The World Commerce and Contracting Association's (WorldCC) APAC Summit in Melbourne this week focused on "from operational overload to strategic value" and was well attended by both public and private organisations from across the region, including NSW Treasury.
Our key takeaways from the conference were:
- campaign, not an event - contracts and commercial professionals (including legal) drive strategic value for organisations and deliver outcomes in a world connected by contracts. As professionals, we can decide how we use our skills and experience in a positive or a negative way and we know what works and what doesn't in delivering effective contracts. We can also choose to attend a conference once a year or choose to be proactive and seek to influence every day
- operational overload - commercial and procurement teams have faced challenges over recent years that has tested their resilience and creativity as individuals and teams. Simultaneously, it has shone a light on their critical importance to business outcomes
- strategic value - the meaning of strategic value varies amongst people. ChatGPT had a definition. At its heart, supporting a business to deliver strategic value involves understanding the organisation's purpose, mission and goals, collaborating across disciplines and with internal clients and bringing the benefit of your experience and knowledge to the fore to shape better outcomes. To deliver strategic value, commercial and legal professionals need to value their knowledge and experience, be visible, build trust and relationships and regularly reinforce their credentials
- psychological safety - empowering people to manage contracts and relationships effectively is critical to contracting success. The concept of psychological safety goes beyond the practical tools of empowerment like delegation and positional responsibility - it looks at how safe and supported decision-makers feel to solve problems creatively. Safety in decision-making means knowing the organisation will support you regardless of how the decision plays out
- generative AI and its impact - from workplace displacement to opportunities unlocked for faster data analysis and new insights, AI is here to bring change. A "big debate" on the motion "AI powered negotiation will be more effective than human powered negotiation" secured a strong vote in favour of "human powered negotiation". However, it was clear from both sides of the debate that AI will be a tool that delivers benefits for human negotiators and decision-makers. As the affirmative team put it: "AI is an 'and' not an 'or'".
In their research experiment, WorldCC brought together negotiators from across their community to negotiate on a set scenario, with a control team conducting a traditional human negotiation, and others using AI in different ways. We heard from participants in the experiment about what the use of AI meant for them in terms of planning for the negotiation and the questions they chose to ask. The AI tool came up with potential solutions the human negotiators hadn't thought of themselves, so it certainly opened up their thinking.
The affirmative team in the "big debate" raised the spectre of a negotiation conducted by two never-sleeping robots programmed to "win at all costs". In contrast, it turns out from the WorldCC research that ChatGPT has a distinct bias against adversarial approaches.
- technology tools - as ever, the technology supporting contracts and commercial management continues to become more effective and sophisticated. After looking closely at these tools and hearing case studies of their implementation, we were reminded that these tools are readily available to us to make valuable changes in efficiency and productivity without significant cost.
It was pleasing to see more enterprises tackling the challenge of creating a reliable, central repository of contracts. Aside from all its legal uses, centralising contract data creates a rich pool of information and knowledge about the enterprise, its operations, its relations with suppliers and where it can improve
- reducing "the risk of uncertainty" in contracting - collaboration, relational contracting, multi-party RASCI matrices and building contracts to align with the motivational drivers of contract participants all contribute to reducing the risk of uncertainty
- lifecycle and circular economy - participants talked about the challenges of asset disposal and the need for changes in the way we approach procurement. We need to go beyond whole of life costing and think more broadly about what actually happens to components at the end of their lifecycle. Can we repurpose them? Where do they fit in the circular economy?
- regulatory burden - it is clear that enterprises are having to adapt to increasing regulatory burdens and the question of whether the regulatory focus on reporting and documentation really delivers the outcomes and accountability being sought was raised. We heard examples from the energy sector where regulatory compliance requirements go right down to the smallest component
- supply chain challenges - supply chain challenges continue to be critical. We heard about the government's Buy Australia initiative, which is looking at ways of increasing local manufacture and broadening participation opportunities for SMEs. This was replicated across the board, with other buyer entities sharing examples of their own challenges and how they have had to innovate and think more broadly to solve supply challenges in their industries. One Chief Procurement Officer observed there is no longer "just in time" procurement. Another lamented rigid specification that limits the options available for purchase. Others shared their experiences of working in multi-participant projects where mechanisms to support collaboration and openly sharing risk and reward drove collective effort towards agreed outcomes
- capability challenges - a commercial manager wears mulitple hats and is expected to be across all aspects of the business. Constant change and the ability to adapt and learn new skills are critical to the capability of the profession
- innovation and curiosity - in their closing remarks, Tim Cummins and Sally Guyer (WorldCC President and CEO respectively), reminded us to innovate, imitate and exercise our curiosity super-power. To "become a forethought, not an afterthought" in the contributions we bring.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
