84% of commercial and contracts practitioners believe they have the skills and competencies needed to perform a strategic role within their business, yet just 32% perceive themselves currently having substantial strategic influence or input.
Taking another statistic, 56% say that executive management considers the commercial and contracts function to be critical and strategic for business success, yet just half that number are receiving executive support for the investments needed to perform a strategic role.
IACCM recently worked with The MPower Group to produce two webinars in which we discussed the growing potential for strategic contracting and relationship management, versus the purely operational role that is common within many organizations. This operational reality is confirmed by much of the survey data that was collected in conjunction with the webinars.
For example, almost two thirds recognize that the function is not seen as conferring competitive advantage (and therefore, one must assume, is not really seen as delivering significant revenue or margin improvement). 60% are struggling to persuade the rest of the organization that the function has value and – perhaps not surprisingly – 72% acknowledge that the function is not being raided for talent and future leaders.
So how can we explain the dichotomy between the belief in existing strategic skills and executive approval, versus the reality of actual status? Unfortunately, it suggests a lack of readiness to face the truth and a wish to be something that – in many cases – we are not. While a growing number of executives are embracing the importance of commercial and contracting skills and competencies, they do not automatically associate those attributes with the incumbent contracts and commercial staff. And that, quite simply, is why they are not investing or engaging the function in strategic decision-making.
There are certainly exceptions and some commercial groups are flourishing. They have focused on how to offer broader insights and advice, ensuring they have access to unique data on performance and improvement opportunities. They are not limited to work at a transactional level; nor are they excessively focused on issues such as compliance, escalations or post-mortems on failed contracts.
These groups truly are looking at commercial and contract management as a source of competitive advantage – their message is about creativity rather than control. They work on developing capabilities to manage risk, rather than seeking to avoid it. They have compelling reasons to meet with top management, rather than having to wait to be called.
Many of those who read this blog will be among the small percentage who have grasped the challenge of continuous improvement and who have the personal and leadership qualities to offer strategic value. On the positive side, we also have growing numbers emerging from IACCM learning and certification programs, which are visibly impacting skills, knowledge and the confidence to engage with executive management.
I firmly believe that this is of real importance to the contracts and commercial community; transactional work will steadily decline. We must step into the strategic gap that today's market conditions have exposed.