly determine the opportunities for profitable operations.
In my experience, the companies that succeed are likely to be those most adept in handling less developed international markets. It is here that commercial creativity is often most evident. Such markets demand innovative solutions such as new partnerships or channels; they also require far more adaptive systems due to their relative volatility and unpredictability.
The second article, by Richard Branson, is on the State of Government and examines the role of business in the development of democracy. It simply reinforces the points being made by Eric McNulty; we live in a time of rapid and unpredictable change, an environment which requires creative and adaptive minds and mechanisms. A time, in other words, when those with commercial skills must ensure they are taking a truly global view both to sustain their business and also to develop their personal contribution.