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Innovation in contracting

December 6, 2016

It is widely accepted that innovation is important for survival; it is unquestionable that adaptation is essential.

In a fast-changing business environment, it’s easy to become confused, to be unsure of the right direction, to be tempted to wait and see what happens. That is a risky strategy because, like many in the past, those who do nothing and fail to adapt tend to become irrelevant.

In some respects, practitioners in legal, procurement and contract management can be especially susceptible to this inertia. Since a major element of our job is to focus on compliance and protecting our business from ‘risky events’, it’s easy to see any pressure for change as innately risky – and therefore something to be resisted. Certainly there are many who do not go out there actively looking for opportunities to act differently.

Key to the future – key to innovating and adapting – is a readiness to ask questions. Improvements come as a result of curiosity, a belief that things could be done differently and better. Some people are naturally more gifted at this than others. They are not necessarily leaders of people, but they are leaders of thinking. Others may imitate those leaders, either replicating or building on their innovative work. And then we have the third – and largest – category, who simply feel they are too busy to question or to change. Among this group (which covers all job levels) there are those who actively resist and a rather larger ‘passive majority’.

What questions might we be asking? It is of course essential that the areas we challenge are relevant and bring value. Therefore a good place to start is to relate them to business strategies – speed, ease of doing business, improved revenue or reduced costs, innovative commercial terms or offerings. So the sort of questions we need to answer relate to cycle times (which can be dramatically shortened), comparison of terms to market norms and market leaders (which can be assessed), the impacts on costs and revenues of different term options or contract structures (which can be analyzed), the elimination of errors or repetitive areas of complaint ….. Since contracts touch every part of the business and lie at the heart of revenues, profits, competitive differentiation, the opportunities for change and innovation are myriad. Even the underlying information is not that hard to find, when organizations like IACCM have built such an extensive network and database. Indeed, the only real constraint is our own lack of imagination – or questioning.

When it comes to survival, it isn’t just a matter of whether you personally are asking questions and exploring changed approaches, but whether those around you are pushing towards new boundaries. If you are in a function that simply waits to see what happens, it’s time to move.

  1. Eugene P. Grace permalink

    Manage the future or the future will manage you. Change is one of the three pillars of our existence. Critical that you acknowledge that and steer change. Same principles apply to this function.

  2. bob henry permalink

    Tim well stated. whether one is in an innovative eniroment or not asking questions and being viewed as a business player is key to the survival.of the CM role.

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