Commerce and Contracting: Why I Care

Contracts and commercial management are fascinating because they are interdisciplinary. They touch and require a degree of understanding of every facet of a business or organization.

My first exposure to contracts was from a financial perspective, working with Procurement to analyze and control purchase cost. In my role as a Financial Analyst, I discovered the multiple economic factors influencing prices, including government policies and interventions. In 1977, I recall presenting to members of the UK parliament on how prices and incomes legislation, far from subduing inflation, was in fact embedding it within the contracting process.

At that time, most contracts were letter agreements. In the context of local, long-term relationships, this level of informality worked well. But then my responsibilities expanded and shifted to supporting sales in export markets. There, a lack of formality frequently led to a lack of clarity and understanding, resulting in later disagreements. In driving a shift from the exchange of letters to a jointly signed agreement, I recognized my ignorance of law, so made that my next field of study.

Over the years, I have been in roles that brought me into direct contact with Sales, Marketing, Engineering, Product and Project Management, Risk, Audit, HR, Logistics – the list goes on, because in different ways and at different times every one of them impacts and is impacted by contracts and commercial policies and practices.

Today, those impacts and interactions are frequently described as ‘friction points’. In that sense, it takes me back to the beginning, to cost analysis, because every friction point represents a cost. Yet I have learned that we often seek to eliminate costs at our peril. By limiting interactions and constraining conversations, we may destroy opportunities to create value or we simply shift costs to another point in the acquisition or delivery cycle. We also lose opportunities to innovate, to introduce new ideas or methods.

Commerce and contracting are never static. They lie at the heart of business complexity and design. Because they are so multi-disciplinary, they have received limited attention from academia and often defy the attentions of top management. Yet slowly their central role in improved economic and social understanding and cohesion is becoming appreciated. Today, organizations need dedicated contract and commercial professionals and, for 21 years, IACCM has supported a growing body of highly-qualified practitioners. But that is not enough. The world also needs a powerful institutional champion for better commerce and contracting, for the research, standards and advocacy that will better serve the many disciplines which depend upon them.

This is the reason behind changing our name to World Commerce & Contracting, for expanding the role and mission performed by IACCM. Through increased knowledge and understanding, we can aspire to a world where every trading relationship delivers social and economic benefit. It is a big ambition that may never be fully realized, yet its benefits are obvious.

And that is the reason why I care.