Guest Author Series: Collaboration Is Everywhere – Except In Contracts

Posted on May 26, 2010

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Note: The following is a post by Tim Cummins that was originally posted to his blog Commitment Matters on Tuesday, May 25th, and has been provided to Procurement Insights through the Essential Connections Blog.

Tim is the Founder and CEO of the International Association for Contract & Commercial Management (IACCM), a non-profit organization that has become the global forum for innovation in trading relationships and practices.

Tim McCarthy, Vice Chair IACCM - North American Region

It doesn’t matter where I go, it seems that principles of more collaboration, more cooperation are sweeping through business and society.

Last week I was at a lunch with Dr. Vince Cable, the new Secretary of State for Business in the UK’s coalition government. I guess it may not be surprising that those forming a coalition might sing the praises of collaboration, but he was far from alone. Today, at the IACCM Europe, Middle East & Africa conference, his message was echoed by the Scottish Minister for Industry, who declared that ‘results can only be optimised through collaboration’. Politicians, trade association leaders, business executives, scientists and leaders in supply chain are all suddenly espousing the idea that innovation, value and risk management are improved if we work together to generate ideas and solutions. I could recite a long list of recent news articles and presentations to illustrate my point.

The cynics might suggst that this is simply a passing phase – that Western politicians and businesses are reeling from the impacts of the recession and are suddenly awakening to their loss of power and influence, so are calling on the new power-elite to be ‘collaborative’. Under this theory, the alpha-male is merely in abeyance – and will re-surface when the good times return.

Such a concept would of course depend on the fact that ‘the good times’ will return, at least in the forseeable future. Also, there are many who would point to the fact that we have created an increasingly borderless world with far greater inter-dependency between companies, organizations, political entities and individuals. This will force us to challenge some of our former beliefs and behaviors.

Among these, of course, are the ways we have gone about contracting and negotiation. We all know that these vary to some extent by culture and business practice. However, as the recent IACCM ‘Most Negotiated Terms Survey’ revealed, the international differences in contracting have continued to decline, driven by a broad adoption of the common law framework and habits (at least for international trade). These habits include a transactionally driven, adversarial approach to many negotiations: an approch that is, quite simply, out of step with public and political sentiment. Negotiators know this (they tell us what the focus should be, and it is very different), but feel powerless to change.

Such a defeatist attitude is disappointing. But more than that, it is potentially self-destructive. Contract drafters and negotiators are not immune from global trends; if they fail to adjust, they will simply be swept aside. Change is not an option. The option we have is whether to be among the leaders or among the victims. It is time to re-think the focus of contract content and negotiation planning. The change can be made. There are already collaborative models in place; there are examples we can draw from. There is no good excuse for continuing to fight battles that others can see are undermining value, increasing risk of failure and inhibiting new ideas and innovation.

Copies of the latest IACCM study into the Most Negotiated Terms are available from info@iaccm.com