Contract Management, the revolutionary pivot of brand ecosystems and partnerships

Technological developments, the holy grail of flourishing opportunities and major challenges. Disruptive brands in the consumer market like Uber, Airbnb, Spotify, Apple and Google bring change at lightning speed. Many consumers experience all kinds of changes – barring they consider it to be advantages or not – this reflects on the business world. How is technology changing social interaction? The way we maintain relationships and collaborate is influencing contractual relations and as a result the outcome of contracts. Contract management, especially the psychological contract, is defining the quality of a brand ecosystem.

The availability of information and technology developments enables true price transparency. It will originate, forecast, integrate and transcend the enterprise. What happens in the consumer related area concerning social interaction is happening in business to business as well. The underlying cause lies in the fact that interactions change. Technology is no longer ‘just’ technology; it becomes a social platform. Not only between people, also between organisations, machines and across value chains. This effects all contractual relations, so we need to be aware of the fact that a successful business is about managing an ecosystem, not individual contracts. Procurement, as classical price pusher, and sales, as classical storyteller, won’t be the defining factors anymore. Future businesses are depending on integrated value creation.

The deployment of contract management as mechanism to manage your world around you on a strategic level has a leading role in building and managing your brand ecosystem. What influences are driving these changes and how do we make our businesses futureproof for the new age?

The six drivers of change

What causes interactions to change so disruptively? Not only technology, but also the social and environmental need to create a better, sustainable world. Here are the drivers of change that will shape our future the next ten years.

Longevity

Technology and science have developed better healthcare over the years. This has brought forth extreme longevity. By 2025 the number of people who are over the age of 60 will be increased by 70%. Today’s business relationships are mostly focussed on relatively short term goals. Longevity requires a focus on maintaining long-term relationships as people will be looking differently to brands. This also means that a continuous change and focus must be part of any strategy and any ecosystem..

New media

New communication tools need more than only text related media. The increase of available digital tools provides us with quick and efficient instruments to connect, educate and direct people. Visual communication is becoming a new universal language. As a manager of a brand ecosystem you need to be constantly aware of how you are perceived and how you perform.

Computational world

Fast developments in sensors and processing turn the world into a programmable system. Big data gives us the ability to see things on a larger scale. It encompasses algorithms, systems and processes that can review, analyse and present information in a more meaningful form. This supports organisations or end-users in acting appropriately and proactively upon (un)foreseen circumstances.

Global connection

The internet makes the world a ‘smaller place’. It enables people and organisations to bridge long distance relationships and to outsource activities to any country in the world. Ecosystems will cross borders. US and Europe have no longer the monopoly in job creation, innovation and political power. This places diversity and adaptability at the centre of operations. In each ecosystem you must be able to cope with cross cultural differences and timing, more than ever before in history.

Social tools in business

Social tools are allowing organisations to work at extreme scales. It strengthens the global connection. New ways of production and value creation will spring to life through social technology. It is not just about collaboration across time zones anymore. Beta testing and ghetto testing approaches, rapid testing with the marketplace play crucial roles. In certain cases also delivering co-creating and co-developing is part of the added-value of social tools.

Smart machines and systems

The introduction of robotics and workplace automation will take over repetitive jobs. This technology will help people to focus on what’s important and gives them the ability to augment and extend their capabilities.

The solidarity effect on contractual relations

These technological developments will not only change the way we work and interact socially, but will also implicate contractual relations. Growth will thrive best when working together towards a joint goal. In order to mitigate the implications of disruptive initiatives, businesses need to elaborate on what insights and skills are required in the new, digital age. Furthermore, it is important to realise how it changes to whole concept of doing business and maintaining partnerships. The advantages of creating stuff together will become more evident. A shift from pre-award to post-award focus will take place as a logical consequence of increasing output based collaborations. To meet market demands steering towards co-creation and co-value driven long-term investment is crucial. As a business pivot, contract management will revolve around managing long-term relationships, not just managing contracts. The huge impact on the business role of contract managers is depending on their level of empathy and relationship management skills.

Psychological contract

In most organisations the psychological contract is yet to be fully defined and understood. It’s far from widespread recognised and used in organisations. This is an important next step in building brand ecosystems, because it sets the dynamics for relationships and defines the practicality of the work to be done. Successful contracts depend on human behaviour; managing expectations is key in the set of behavioural values. The psychological contract develops and evolves constantly based on (the lack of) communication and the unwritten expectations of the relationship as distinct from the formal contract. Qualities like respect, compassion, trust, empathy, fairness and objectivity characterise this psychological contract. Perceived interruption of the psychological contract can severely damage a relationship, but perceived loyalty will lead to engagement and an increase of productivity.

Building a brand ecosystem for a healthy business

Building and managing an ecosystem requires businesses to look beyond contracts and suppliers and a solid moral compass the organisation is loyal to. Co-creation can only thrive in an ecosystem that connects parties that live by the same principles. An example of an organisation that has successfully built a brand ecosystem is a company called Under Armour. Learning from their journey, what could be an effective strategy to establish a productive ecosystem? In five short steps:

1. Look around and learn from industry innovators.
2. Say farewell to your product centric approach, extend to a content centric approach.
3. Forget monopolies, forge the perfect partnerships.
4. Loose the inward pattern of thinking, help customers to build a lifestyle.
5. Develop industry changing initiatives that create thought leadership.

Building a brand ecosystem is a continuous process that will always be subject to change. Agility, output and the psychological contract will always be leading in that process.
So, what drives a successful contractual relationship in the future?

Partnership in the year 2025

Contract management is requiring a more human interface. Whether its B2B, B2C or C2B business, dealing with the psychological part of a contract becomes crucial, because it specifically concerns mutual expectations of inputs and outcomes. Compassion, trust, respect, fairness, empathy and objectivity; they are all currencies that evaluate and enhance the embracing of the drivers of change. How these currencies are applied in relationships determines the intensity of each partnership and contract.

Practise what you preach: cultural behaviour should be guided by governance from the top. The behaviour of leaders – the tone from the top – sets the tone for overall organisational conduct and the way people within the organisation interact with third parties. This is an important foundation of a brand ecosystem. Within the framework for good governance re-innovating existing partnerships will help set the outlines for high quality relationship management, co-creation and co-value driven long-term investment. Bringing the existing partnerships to a higher, more human level is precedent over new sourcing. To ensure every partnership is delivering excellent mutual results, an effective framework should also cover information governance on big data strategy and decision support in order to manage contracts to the full extent.

Above all: think big, start small and act fast!

Key statements of ‘Contract Management, a strategic perspective’

Arjen van Berkum

Arjen van Berkum is a columnist, keynote speaker and motivator, with an eye for business ecosystems, innovation and disruption. In addition to his work as technology and contract management evangelist, he is a visiting lecturer at Delft University of Technology (TU Delft).