Tom Monahan, the CEO of CEB, a multi-national best practice insight and technology company recently wrote an article in Fortune Magazine entitled “Revving Up Your Corporate RPMs” that notes that, despite advances in technology, decision-making and change in the business world has actually slowed down in the last decade. His article offers these statistics:
- Hiring a new employee now takes 63 days on average - up from 42 in 2010;
- The average time to deliver an office IT project increased by more than a month from 2010 to 2015. It’s now over 10 months from start to delivery; and
- The time required for one company to sell something to another has risen 22% in the past five years.
Mr Monahan suggests the reasons for this increase in corporate decision-making include the following:
- Companies now are larger;
- Post global financial crisis there has been a growth in control and risk management functions - compliance, privacy, data protection and enterprise risk management; and
- Misuse of technology such as email has led to more people being required to approve decisions as it has meant sending details to more people has become more “efficient”.
He believes, “the answer is not for executives to resist collaboration and make more unilateral decisions. But collaboration and risk management don’t have to come at the expense of speed". The process for agreement needs to be thought about laterally and optimized so that not only are good decisions made but the time making these decisions is as swiftly as possible.
Mr Monahan gives examples of ways two companies have reduced decision-making times by thinking laterally:
- The hiring process of a Western US hospital reduced its decision-making time by limiting the number of in-person interviews the company had for each hire; and
- An open-source software company reduced internal processes by having it’s IT department simplify their language by being less technical when discussing projects.
Many companies are fast-moving to machine learning technologies that use transactional and behavioral data from past negotiations to accelerate decision-making and improve new business outcomes. What’s revolutionary about these predictive agreement systems is that they allow all employees to tap into the collective intelligence of their organizations, automatically spreading best-practices and minimizing poor decisions made through guesswork.
For example, imagine a recently hired employee who needs to review and negotiate a contract. Rather than just depending on her current knowledge of how the company does business, or wasting time asking others for their opinion, she can now see in real-time how good or bad the terms being proposed are, based on what the system has “learned” from previous deals and what everyone in the organization has done in the past (including those who have already left the company or moved on to new roles). While this doesn’t necessarily guarantee success, it certainly reduces the learning curve and optimizes resources.
When you look for an effective deal-making software, also known as contract management software or contract lifecycle management software, make sure you look for systems that can do the following:
- Dynamically control the contracting workflow by guiding uses in the process e.g. notifying them when they are required to review or approve something;
- Capturing all critical communications in one secure location and providing for fast retrieval and decipherability of past communications in case any discussion needs to be re-examined;
- Captures behavioral and transactional data about the negotiation process and uses machine learning techniques so it may be leveraged to make better and more efficient decisions for future use.