We live in a trust deficit world while lawyers spin circles around us

It seems like a long time ago, when I started my career as a fresher with a simple one page appointment letter issued by the company. The letter had a designation, department, location, joining date, probation period, and compensation, and was signed by HR. I did not require a dictionary or assistance from an attorney to understand any of the clauses, intent, or my role in the company. Along with me, three others also had no trouble deciphering the language on that precious piece of paper.

Climbing the corporate ladder rather quickly, I reached a place where I was issuing two page letters to young aspirants who liked the simplicity of communication. There was no ambiguity in anyone’s mind on what was expected, exclusions, inclusions, KRAs, official work times, rules and regulations because none of these challenged the new hires in their comprehension; there was an inclusive feeling of welcome-ness, enthusiasm and eagerness to learn, contribute and become part of the family that the enterprise represented.

With passing time, in a position of authority, power and responsibility, vendors engaged to solicit business, selling their wares, offering services, architecting the future one step at a time. Consultants big and small sought to create success in intent and execution, the good work thus acknowledged by the Management team. Towards the turn of the millennium, scams had tainted corporate ethics, hype had overtaken reality, euphoria and expectations rising sky high, the end rose to prominence with lowered regard to the means.

The meltdown, slowdown, trough of disillusionment with crashed expectations led to everyone covering real and perceived risk in any engagement, every eventuality however remote. Documents started expanding, if, but, therefore, hereinto, whereas, words hitherto unused in normal business communication started appearing in every document that attempted to bring two or more parties together. Unable to grasp the complexity, the shake of hands, gentleman to gentleman agreements now need corroboration in legalese.

Slowly and steadily the document stack continued to grow, legal teams took over the task of negotiating clauses; the engagement shifted from wanting to collaborate and achieve something to covering all risks and pinning down obligations such that any deviation, misstep or mistake would bring the sky down. The approach began to weigh down on ability to move fast, create new market opportunities or compete with agility; one-upmanship became the rule and relationship based engagement has disappeared.

Trust is earned is the new mantra today implicitly indicating that I shall not trust you until there is evidence – direct or referential – that you are trustworthy. Reference checks, customer visits, case studies, collateral, reports from external agencies, and now the internet contribute to building a persona for the individual or company. Despite all the due diligence, we still struggle with allegedly misrepresentations and continue to use contracts and legal documents to protect our interest, surprisingly on both sides.

As an entrepreneur I worry about someone plagiarizing my idea, large companies not honoring their commitments, overdue payments, despite the written word in the contract; I hesitate to agree to clauses that appear to be unilateral leaving me no recourse, but then I accept it with my inability to change the words and my need being higher than the counterparties. I wonder what happened to the world in which I started working not too long back, a world where we trusted each other despite not having a voluminous contract to enforce.

Going deeper into the changing human psyche, the emerging business and economic environment, technology led disruptive models, and the no holds barred race to riches, it is evident that it is a mercenary world now. Collaboration is a necessity driven out of need for survival or at times for convenience to get ahead of a pesky competitor. Our DNA has changed rapidly giving rise to new models of engagement, rather transactional way of doing business until the next big wave changes our reality and we start all over again.

Comparisons indicate growing complexity of engagement as well as highly targeted tacit knowledge based arrangements. These are non-frivolous yet transient in nature creating value for stakeholders, leaving behind firm and lasting impressions. Today contracts have become a necessity to set clear expectations and boundaries for coexistence. I believe that when intent overrides the intricacies of legalese, the resultant simplification works wonders in creating win-win opportunities; and that is a good place to be for all of us !

Finally to quote Mahatma Gandhi: Be the change you want to see in this world !

Strategic sourcing, pathetic delivery

The poor fellow was looking harrowed after week long meetings sans his CIO with the big global IT services company with whom the company had entered into a long-term strategic services contract. Six months having passed since the signing of the contract, he was wondering whether the decision can be changed or penalties levied for not meeting commitments, the contract protected the vendor in the transition phase. The presales team which was a permanent fixture in the office earlier was now trying to avoid coming to the meeting very well knowing the situation not being favourable.

Over a year of courting, discussions, negotiations and going over a long legal contract, it was a sigh of relief for the vendor and the enterprise when they did sign off the deal. As all strategic sourcing deals go, there was an expectation of maintaining business as usual with improved efficiency and lower cost; then move on to transformation driven by tools and technology which was the investment promised by the vendor. Over the decade of relationship, it was expected that there would be efficiency of scale, savings on the table, and investments in innovation with global benchmarking.

The big team arrived soon enough to transition services and fit or change existing processes into their framework, which they managed with some difficulty. Within a few months unable to scale up to diverse needs across locations, changes in the management team were enforced and that brought welcome improvements though not commensurate to expectations. The first big review meeting was a shocker for everyone. Some milestones achieved, lot of work in progress way past due dates, a few endpoints seemed a long way off; the CIO who was well known for his patient handling of crisis lost his cool.

To begin with interpretations of clauses done by the execution team were in conflict to understanding while drafting them into the contract. Stretched timelines became super-stretched timelines; senior consultants attempted to provide solace with no Plan B in case success eluded the team. The High tension meeting resulted in change of pace and “compromise” in favour of the customer. With new timelines cast, the pressure was on everyone; avoidable pressure as agreed by everyone present.

Why does delivery rarely match presales promises or timelines ? Are sales teams preconditioned to sell unreasonable timelines or commitments to bag orders from unsuspecting and gullible customers ? No, I am not calling the CIO names, but admiring the ability of the sales teams to sometimes get away with untenable contracts. I am also bewildered at the ability of delivery teams to squarely make a hash of even normal service delivery expectations. What causes history to repeat itself in almost every engagement ?

In this case, the CIO summed the case up with one phrase “lack of consistent communication across the ecosystem”. The presales team did not spend adequate time taking the transition team through each and every clause and expectation. The delivery team found significant differences on the ground to their assumptions which required change. The project lead busy fighting fire every day forgot that consistent communication is essential to setting expectation, managing perception and finally success.

I believe that it does not always matter what you do; what matters is how you communicate what you have done or planning to do. No news is not good news when everyone is expecting some change. Otherwise strategic sourcing will become a big tactical pain where real life experience defines success.

Is Outsourcing cheaper in the long run ?

Once upon a time many moons back, the IT industry discovered multi-shore sourcing, I use this term to encompass all types of (out)sourcing initiatives, and with that came long-term contracts, 10 years was normal, 5 was seen as short-term. A lot of these that termed themselves as Strategic Sourcing also built in innovation, new technology, business process linked contracts with broad intent on changing market and business dynamics.

The fever spread across the globe and no markets or sectors remained untouched. Big or small, almost every company was expected to embrace this new wave. The euphoria within the enterprise as well as IT companies was such that companies that did not enter into such arrangements were seen as stakeholder unfriendly or just plain dumb for not acquiring the obvious value.

As the years passed by many companies reported rumblings of discomfort and missed expectations. Analysis appeared to indicate specific issues with companies and individuals for not putting in their best effort, safeguarding the model with zeal lest the industry collapse with an unsustainable framework if there were indeed cracks in the carefully crafted Contracts, Service Level Agreements and Reference Architecture that represented the blueprint for the future. Business, profitability, political and other pressures forced reviews and scale down.

Prudent and rigorous reviews also exposed that long-term contracts had advantages of consistency and predictability, but lost on taking advantage of swings in the IT industry as well as did not bring in the level of efficiency or capitalization of quick market trends requiring agility that was possible with short-term relationships or with the ability to review and recast the terms of engagement say every alternate year. This was reflected in the drying up of the decade long deeds and most engagements focused on a 3-5 year term. Maybe “familiarity breeds complacence” also took root with in most cases both parties working hard to keep the marriage going.

There is no implication that these did not deliver to promise; some of them did and continue to do extremely well; some required significant investments in governance. Leaving aside labour arbitrage, the value captured did stretch the boundaries of discussion and measurement models.

New models now seem to be emerging with focus on outcome based payment schedules, collaborative investments in new technology exploration, but the basic framework has survived the troughs and waves of the economy and resultant impact. The challenge of growth (manpower retention) has mutated the needs and solutions into new forms with service providers hungry to get back to growth of the past, but discarding the learning of unsustainable linear growth assumptions.

Outsourced contracts or strategic sourcing contracts will thus become expensive and non-tenable with linear growth not aligned to market/business or the (in)ability to manage sudden shocks or black swans that keen coming back to surprise us. Periodic review of terms of engagement even if they imply disruption is the need of the hour; the IT industry however is not very excited.