Are your Contracts Vulnerable and what to do about it.

How vulnerable are your contracts to failure? In the recent series of posts on contract retention, I showed you how to undertake a contract vulnerability analysis. In the post 6 steps to Improving Contract Retention I made reference to the STaRS Model from the book The First 90 Days by Michael Watkins. Using this model can provide you with an effective tool that will allow you to understand how vulnerable your contracts are, and what you need to do as a leader to grow these contracts or to re-energise them.

The book was originally written to assist leaders to make successful transitions into new roles. Like all good models, STaRS is a simple concept but deep in meaning and application.

There are effectively 3 layers to the model and I have therefore chosen to split this into a series of three consecutive posts. Which will cover

• The 4 stages of contract vulnerability
• The 3 strategies to Sustaining Success
• Matching the required leadership skills to contract vulnerability

This series of posts will set out the situation that you are likely to encounter when reviewing a contract and provide you with a means of understanding what is happening and what action you need to take to remediate the situation.

Introduction

I first read the book at the time that I was moving from one job to another more senior role in another company. I wanted to use the book to help me set out a strategy for the first 90 days to understand the new business I was joining and my role in it. Michael Watkins’ premise in the book is that Executives in transition must gain a quick and deep understanding of their new organisation and adapt to that reality within the first 90 days.

Whilst there is a lot more to the book than just the STaRS model it became apparent to me that the model was applicable to Contract management. After all the business of a Service provider is a combination of a number of small businesses that we call contracts. Each contract must be run as a separate and distinct business and as such the premise of the model hold true.

The STaRS model lends itself to reviewing each individual contract as a business at different stages of development. No two contracts are the same and no one size fits all approach. So in order to avoid the problem Mark Twain paraphrased “if the only tool in your box is a hammer then every problem will look like a nail”. We need a framework for assessing the contract, which will allow you to tailor your strategy accordingly.

It is important to understand that long contracts tend to move along a predictable continuum, rarely are there catastrophic failures, which take a contract from a stable situation to termination. Rather there is a foreseeable transition process through which contracts pass on their way up or down the continuum towards success or failure. It is at those points that your strategy determines the fate of the contract.

Using the STaRS model you’ll be able to recognise the clear differences between the different situations and the strategy and skills that are required to bring about positive change.

The first thing to note from the model is that there are fundamentally five states of a contract including Shutdown. The termination of a contract needs no introduction or explanation and in most cases is a stage that we want to avoid. There may be a situation where you may want to exit from a contract but for the purposes of this model we will not dwell on this here

Firstly the model does three things it provides a largely predictable path, which all contracts will travel at some time in their life-cycle. Secondly, the model neatly categorizes the different stages of a contract into 4 clearly distinct phases, all of which have individual characteristics. Thirdly and possibly most importantly the model sets out 3 cycles, which describe the journey between the stages depending on whether you are succeeding or failing.

In all situations one wants to bring back the contract to the Sustaining Successplatform for it is only from this stage that the contract can grow.

The 4 STaRS stages are follows

  • Startup
  • Turnaround
  • accelerated growth (not really a stage and will be covered in the next post)
  • Realignment
  • Sustaining Success

1. Start-up

In the contract Start-up phase, the prevailing mood is one of excitement and enthusiasm as well as a degree of confusion. More often than not contracts are started following an accelerated timetable of mobilisation. This is a period of change for all parties, both our staff as well as the Client.

The leader’s job is to channel the energy into productive directions and to assemble all the capabilities resources and technology to get the contract off the ground.

Challenges

The challenge is to build and implement the contract including the operating strategy and getting systems up and running from scratch. You will be responsible for recruiting and welding together a high performing team, whilst having only limited time and resources.

This will be a period where personalities are sizing up each other and all of this has to be accomplished without affecting the clients business and at the very least maintaining the service standards that were in place prior to your contract. The signature on the contract is still wet and you are still on probation. Failure to adopt and adapt at the Start-up phase will lead to termination before you have had a chance to progress.

Opportunities

Whilst you can get bogged down in the changes there are a number of opportunities available to you during this period. You’re in on the ground floor, you’re a fresh broom with the ability to sweep clean. You have the chance to impress and get things right from the beginning.

If you have managed to undertake your change management right your new team members will be energized with the possibilities on the contract. You will have a team of transferring employees who are looking forward to the challenge of being at the centre of your companies focus. This is a world of endless possibilities and there should be no rigid preconceptions of what is achievable.

2. Turnaround

In a Turnaround situation, your job is to save a contract from the next step which is termination. It is highly likely that the contract which is widely acknowledged to be in trouble. In an honest appraisal of the events, the group of people on the ground are likely not only to be aware of the situation, but they have known they are in trouble for some time.

We may be dealing with a team that has been like a rabbit in the headlights, paralysed, directionless and leaderless. Alternately there may even have been willful neglect, whereby everyone knew what was happening but nobody actually grabbed the bull by the horns and did anything to remediate the situation. In either situation, there were road signs along the way have been ignored and you will be dealing with a group of people who are close to despair.

Challenges

The challenges will be to immediately re-energise a demoralized group of employees and crucial stakeholders. You’ll be called upon to make tough and effective decisions under time pressure.

They’re looking for a leader to take charge and provide light at the end of the tunnel. You will need to undertake resource intensive reconstruction work and need to make tough calls early.

In situations such as these, it is important that the leader goes deep enough with painful cuts and difficult personnel choices. It is crucial to the ongoing morale of the team that is left behind, that you cut once only and so you need to cut deep. You do not want to be in a situation where six months down the line you have to repeat the process. This leaves the team totally demoralized and not knowing whether those left behind are safe.

Opportunities

Whilst this is an unpleasant exercise to have to go through with what is necessary to survive.

In the case of willful neglect, it is likely that everyone recognises that change is necessary but nobody has had the courage to execute. In the case where the team is hapless and clueless, your job as the leader is to communicate the need for change. Whilst there will be casualties, if you have done this with empathy everyone will recognise that change is necessary and that those left behind will feel safe and empowered to deliver.

As a leader, your job is to ensure that the affected constituencies are offered significant external support. Not only is this the right thing to do it is important for the other team members that are left behind see you that they will not be left to fend for themselves.

3. Realignment

Where the vulnerability process identifies a contract that requires Realignment, this is akin to a minor procedure as opposed to the major transplant surgery required in a Turnaround situation.

As the model indicates, contracts that require the deep and painful process required by a Turnaround situation have almost certainly gone through the Realignment stage without anyone recognising the need for minor corrective action.

Challenges

In a Realignment situation, your focus as the leader should be on re-energising a previously successful initiative that has drifted into trouble and now faces problems.

Unlike the Turnaround situation, it is unlikely that the team in place will recognise the signs and so the major obstacle that you will have to meet head on will be to pierce through a veil of denial that is preventing people from confronting the need to realign the contract. The challenge, therefore, will be to convince employees that often deeply engrained cultural and operational norms are no longer contributing to high performance and change is necessary.

Do not underestimate this situation. Whilst the size of the behavioural change may be less than a Turnaround situation the challenge will be in getting the team to recognise that change is required however small that may be. This will require careful negotiation and adroit skills at managing egos in being able to refocus the team.

Opportunities

The once successful contract will in all likelihood have significant pockets of strength upon which you can build. You are likely to have a client who is a significant ally and still has enough invested in the contract to see it succeed. The support of the client will be a significant rallying point for the people who need to be able to continue to see themselves as being successful.

4. Sustaining Success

In this situation the contract is humming along, performance is above expectation and you are likely to have significant wins under your belt. Confidence in you and your team is high. This, of course, is a great place to be as the leader. However, you need to be aware that the potential exists to slip into the Realignment stage. The preservation of the vitality of the contract and its relationships is your responsibility and you need to take it to the next level by growing the business.

Challenges

Things are going well but you need to exercise caution, this is not the time to coast. Sustaining Success is the only platform from which you can grow the business. This means that the team will be required to do their day-to-day job in running the contract but in addition, run with up-selling and cross-selling initiatives. Beware, detraction from the day to day issues is a very real danger.

Unfortunately, it is a reality that clients will not entertain your advances in terms of additional scope or services if the day-to-day issues are being left unattended or worse still there are service failures. You, therefore, need to play a good defensive role before embarking on too many new initiatives and/or services. As a leader, your challenge will be to find ways to keep your team motivated and combat complacency as well as finding new directions for growth from an organisational and personal capacity.

With a team who feels that they are on top of their game, you may need to invent a challenge to stretch their capability and capacity and find a new direction for growth

Opportunities

Your previous successes will undoubtedly mean that you have a strong team is likely to be in place. This does not mean necessarily that day will be the right team to instigate new initiatives and supplementing the team with sales personnel for the up-selling and cross-selling initiatives may well be required.

The window of opportunity may be fleeting but growing the contract requires a continual balance with the daily operational needs. The foundations are undoubtedly in place that your people will need to be continually motivated to continue the history of success.

Conclusion

In your assessment of your contract’s vulnerability, it will fall into one of these categories. If you are in Sustaining Success well done, you have a platform from which to build. I will talk about the Growth Cycle in the next post but beware, this has its dangers too. If you are in Turnaround or Realignment you need to work at getting the contract back to the Sustaining Success platform. I will talk about the different strategies in the Recovery Cycle the Crisis Cycle in the next post as well.

Source: workplacefundi.com-Are your Contracts Vulnerable and what to do about it.

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