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Commercial Excellence - and how it can keep you in business

Published: 31 Mar 2015 Average Rating: unrated Print
 
This article appeared in Contracting Excellence magazine on 31 Mar 2015 view edition
 

Author: Tim Cummins

The truth about risk is you either manage it or it puts you out of business. Although no one would argue with this, what to do about it is where opinions start to divide. Some see risk as a hot potato to be passed on as swiftly as possible to the other guy. Within organizations risk may be seen as something best left to the professionals. Others see risk and its management as a shared condition of doing business.

How much better would it be if the “in it together” concept could reach beyond just risk and include all the realities of trading relationships - the smooth as well as the rough?

We have seen that parties that construct and manage their trading relationships in a harmonious way, aligning their contracts to create targeted value, not only improve performance but also bottom line results. In challenging sectors where businesses struggle to manage trading relationships that are increasingly diverse, complex and volatile, and where such a bottom-up approach may not be practical or feasible, the relational approach is becoming a vital lifeline.

It follows that being able to recognise the advantages of shared determination to improve the performance and the bottom line – and achieving it – is a strong indication of organizational capacity to achieve a culture of commercial excellence2 across all its dimensions, with all the other benefits it brings.

The success of this overall approach and the central role of contracting within it, may also explain the growing “buzz” around the commercial side of our profession and a new proactive take on the concept of commercial excellence. This commercially proactive approach is where our profession excels, actively finding solutions to risk and supporting dynamic decision-making at the front-end of the business.

Though it is not new, it is a trend that is rapidly gaining ground, with a commercially focused approach reflected in organizational design, for example, within the pharmaceutical industry where we are seeing the emergence of “commercial excellence” executives and functions.

Beyond doubt is that change is occurring at an ever-faster pace. Rather than change being a problem, it allows us to re-think our role and purpose, together with the ways we perform; for contracting this means thinking less about control and more about enabling, with greater awareness of the commercial implications.

We have said that proactivity, commercial judgment and the ability to share information and knowledge are key skills for professionals working in our field today. But there is still a very wide spectrum of difference in perception of the role and its purpose – and the debate about the difference between a contract manager and a commercial manager continues!

END NOTES

  1. See my Commitment Matters blog (Increased risks bring unexpected consequences, Feb 4, 2015)
  2. IACCM's leadership team has designated 2015 as the year for Commercial Excellence. Tim discusses what exactly is meant by commercial excellence in this webinar.  Click on Contract and Commercial Management - what lies ahead?  ATE by Tim Jan 2015