The sole purpose for creating a contract is to establish a path of certainty that will guarantee a successful outcome. In short, if I do “A” and you do “B” we should achieve “C”.
Unfortunately, there is no such thing as absolute certainty in the real world. As a result, even a well crafted contract with clearly defined terms and conditions will fail if it does not accommodate the need to adapt to the inevitable changes that occur over the life of the agreement.
When I talk about changes and adaptability, I am not referring to compliance relating to the terms of the contract itself. What I am talking about is the practicality of recognizing and responding to external factors that were not identified in the original contract, and therefore fall outside of the framework of the existing agreement.
Once again, and using my long journey analogy, you may have chosen a particular route to get from one place to another based upon known factors such as distance and time. In this regard, you anticipate the length of time you will be on the road, and at what points you will have to stop along the way to refuel.
But what happens if during the actual journey you encounter bad weather or discover that the route you had originally planned to take has an unexpected detour or, you experience car trouble. What do you do?
For example, with bad weather, you will likely delay your journey and spend time at a rest stop along the way until it blows over. This may mean that you will take longer than expected to arrive at your destination but, you will ultimately arrive safe and sound.
Seems simple enough. Even though you did not expect to encounter bad weather when it hit, rather than pushing through with potentially dire consequences in an effort to adhere to the “original” plan, you adapted to a new reality or set of circumstances.
This demonstrates both experience and maturity.
Within the context of a contract, there is usually little if any room for such flexibility. This is because we are locked into its terms, even if said terms do not reflect the unexpected events of the real world. In those instances where one party is late on a deliverable due to unforeseen circumstances, they are more likely to be penalized, even if said delay benefits the entire project in the long run.
As a result, using contracts to manage relationships does not reflect relational maturity.
What Is Relational Maturity?
Relational maturity in its most basic form is present when there is a desire on the part of all stakeholders to participate as productive and useful partners in a long term arrangement. However, this desire needs to be accompanied by the establishment of a solid management structure created within a truly collaborative organizational culture.
In other words, and rather than employing a top down command and control model of management in which there are thick layers of oversight centered around compliance management in relation to contract enforcement, the relationally mature organization takes a different approach. This includes recognizing and responding to change from the standpoint of achieving the best outcome, even if said change means expanding upon the original engagement parameters.
With the relationally mature organization, such expansions or adjustments are not undertaken through an onerous change management process. Nor are there risks of a partner being penalized for acknowledging unanticipated issues.
Instead, a relationally mature organization having established the necessary systems and processes to facilitate the collaborative approach to problem solving, are able to proactively manage change while keeping the desired outcome clearly in site. Similar to Jim Collins’ autopsies with blame approach, which he identified as being one of the key differentiators with the companies who have made the transition from good to great, the relationally mature organization seeks solutions as opposed to either assigning blame or enforcing adherence to terms and conditions that are no longer relevant.
To get to this point of productive partnering or relational maturity, a new model of engagement is needed.
The New Model For Achieving Certainty
The relational model to which I have referred throughout this series is centered around a core concept of establishing a charter that becomes the strategic and operational framework for the relationship.
It represents a departure from how we have traditionally viewed relationship sourcing and management, which in the past has been based primarily upon a contract compliance or enforcement mechanism .
While changing a company’s culture is not an easy task, it is nonetheless essential for success. This means that the internal organization (Program Owner), as well as the partner or partners service capabilities need to be properly aligned and enabled for the joint relationship structure to work. By this I mean that on one hand, a mechanism is needed to translate business objectives and priorities into performance goals for the relationship. On the other hand, there is the need to support and process relationship requirements and take the necessary measures to enable them.
The basic internal organizational framework needed for effective relationship delivery management involves establishing and operationalizing the following management structures:
- Relationship Approval and Review Board – (RARB) – An executive committee representing lines of business, procurement, delivery, finance and legal responsible for achieving corporate objectives through strategic relationships.
- Relationship and Delivery Management function (RDM)– an organization reporting to the RARB responsible for the administration of the relational approach including, but not limited to, standards, coaching, joint governance secretariat, change management, relationships budgeting process, operational reviews and relationships portfolio management.
Even though complex business arrangements are by definition intricate and diverse, beyond this basic management structure, success is ultimately based on people. More to the point, people working together to achieve a mutually beneficial goal within an operational framework of shared values and open dialogue. As such, becoming relationally mature is a journey that requires the presence of the following key elements:
Leadership – recognition at the executive table that delivery models of today rely on partner capabilities, which include a high degree of agility and responsiveness that can only be achieved through adaptive relationships as opposed to transactions or deals.
Business operations – proactive implementation of the model, which includes the institution of the RARB, RDM and the Relational Governance structures referenced in both this as well as previous posts.
Education – continuous education programs for individuals involved both directly and indirectly with the initiative to ensure that the structures and processes to facilitate the creation of high performing relationships are understood.
Incentives – establishing incentive based HR programs to promote collaborative behavior within the organization and across all participating organizations.
Communication – relentless communication program supported by strong and continuous messaging from the top.