For decades organisations have understood that real value lies not in selling products, but in delivering performance over time. Aerospace introduced “power by the hour,” aligning payment with engine availability rather than spare parts. Industrial leaders such as SKF developed models focused on reliability and operational outcomes. Customers want to buy capability, not equipment.
So why didn’t outcome-based and lifecycle models become dominant long ago?
The limitation was capability. These approaches depend on trusted data, visibility into usage, operating conditions and performance. That data was incomplete, expensive or difficult to validate. Contracts linking payment to outcomes carried too much uncertainty, so commercial arrangements continued to operate with fixed pricing and rigid risk allocation.
This constraint both reflected and reinforced commercial fragmentation. Pricing, service delivery, finance and contracting operated separately, each holding part of the picture but none seeing the whole. Adaptive models were simply too risky to scale.
That constraint is now disappearing. Digital connectivity, sensors, analytics and AI are making performance visibility routine. Organisations can increasingly understand value creation as it happens rather than reconstruct it months later. The technical barriers that once limited lifecycle and outcome-based approaches are rapidly eroding.
Across industries, the aftermarket is becoming the primary engine of growth and margin. Revenue shifts toward long-term service relationships. Customers expect availability, efficiency and outcomes, not transactions.
But now, volatile markets mean that pricing and cost management must become dynamic – and contracting has become the constraint. Most agreements are still designed to create certainty at signature. Prices are fixed, risks allocated once, and governance assumes stability. Yet the environments those contracts govern are defined by continuous change. Renegotiations increase, change orders multiply and commercial friction grows. Organisations generate better insight but are struggling to act on it.
The barrier is no longer technology. It is commercial design. Organisations possess increasing commercial intelligence but lack integrated mechanisms to use it. Pricing teams see signals contracts cannot accommodate. Service teams understand performance realities without authority to adjust terms. Finance models remain disconnected from operational variability. Legal and contract management focus on compliance rather than the value that’s created during execution.
This fragmentation is structural and it is why the contracting process and contracts themselves must become governance frameworks. Through a streamlined process, contracts must define how pricing adapts, how performance is measured, how data is shared and how decisions evolve over time. The purpose of contracting shifts from locking terms to enabling controlled change.
Markets have already changed and technology has already changed. Contracting capability and capacity now determine whether organisations can keep up.
“I’m so excited about what Copilot is doing for us”, gushed an attendee at a recent contract management event. “We are serving the business so much faster and soon the quality of output will mean we can avoid many of the traditional reviews and approvals.”
I don’t disagree with those observations, though I do wonder why that individual wasn’t recognizing that they may rapidly become one of those eliminated ‘review and approval’ steps. WorldCC’s recent executive dialogues reveal a striking convergence across buy-side and sell-side leaders. Regardless of role or sector, participants described the same pressures: the need for faster decision cycles, clearer accountability, stronger data visibility, adaptive contract structures, and earlier commercial involvement in strategic initiatives. This alignment signals something important – the challenge and the opportunity created by AI is no longer functional; it is systemic.
Core AI capability is rapidly becoming a great equalizer. Large language models and agentic tools are making sophisticated analysis, drafting, and pattern recognition widely accessible. These technologies will transform productivity, but they are unlikely to provide lasting differentiation. When everyone has access to similar tools, advantage shifts elsewhere.
For professionals in legal, procurement, and contract management, the question therefore becomes “what is the source of sustainable value?” It cannot be the technology itself. It must lie in the judgment, commercial insight, relational intelligence, governance design, and strategic framing that technology alone cannot provide. Tools can generate options; only skilled practitioners determine which commitments are worth making and how they should be structured to deliver performance. Unless they are bringing insights and intelligence that go beyond those delivered through AI, they become irrelevant.
This is precisely why institutions such as World Commerce & Contracting, NCMA and the CCM Institute matter. In a landscape where baseline capability is increasingly automated, differentiation comes from building and maintaining shared and adaptive standards, advanced practice, research-driven insight, and the continuous development of evolving professional judgment. Sustainable advantage will belong to organizations that are engaged with the formation of thought leadership, cultivating these capabilities deliberately, not those that assume technology is a substitute for them.
High-performing organizations are already responding. As we saw in our 2025 Global Benchmark Report, the leaders embed commercial expertise early, pre-align baseline terms with key partners, and design governance pathways that accelerate execution. Speed, in this context, is not a trade-off against control; it is the result of intelligent design.
Technology is reshaping expectations in other ways as well. Contracts contain vast stores of operational and financial data, much of it historically inaccessible. Modern tools can surface obligations, detect performance risks, and generate insight, but only if organizations resist the temptation to automate broken processes. Technology should inform decisions, not scale inefficiency.
Meanwhile, the one-size-fits-all contract is becoming obsolete. Regulatory divergence, geopolitical tension, and cultural variation demand adaptive agreements engineered for execution, not uniformity. Resilience must be designed into contract structures through mechanisms such as clause libraries, review triggers, and structured amendment processes.
Perhaps most encouraging is that the capability gap is less about skills than deployment. Many commercial professionals already possess strong analytical abilities, yet too much effort is spent resolving problems after they occur. The future belongs to organizations that position commercial teams earlier — shaping deals, preventing friction, and aligning stakeholders before value leaks away.
Taken together, these signals point to a deeper shift: contracting is evolving from document creation to intelligence generation to operating model design.
Organizations that fail to modernize – or simply think that using Copilot and agentic AI provides competitive advantage – are missing a key point. Speed, control and access to data are features of a process. The future advantage will not belong to those who manage contracts most efficiently. It will belong to those who design and execute distinctive commercial capability.
The ancient Mesopotamians carved their story of the great flood into stone tablets. The Deluge wasn’t divine punishment: it was what happened when each person looked only to their own survival, when collective action became impossible, when short-term protection trumped long-term flourishing. And we are living our own version today.
Walk into most commercial negotiations in 2026 and you’ll see contracts designed to protect individual organizations rather than create shared value. Terms where risk is shifted, not shared. Timeframes set to match quarterly pressures. Innovation stifled because it requires levels of trust we no longer have. It’s not that anyone set out to build this system. It emerged, and rose steadily, the way flood waters do – and each organization seeks safety in isolation, rather than through collective action.
When uncertainty surrounds us – political division, market volatility, stakeholder pressure – self-protection appears defensible, rational, safe. But ultimately, it leads to loss of value and threatens our future.
Picture the commercial landscape a decade from now, if it is shaped by today’s defensive decisions. Coalitions fall apart and those that could have happened never form. Programs that could have succeeded are abandoned or cut back due to cost overruns and delays. Rather than aligning, each organization puts its own protection first – different risk appetites, different measures of success. different attitudes to data sharing. They hold endless meetings, produce multiple papers, sign contracts no one can understand and disband in disarray amid mutual recriminations. Perhaps a construction firm develops a breakthrough approach to affordable housing through contract structures that share risk over fifteen years. But competitors can’t adopt it because their contracts are standardized for protection, not innovation. Investors move on. The breakthrough dies.
So here’s how the commercial and contracting deluge happens. Uncertainty rises and organizations focus on how to protect themselves; collaboration is declared, but not put into effect; problems compound and they are all blamed on someone else; trust is destroyed so further protective measures are introduced, driving up costs and destroying opportunity. Given the behaviors, each protective move is understandable. Each defensive contract makes sense given the pressures. But ultimately, they offer an illusion of protection and a guarantee of sub-optimal results.
The ancient tablets described a world that drowned because people couldn’t act collectively when it mattered. The modern version is quieter: we risk drowning ourselves in self-interest, each organization building its own ark, discovering too late that isolated arks don’t save civilizations.
When commercial relationships default to self-protection, time horizons collapse. Real breakthroughs may take years of iteration – like Rwanda’s drone blood delivery or India’s telecommunications transformation. But protective thinking can’t accommodate ten-year horizons. We optimize for this quarter, we resist adaptive or agile relationships because we say they are too risky, that we want certainty.
Your organization might be uniquely positioned to address major business opportunities or societal challenges through contracting relationships. But if you’re focused on protecting yourself from every risk, you’ll never deploy those capabilities where they matter most. However, this isn’t inevitable. History shows the way forward: narrow focus, capability-led action, long time horizons, collaborative coalitions built on shared risk and shared reward. We know it works – from developing unleaded gasoline to seat belts to maternal health systems. Shipping container standardization turned global trade from chaos into a system, but only after competitors agreed to share specifications rather than protect proprietary designs. The internet itself required telecommunications companies to adopt common protocols. Nike and Apple combined fitness tracking with sportswear. The biggest commercial breakthroughs come through partnership, not protection.
Commercial contracting operating in a spirit of shared risk and reward is central to all of them. The question is whether we’ll choose this approach. Right now, our research continues to show that we say we want greater collaboration, but we don’t believe it will happen. It’s a choice whether we structure a contract and design a relationship that seeks to protect us from every risk, or build one that creates shared value.
The Mesopotamians couldn’t stop their deluge. But ours is commercial, and it rises from accumulated defensive decisions, not rain. Which means we can choose differently. We can ask: What challenges could our contracting relationships help solve? Who needs to be in the coalition? What would unlock real scale? What time horizon does change require? We can build contracts that deploy capabilities toward impact and outcomes, instead of just managing exposure.We can form coalitions that persist long enough to matter, instead of protecting ourselves into irrelevance. We can choose collaboration over self-interest, shared risk over shifted risk, collective progress over individual protection.
Or we can keep building our isolated contractual arks, wondering why the waters keep rising around us.
As we mark the first anniversary of the CCM Institute, one thing is clear: this was never intended to be a traditional research body.
The past year demanded something very different. Market volatility, cost inflation, delivery risk, social expectations, and the rapid advance of AI created immediate, real-world questions that organisations and governments could not afford to wait years to answer. The Institute’s role was to provide dynamic, applied intelligence, research that informs decisions, underpins capability development, and translates directly into better commercial outcomes.
Looking beyond the amazing achievement of the global Contract Management Standard, a defining focus of the year was contract models, particularly Outcome-Based Contracting (OBC). Rather than promoting OBC as a policy aspiration, the Institute examined how it actually works in practice – where it delivers value, where it fails, and why. Our work highlighted the challenges: incentive design, outcome definition, data requirements, governance, and capability on both sides of the contract. This proved especially relevant for public agencies seeking better delivery without sacrificing affordability or accountability.
Equally important was our exploration of adaptability. As instability became the norm rather than the exception, the Institute examined how contracts can be designed to flex to changing conditions and reduce the likelihood of dispute. From pricing adjustment and hardship mechanisms to structured change control and shared governance, this work helped organizations move beyond rigid, risk-transfer models toward contracts that sustain performance under pressure. Allied to this, there was tremendous interest in how to better capture and retain value: we published extensive material on tightening the connection between contracts and financial performance.
Alongside this, the Institute delivered practical insight into the impact of AI on commercial and contracting practice. We investigated where AI already adds value – contract intelligence, obligation monitoring, risk identification – and where it depends on us overcoming weaknesses in data, process design, and ownership. A consistent message emerged: AI accelerates good commercial design, but magnifies poor design.
What has set the Institute apart is speed, relevance, and access. Through close connection with WorldCC and NCMA, the Institute can test ideas, validate findings, and respond quickly to practitioner and policy needs, drawing on the lived experience of more than 200,000 professionals worldwide. This ensures research does not sit on the shelf, but feeds directly into guidance, training, and decision-making.
Looking ahead, the demand for this kind of intelligence will only grow. Business and market conditions demand fresh thinking and fresh approaches to operating models, capability development, process design, skills deployment – not to mention the need for functional and behavioral shifts such as adaptive pricing, AI-enabled governance, outcome-based public delivery, and collaborative working models that drive transparency and trust.
One year on, the lesson is simple: in today’s environment, research must move at the speed of the market. The CCM Institute exists to make that possible.
Globalisation did not just stretch supply chains across borders, it quietly reshaped how organisations thought about contracts, risk, and value. What began as a search for efficiency and scale evolved into procurement models dominated by cost-based analysis, standardisation, and leverage. Contracts became instruments of control rather than frameworks for collaboration. The result was not only opaque supply ecosystems, but a steady erosion of trust that now constrains our ability to adapt.
As supply networks expanded globally, visibility diminished. Distance (geographic, cultural, and organisational) made relationships harder to sustain, so procurement turned to what could be measured: price, unit cost, and compliance. Risk was increasingly perceived as something to be mitigated rather than managed, and the illusion that this could be achieved through onerous contract terms took hold. Liability caps, indemnities, termination rights, and unilateral change clauses multiplied, often imposed through non-negotiable templates. The contract was no longer designed as a shared commitment but instead became a defensive shield.
This shift had profound consequences. Cost-based procurement models encouraged fragmentation: multiple tiers of suppliers, subcontractors, and intermediaries operating with limited transparency and weak alignment to end outcomes. Contracts reinforced this fragmentation by prioritising protection over performance and enforcement over learning. In many cases, the commercial logic assumed that power and scale could substitute for trust. When something went wrong, the answer was more control, tighter terms, and greater risk transfer.
Over time, this approach hollowed out relationships. Suppliers learned to protect themselves just as aggressively as buyers sought to protect their organisations. Information was withheld, problems were surfaced late, and innovation slowed. Value was undermined not because parties lacked technical capability, but because the commercial environment discouraged openness and shared problem-solving. Rather than enabling coordination across complex ecosystems, contracts became barriers to adaptation.
The legacy of this period hangs over us today. Even as organisations acknowledge the limits of cost-led procurement and the fragility of global supply chains, the underlying contract models remain largely unchanged. Templates still reflect assumptions of mistrust. Risk is still treated as something that can be transferred rather than jointly managed. Governance mechanisms still prioritise escalation and enforcement over dialogue and adjustment. Taken together, we have created rigidity in a world that demands adaptability. Contracts are simply unfit for purpose.
Moving away from this is difficult precisely because trust has been so deeply damaged. Relationships cannot be reset simply by declaring new intentions or adding collaborative language to old structures. Contracts encode history. They reflect past behaviours, power dynamics, and expectations. As long as commercial models continue to assume adversarial interests, they will reproduce the same outcomes—regardless of how volatile, interconnected, or uncertain the operating environment becomes.
If globalisation taught organisations how to optimise for cost, the next phase demands that they relearn how to design for resilience, value, and adaptability. That shift cannot occur without confronting the role contracts have played in shaping behaviour. Until contracts evolve from tools of control into instruments of shared understanding and managed risk, procurement will remain trapped by the very models it now recognises as unsustainable.
Supply talent is no longer about procurement skills, functional process expertise, or traditional supply chain operations. In a market-driven, AI-enabled world, organisations need people who understand how value is created across the entire commercial ecosystem, from customer promise through market demand, pricing, product design, supplier capacity, and multi-tier commitments.
It is not only AI which is driving this shift, but the movement from analog, fragmented data to digitally generated, continuously flowing data. That shift is dissolving the old view of supply chains as sequential pipelines with poor visibility and replacing it with data-integrated ecosystems where customer, supplier, operational, and financial signals circulate in near-real time.
This demands a different kind of talent – people who can think, decide, and act across boundaries, using AI and data to shape commitments, not just manage processes. It also changes the way that relationships are formed and managed, resulting in a different approach to contracting.
So as we head rapidly into 2026, these changes will be a big focus for our research and publications. The shift itself will require planning and preparation – it’s time to get started.
A recent interview by McKinsey with Wikipedia’s founder offers valuable insights to a question challenging many commercial teams and business negotiators: how do we build trust in an age where technology increasingly mediates our relationships?
Jimmy Wales observed that trust is declining almost everywhere, whether in politics, journalism, or institutions. This erosion of confidence makes it harder to agree on even the simplest facts – yet the Wikipedia model continues to function. It’s grounded in two simple principles: assume good faith and make integrity easy to verify. These principles have deep relevance for today’s commercial and contracting professionals.
Deliberate Vulnerability
Wales once wrote on his user page, “Yes, you can edit this page. I trust you.”
That willingness to extend trust as a core principle became part of Wikipedia’s culture. The community allows anyone to edit, but with the safety net of instant reversion and transparent oversight.
Commercial teams could learn from that mindset. Too often, contracts are written as if every counterpart is an adversary waiting to exploit a loophole. We legislate against bad faith instead of designing for good faith. Yet successful partnerships typically begin with an act of measured vulnerability -sharing data, explaining assumptions, or exposing real cost structures. When it is paired with sensible guardrails, acts of trust invite reciprocity.
Trust by Design
Wikipedia assumes good faith, but not blindly. As Wales puts it, “Assume good faith is not a suicide pact.” Trust is supported by a well-structured system: transparent edits, public records, clear rules, and the ability to revert or block bad actors.
In business relationships, trust must likewise be designed, not declared. Governance frameworks, data accuracy, and digital records serve the same purpose as Wikipedia’s edit history. They allow for correction without accusation. In the era of AI and digital contracting, this means traceable data flows, version control, and transparent performance dashboards. Technology becomes the architecture that sustains integrity.
Reputation as the New Currency
Wikipedia relies on “pseudo-anonymity” – consistent identity and behavior over time. Reputation counts – and builds over time.
That lesson translates directly into contracting. Buyers and suppliers alike build credibility through consistency of conduct: fairness in negotiation, honesty in communication, reliability in delivery. As digital ecosystems expand, formal and informal reputation systems will increasingly determine who is trusted, who gets opportunities, and who is left out.
Shared Understanding of the Facts
Wales warns that democracy fails when people no longer share a common reality. The same is true of commerce. Negotiations and contract management collapse when each party operates on different data or conflicting interpretations of performance.
AI and analytics can help, but only if they reinforce a shared factual baseline. Joint dashboards, open data repositories, and agreed definitions of success turn technology into a trust amplifier. Without that alignment, technology simply speeds up misunderstanding.
The Simplicity of Integrity
“Tell the truth. Give the facts. Don’t be biased.” Wales calls it the “kindergarten test.” These values have never been more relevant. As algorithms begin to draft contracts, monitor delivery, and even recommend negotiation tactics, we must embed these ethical principles into the systems we build and use. Transparency, explainability, and fairness should be the cornerstones of any AI-enabled contracting environment.
Scaling Trust
Wikipedia’s community thrives because it combines individual integrity with systemic accountability. That’s precisely what modern commercial ecosystems require. Trust grows through one relationship at a time, but it scales only when systems reinforce the same values.
Adaptive contracts, shared data, and relational governance are the business equivalents of Wikipedia’s edit logs and community norms. They make trust not an act of faith but a design feature.
Technology Cannot Replace Trust: It Can Encode It
Wikipedia’s success is not about technology; it’s about the values the technology supports.
The same choice confronts commercial and contracting professionals. As AI enters the negotiation room and digital platforms manage our obligations, we face a defining question: Will we use technology to control people or interactions, or to empower trust between them?
Trust remains the invisible capital of commerce. It is what turns data into decisions, contracts into relationships, and promises into performance. The tools may be new, but the lessons remain the same.
When ERP systems became the backbone of many organizations in the 1990s – 2000s, one of the frequent criticisms (and I was among those critics) was the extent to which it caused the embedding of rigid, siloed standards which added to the push for commoditization and drove tensions in the customer – supplier relationship.
In the eyes of those objecting, ERP standardizes and hard-wires business processes (including procurement and contracts) to the point where it constrains flexibility, makes it harder to accommodate exceptions, and limits the ability to adapt to diverse or changing market conditions.
So: were those concerns valid? Are they still correct today?
Then: The Nature of the Concern
ERPs were designed to impose discipline and standardization, which was a huge benefit for compliance, data integrity, and efficiency. But for contracts, which are inherently situational, market-responsive, and nuanced, ERP often presented a barrier. Templates and workflows embedded in ERP systems often reflected the policy at the time of implementation, and became very hard to change.
Negotiators and commercial managers complained of too-rigid clause libraries, overly standardized approval paths that didn’t recognize different risk–reward trade-offs and lack of ability to reflect business realities between different products or services, industry partners, market segments or geographic regions.
Now: Facing Market Volatility, Are Those Issues Evident?
The answer is yes – more so than ever.
Markets today are far more volatile, diverse, and uncertain than when most ERP systems were architected. Organizations are being asked to:
Enter into new types of agreements (e.g., outcome-based, ESG-driven, multi-party ecosystems).
Adjust terms more dynamically to reflect supply disruptions, inflation, new regulations, or competitive pressures.
Recognize local market variations (cultural, legal, and commercial).
But the rigidity of many legacy ERP systems makes it slow and costly to adapt contracting practices. In fact, this rigidity has caused serious problems in building and managing trading relationships. Key examples of this are:
Manual workarounds — people operating “off system” to enable exceptions.
Data fragmentation, because contracts negotiated outside the ERP aren’t integrated back cleanly.
Value erosion, because organizations can’t easily adjust to market signals or customer/supplier needs.
Is this changing?
ERP vendors have started responding. Many now offer more modular, API-friendly architectures that allow best-of-breed CLM or CPQ (Configure-Price-Quote) tools to integrate. Cloud-based ERP is more configurable than older on-premise versions, though still more rigid than a true CLM platform.
High-performing organizations now deliberately keep their contract intelligence and flexibility in a CLM or adjacent platform, while letting ERP handle transactions, compliance, and reporting. There is growing adoption of governance models which accept some decentralization to allow local or deal-specific adaptations. And the experience with ERP has taught us that adaptability and resilience must be designed into both processes and technology, not treated as afterthoughts.
So the challenge now is not to throw out ERP, but to augment it with more flexible, intelligent tools and governance frameworks that reflect the reality of modern contracting.
I started writing ‘Commitment Matters’ blogs almost 20 years ago. In that time, our world has changed and I started questioning how our concepts of ‘commitment’ have altered in the context of modern contracting.
20 years ago, I had to think long and hard, then document my thoughts. Today, indicative of the changes that have occurred, I was able to simply ask my AI-self, WorldCC’s ‘AskTim’. It took a few sdeconds to generate this reply. What do you think of it?
The Meaning of ‘Commitment’ in Modern Contracts
In the context of modern contracts, the concept of ‘commitment’ extends far beyond the traditional legal understanding of a binding promise. Based on the available sources, we can explore what commitment truly means in today’s contracting environment.
The Evolving Nature of Commitment
The meaning of commitment in modern contracts reflects the changing business landscape characterized by volatility and uncertainty. True commitment in this context involves:
Decision-making under uncertainty: Commitment means being ready to make decisions and be held accountable even when facing ambiguity, incomplete facts, and limited data. This represents a form of leadership that both contract and commercial managers must embrace in today’s volatile global markets. [1]
Accountability: A core aspect of commitment is the willingness to be held accountable for decisions and outcomes. This accountability represents leadership in contract and commercial management roles. [1][2]
Adaptability: Modern commitment requires the ability to handle conditions of uncertainty that are increasingly common in today’s business environment. This means being flexible and responsive to changing circumstances while maintaining core obligations. [1]
Beyond Legal Obligations
The sources suggest that commitment in modern contracts transcends mere legal obligation. It represents a professional mindset that embraces:
The ability to navigate ambiguity
The courage to make decisions without perfect information
The willingness to be accountable for outcomes
The adaptability to respond to volatile market conditions [1][2]
This perspective aligns with the evolving nature of contract and commercial management, where professionals must increasingly deal with complex, uncertain business environments rather than simply enforcing static contractual terms.
While the traditional legal view might define commitment as simply “a binding promise or agreement,” the modern business context demands a more nuanced understanding that incorporates leadership, decision-making capacity, and adaptability to changing circumstances.
Prompt Coach
Further Thoughts for Exploration:
How might the concept of commitment differ between relational contracts (focused on long-term partnerships) versus transactional contracts (focused on discrete exchanges)?
Suggestion for Refining the Question:
Next time, consider refining your question to include specific parameters like industry context (e.g., technology, construction, services), or whether you’re interested in buy-side vs. sell-side perspectives on commitment. Additionally, specifying whether you’re looking at commitment from a legal, operational, or relationship management perspective would help provide more targeted insights from WorldCC’s research.
MORE RELATED QUESTIONS
What are some common challenges organizations face when interpreting ‘commitment’ in contracts, and what strategies might be implemented to address these obstacles effectively?
How does the concept of ‘commitment’ in modern contracts differ when viewed from a buy-side versus sell-side perspective (for sectors such as technology or construction)?
In what ways can the definition of ‘commitment’ evolve in response to the increasing complexity and ambiguity in global markets, as highlighted in your source?
How can organizations (large vs. small; multi-national vs. local) effectively foster a culture of accountability and commitment among contract managers?
Considering emerging trends in contractual relationships, what future implications might arise regarding the meaning of ‘commitment’ in international contracts?
Contract redlining – the activity of marking up a contract to show proposed changes – is a go-to technique for contract negotiation and review enthusiasts, now further enabled by automation and AI. But before we get carried away by the ease with which it can be undertaken, let’s reflect on the point that how and when we wield that trusty red pen can make or break business outcomes.
Traditional Redlining
It’s interesting to reflect on the origins of the term. ‘Redlining’ was a discriminatory practice introduced in the US financial sector to limit risk. Hence it often remains associated with risk allocation and protection of self-interest – an approach which tends to be reactive rather than creative, especially when:
Changes are made without considering the underlying business objectives
Edits focus solely on shifting risk to the other party
Modifications are based on templates or standard positions without consideration of the specific relationship
Creative Contracting Approaches
More imaginative approaches to contract review and negotiation include a check to ensure we are even reviewing the right commercial model. Too often, the parties become so engrossed in the battle over redlines that they forget to ask ‘Is this the right form of agreement and the appropriate set of terms?’ A value-add process includes a quick review, asking whether before we rush into redlines, we should be:
Focusing on mutual value creation rather than just risk allocation
Designing innovative solutions to address both parties’ concerns
Using visual elements, plain language, and creative formats to enhance understanding
Developing relationship-focused provisions that encourage collaboration
Before you act …
Ask “why” questions to understand underlying needs before proposing changes
Consider multiple alternative solutions to address concerns
Focus on outcomes rather than specific contract language
Use design thinking principles to reimagine contract structures
Incorporate relational elements that support long-term collaboration
Conclusion
Redlining is a necessary tool in contract review. However, an approach to redlining that is purely reactive and fails to consider creative alternatives is inevitably confrontational in nature. We must be wary of stifling creativity and imagination by jumping straight to redlines. The most effective contract professionals use redlining as just one tool within a broader, more creative approach to contracting that focuses on relationship-building, mutual value creation, and innovative problem-solving.
Commitment Matters 