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My interest in this topic results from a strong recent growth in demand for commercial awareness training, from both business and government. There appear to be two distinct drivers behind this demand, one being efficiency and the other being improved management of specific risks. Both appear to be a direct consequence of ever-increasing business complexity.

 

The way that growing complexity manifests itself depends on the way a business is organized. For those with a strong control culture, it results in increased pressure on review and approval functions such as legal, contract and commercial management. They respond either by adding resources, or they become a bottleneck in decision-making (or in some cases, both).

 

For those with a more de-centralized approach, where central management controls are weaker, the consequences of complexity may become visible only when things start to go wrong – for example, when contracts are not performing or regulations are breached. In these cases, management seeks rapid answers to prevent further damage.

 

In both cases, one element of the solution has to be to increase understanding of contract and commercial issues at the front-end of the business. Whether the goal is increased empowerment or increased control, they can be achieved only by raising the understanding of groups such as sales, project management or procurement and alerting them to the potential for danger.

 

Another interesting observation is that in some cases, the request for help comes from the Legal or Commercial group itself, while in other cases it comes from senior management. When driven by the former, it represents a pro-active group seeking to raise its contribution to the business; when driven by the latter, we typically find the next step is more fundamental re-engineering of the contracting process – and heads soon start to roll.

 

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