(b) Script the critical moves (clarity resolves resistance) 1/2
Contract automation requires a leader to be precise about the critical steps of implementation. Why? Well, clarity resolves resistance. Ambiguity or uncertainty exhausts a lawyer because those are two things that appeal to their driver, not their elephant. Solving ambiguity or uncertainty requires thinking, choices and decisions, but not an acting on their intuition. Since riders are very logical, they can be swayed by many options and they need a clear goal. This is called decision paralysis. Research shows that when a person needs to decide about something, too many choices hinder and lead to not deciding at all.
Successful change requires translating goals into concrete, specific behaviours or actions: instructions about the new way of working must be crystal clear. It all boils down to being specific. (Clarity dissolves resistance.) Drivers hate to make a choice (at the exclusion of other options) and any ambiguity makes everything worse. Scripting the critical moves allows the rider to decide and lead the elephant in the right direction.
Be clear about how people should act. This is one of the hardest – and most important – parts of the framework. As a leader, you’re going to be tempted to tell your people things like: “be more innovative!” “customers first!” But you must not stop there. Look for the behaviours and see how those may need to change. Scripting the critical moves may include that your legal team members tells their (internal) client – backed by you – that for the benefit of the near future performance, today’s priority is to get contracts automated.
ASML created momentum and succeeded. When ASML started with contract automation in 2010, they had not one proper model contract. Of course, they did have a number of ‘templates’, which worked fairly well, but they basically needed a complete review. Their head of legal realised that while their model contracts were not top-notch, their first priority was to bring all (or at least a considerable number of) suppliers under a formal contract. As ASML used to have a supply chain of over 5,000 suppliers, they could not rely on the assumption that all suppliers were delivering under ASML’s general terms and conditions of purchase. With only a fraction being under a formal contract (in 2009), the legal department better focused on speed than on quality.
What happened? The automation of all procurement contracts caught the attention of the procurement department (not surprising: contract automation was the result of a comprehensive review of their procurement process and the legal department had organised roadshows to showcase and discuss their automated contracts). The first Q&A question of ASML’s automated Long Term Agreement was “what is the buying model?” with only ASML’s four procurement models as the available options. What’s special here? – This was a legal department that stood next to the business. The response from ‘procurement’ was highly supportive: it triggered a re-review of the Weagree template, this time with procurement participating closely. The results of the second review came to the attention of ASML’s CFO who then activated a larger group. Within nine months after kick-off of using contract automation, the core supply chain contract had been turned around three times.
Being undone from legalese and contractual noise (i.e. irrelevant or inadequate clauses that would otherwise be left in the first-draft ‘just in case’), negotiations of ASML’s new Long-term supply agreements took much less time than the years preceding contract automation: the transaction cycle reduced from an intense two years to only a few months with little back-and-forth drafting. An explosion of contracts generated with the Weagree Wizard, negotiated and signed was the result. Moreover, as contract automation had caught momentum, the legal department also upgraded and finetuned all their procurement contracts in collaboration with their procurement managers.