Growing up, we are often taught that cause and
effect are somewhat standard and predictable. If you eat your vegetables, you’ll
grow to be tall. If you study hard, you’ll get good grades. If you are kind to
a friend, they will be kind in return. As we get older, the lessons change, but
hold a similar theme. If you work harder than others, you’ll be promoted first.
If you spend time with your kids, they’ll be well behaved. If you break the law,
you’ll be punished. The contracts Law of the Conservation of Energy summarizes
this idea as “the effort you put in will dictate the result you get out” (p.
71). Take small actions, and results will be small in return. Take large
actions, and the impacts will be much larger. Lorenz’s Strange Attractor, or
Butterfly Effect, shifts this idea to a state where small actions could
have huge impact, and results are often produced in unpredictable and unconventional
ways.
For humans, who are “sometimes too good” at
linking cause and effect, the butterfly effect can be a difficult concept to
grasp, especially for those who have not thought about how this has played out
in their own life and/or career (Sullivan, 2011). I have seen real evidence of
the butterfly effect at my organization, starting with two small changes that yielded
big results.
Small Changes to the Contract Organization Yielding
Large Results
Creating a “Selling Team”
Many on the periphery would argue that the
sales person sells the product and the contract person steps in to finish the
paperwork. This perception lead to a big change within my organization: the
creation of something called a “selling team.” The selling team is comprised of
three key individuals who are critical to completing the sale of the product. First,
is the sales person, who is responsible for acquiring the customer, building
the relationship, and introducing key stakeholders to one another. Second, is
the marketing person, who is responsible for understanding the customer’s
needs and explaining how the product can address such needs. Finally is the
contracts person, who is responsible for listening to the conversations going
on in their periphery and balancing the needs of the customer with the level of
risk the company is willing to take. The contracts function is critical to the risk/reward
analysis of every deal. Through this analysis, the selling team is able to
strip costly risk items out of the agreements, resulting in the ability for the
organization to reduce its price and increase its chances of capturing the
sale.
Before the creation of the selling team, each
of the three functions mentioned above acted consecutively instead of in
parallel. The sales person did his or her part and then handed the customer off
to the marketing person. The marketing person would adequately explain the
project and then hand the customer off to the contracts person. The contracts
person would capture the terms of the agreement and then the deal would be
done. The issue with this approach is that: (1) the process took way too long,
averaging around 12 to 18 months for a single sale, (2) the terms of the deal
were difficult to capture because the contracts person was not brought into conversations
until they were nearly complete, and (3) the relationships between each function
were strained because the individuals never worked on tasks together and consequently
saw each other as a roadblock. Since the creation of a selling team, the
average time to close a deal has decreased dramatically, down to 3-6 months. This
small change of creating a team that traveled throughout the life of the selling process together
resulted in significant improvements to the sales process and therefore to the
bottom line.
Diversification and New Functional Alignment
Another small change made within my
organization that yielded big results was the decision to realign the contracts
function to sales leadership instead of the legal department. Traditionally,
contract negotiators were seen as a legal branch of the company. This perception
made sense because many of the terms and conditions within the contract had a
legal reason for being there. Consider, for example, indemnification, governing
law, arbitration, liability (etc.); each of these are terms that are
traditionally negotiated between the legal teams at each company. However, if
you step back and look at a sales contract in its entirety, the legal terms
only make up about 10-15% of the total contract document. The rest of the contract
contains business terms like payment, delivery, price, and statement of work.
As a result of having the contract teams
aligned to the legal function, all of the employees responsible for contracting
for the sale of the product were lawyers. This meant that highly trained
lawyers were negotiating non-legal terms and conditions. Many argued that this
resulted in contractual agreements that were overburdened with risk terms,
which customers viewed as costs to their own bottom line. So, close to seven
years ago, the organization changed one thing – it realigned the contracts
organization to a sales leader instead of to a legal one. This small change
resulted in a complete revitalization of the contract negotiation function,
which included a deliberate effort to remove most of the lawyers and replace
them with people who understood the business terms. Today, the contracts team
includes engineers, tax specialists, finance majors, insurance brokers, and expert
writers/drafters. The legal function is no longer marketed as the negotiation
specialists, but rather a resource for
the negotiation specialists. The effects of this change continue to be felt by the entire company, as the selling process is more streamlined than ever.
Implications of Complexity Theory and the
Potential to Drive Improvements
The implications of the complexity theory are
fairly significant for my organization because it tends to be slow to react to
change and very hesitant to put the system ahead of the individual components.
In other words, the groups within my organization tend to work in silos. Each
group has its own piece of the pie that it must contribute, but it rarely looks
outside of its own piece to see how that piece contributes to the overall pie.
Gleeson (2013) explained that working in silos
is not instinctual, rather it is a result of poor leadership. This is a serious
issue in my company because many of the teams that must contribute to our
organizational pie are working in an atmosphere where competition, not
collaboration, is encouraged. Many of the leaders have put a value on proving
other teams to be wrong, which results in a system that experiences significant
dysfunction. The concept of complexity science will be difficult for my organization
to grasp because it requires each team to become more invested in the other
pieces of the pie. If the organization as a complete system operates in a
dysfunctional manner, then leaders must fight the instinct to try and separate
the functions in an attempt to identify the “weak” link. Rather, leaders at my
company will have to look at the way all of the functions interact with
each other in their own unique and complex way.
One of the most common
phrases I’ve heard in my team, including from the leadership, is “that’s not part
of my job - the [fill in the blank] group is supposed to do that.” So how can
my organization embrace the concepts of complexity theory and become stronger
as a unified system? To start, leadership must start encouraging collaboration
and cross training. Rather than worry that the success of one group will make
the other look less effective, employees must learn to encourage and support
each other on a consistent basis. According to a study published by Toren
(2015), “employee productivity and satisfaction increases by 15 percent and 13
percent respectively when collaboration is formalized as a cornerstone,” so I
would argue that embracing complexity science concepts may lead to happier employees
and a more profitable organization in the long run.
References
Gleeson, B. (2013). The
Silo Mentality: How To Break Down The Barriers. Forbes. Retrieved from https://www.forbes.com/sites/brentgleeson/2013/10/02/the-silo-mentality-how-to-break-down-the-barriers/#61d418ad8c7e
Obolensky, N. (2014). Complex Adaptive Leadership: Embracing
Paradox and Uncertainty (2nd ed.). New York, New York: Gower
Publishing.
Sullivan, T. (2011). Embracing
Complexity. Harvard Business Review, 89(9), 89-92.
Toren, M. (2015). 4
Warning Signs Your Team Is Working in Silos, and How to Destroy Them.
Entrepreneurship. Retrieved from https://www.entrepreneur.com/article/250477
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