Today Trakti meets Adrian Furner, Founder & Managing Director at Kommercialize, to talk about risk as an opportunity for innovation.
We have previously met Adrian Furner, on the 4th of October, during his valuable contribution as a guest to our recent webinar “Contract Automation, Benefits and Contexts.”
Watch the integral version here: What is Contract Automation, Benefits and Contexts.
Adrian Furner has over 30 years of experience in the design, implementation, and delivery of complex commercial transactions through novel business models.
A super master contracting expert, and member of the IET (Institution of Engineering and Technology), Adrian is a former board member and an honorary fellow of ‘World Commerce & Contracting’ where he is also an Executive in Residence. He is also co-founder of Open Fabric for Trusted Global Trade.
Today his practice is to advise professional firms on how to boost up their commercial competencies as well as Contributor, Speaker and Author of several books on commercial agility, collaboration and commercial innovation.
Adrian is a leading light for innovating contracting in companies of all sizes!
We started our interview with one reflection:
“In today’s contracting processes, quite often two key concepts emerge: needing AI and trusting AI.“
How can risks be seen as new opportunities for innovation?
It’s an interesting challenge. The best definition I came across for innovation, the simplest one, is only 5 words long and it’s: “innovation is something different that has an impact” and came from Scott Anthony. The reason I like it is that is simple, and it is memorable. There are two parts to it.
- The first one it’s about innovation, is about something different. It doesn’t have to be something new, it can be something we already know but we apply it in a different way, or we use it in a different way. Equally, it could be something that’s totally new, applied to something we already do, so that those two words ‘something different’ are really important in remember.
- The second part of it is ‘that has impact’. It is great to invent something or come up with a new idea but unless it has impact then it really isn’t innovation, is not going to drive what we need.
So, when we combine those two parts that phrase ‘something different that has impact’, it really focuses on what innovation is and why is it important for us.
And quite often when you look at that phrase you can go back and you can look back at things that we thought were risks but actually their potential areas for innovation, but
💡 if we look at things through the frame of risk only, will often miss the opportunities and the innovation the others will possibly see!💡
So, we’ve got to change our mindset a little and turn things that we perhaps would traditionally see as risky. If we open our minds to them being possible innovations, then we can see new opportunities.
You mentioned that at the core is the ability to see opportunities, when others see uncertainty and complexity.
What do you mean with ‘have an eye on the future’?
It’s an interesting challenge, it comes back from a mindset of seeing opportunities for innovation rather than just risk. Quite often we are driven by short-term operational requirements, we are driven by achieving something, doing something in an efficient way to deliver what we need to deliver, and we look downwards on that challenge and we focus inwards on it.
Having ‘one eye on the future’ is about doing that but giving yourselves time to pause and look upwards and outwards. This is important because quite often when we look upwards and outwards we find connections, we see new inspirations that can challenge us and give us opportunities to do the short-term delivery better.
Real innovators achieve both of those they deliver on what they have to deliver today but they also look upwards and outwards to find new opportunities.
We are in times of what we call certain uncertainty.
Uncertainty is not going to go away. It was here before the pandemic and it will continue to be with us. Therefore, we have to become better as entrepreneurs and business people about delivering what we deliver today, but to see opportunities in the uncertainty.
If we go back to the pandemic, and we think about some of the sectors that were mostly impacted, hospitality, the restaurants sector.
Those who really survived well. Were able to pivot very quickly.
They could move from having a sit-down restaurant service, being able to leverage their staff, their knowledge, their capabilities, to deliver, to provide take away or delivery services of restaurant quality food. So, their ability to pivot has found opportunities in uncertainty.
That is a very simple example of something I have seen recently, and those that can pivot quickly and adapt will probably survive and thrive best.
How business can adopt a ‘systematic’ approach to innovation?
It is a real challenge because people think of innovation as blue sky, being creative, the opposite of controlled. But having worked in innovation, being responsible for innovation programs in a large corporate environment, one thing we realised is you need to be creative, collaborative but within a systematic approach to give you a dynamic yet disciplined approach to innovation.
In one of the books, I co-authored, ‘The Professional Services Leadership Handbook’, which is about how you can better lead in a professional services firm, which could be an accountancy firm, a law firm or a consulting engineering firm, we came up with a life cycle that gives a framework for being innovative. There is a transactional approach where you go through, trying to create more systematic way of coming up with new ideas. That’s a very divergent process, we need to come up with as many new ideas, new concepts, new thoughts. Remember that definition of innovation, you go through this ideation phase you capture as many ideas as you can, things that are different.
Then you have to try and converge, you have to try prioritise them. Work out which ones will have impact or which ones will have the most impact, see you’re bringing them back down, you’re trying to converge on which are the best.
💡 Once you’ve got perhaps a shortlist or you’ve identified the best solution, it is about prototyping, it is about testing whether something different does have an impact. 💡
It’s the same in the commercial space as in the product space. We wouldn’t buy a smartphone that hadn’t been prototyped. In the commercial space we quite often don’t think about prototyping the contracts, the governance models that we want to put in place, so there’s an opportunity to prototype.
We’ve got to go out and test it. We’ve got to test it with customers, with users, with our peers, our suppliers to really test whether that prototype works and if it does then we should be looking at scaling it.
You can see there is a consistent approach through that process of innovation and around all of that we need to put a framework of focusing our innovation, so we need an innovation strategy to work out, how is what we are going to develop, how we are going to drive our business, our opportunities, our organisation forward.
So, we need this systematic framework to operate within, if we’re going to be successful at innovation and what you find is most of the large you know, big companies, big organisations, small organisations that we would see as innovative, have some sort of framework within which they create innovation but in a very systematic way.
As a fellow of the World Commerce & Contracting organisation, can you explain what Friction points are in the contracting process? In which way it can be useful to know them?
Friction points is an interesting concept. Quite often organisations want to go through the contracting lifecycle as quickly as possible. When we talk about the contracting lifecycle we’re not talking about the contract itself, we’re talking about the business process of creating value from a trading relationship, so everything from coming up with the idea of what we are looking to purchase or supply right through to making the agreement and then through to delivery and exit at the end. It’s about how we create value for our organisations throughout that process, the contract is just one part of it. From research at World Commerce and Contracting, we identify the average contracting lifecycle end-to-end has in excess of 40 friction points.
Friction points are activities that can either speed up or slow down that overall contracting life cycle.
They can be individual activities or they can be groups of activities that come together to speed up or slow down the process. They can both positive and negative, they can either speed up or slow down the process.
If we take World Commerce and Contracting value leakage research, it identifies that the average organisation leaks 9.2% of value from poor contract management, and it identifies 10 of the top causes of that value leakage.
- The biggest cause of value’s leakage is lack of clarity of scope and goals, so we don’t spend enough time to identify what we’re trying to buy and articulating it. If we don’t do that, then the supplier is going to struggle to supply what we’re looking for and what we find is that once the agreement is signed and we get into delivery, there is more change management which causes leakage, it costs us more because we are changing things later in the process.
- So actually, defining the scope and goals is a friction point but it’s a friction point that if we spend too little time and we try to go through it too quickly, then we lose value. Whereas if we spend more time there or optimise the time you spend there, then it will help us add value to the process.
- However, if we think now about the negotiation process. Quite often, we see organisations going head-to-head and negotiating against each other, creating win-lose positions in the negotiation. Spending too much time in that space is a negative friction point. We are extending the contracting life cycle without adding any more value.
- So, the real challenge with friction points is firstly identifying which of the 40+ friction points are in your contract life cycle and then thinking about how we are expending the effort and resource we have. Is in the right places and on the right friction points? How do we optimise where we spend our time to maximise the value and reduce the value leakage through the contract in life cycle?
In contract automation processes, what is the role and impact of platforms? This is an interesting one. It is very much in line with the friction point analysis and the friction point research. As part of the Open Trust Fabric programme, we looked at the role of platforms. They can be digital platforms, like when you are booking accommodation, you are booking a flight, or you’re buying something online, alternatively they can be analogue platforms, such as framework agreements, or master services agreements. While these are not digital, they are still platforms for trying to create better business performance.
And what we found in simplistic terms, the role of a platform in the pre signature phase of the contracting life cycle, everything up to signing an agreement or doing a one click purchase, is about velocity. About trying to get to agreement in an optimum timeframe.
Once you sign the agreement or you’ve clicked to agree to purchase something, if it’s an online platform, the role of a platform is to enhance the efficiency of delivering what has been agreed.
- So pre signature it’s about velocity to agreement and post signature is about efficiency of delivering what has been agreed.
Thanks to Adrian Furner for his contribution!
