“Why Don’t They Change?!” Because They Aren’t (Yet) Able To

The gap between today’s challenges and the ability to respond to them effectively continues to widen. Why? What’s going on? What’s needed to break out of this pattern? And how can we make the necessary changes understandable, natural, and achievable?

These aren’t new questions, and we’ve already written extensively about them throughout our site. But we do have a new way of presenting the answers, and that’s what we’ll be looking at in this series.

“It’s not f**king rocket science that people need to change how they manage contracts… so WHY DON’T THEY CHANGE?!?!”

So said an exasperated partner of ours to a colleague of mine recently, when discussing how slow the commercial world has been in responding to the accelerating challenges of increasing uncertainty.

In particular, they were referring to the National Audit Office’s 2014 “Transforming government’s contract management” report, which explicitly “recognized the scale of the problem” and, in its very title, sounded the need for profound change…

…but how, nearly 12 years on, the assumptions, practices, culture, and – most of all – the failure rate remain either unchanged, or even worse (despite extensive attempts in the interim to describe the changes needed).

And far from being constrained to government and the public sector, the gap between today’s challenges and the ability to respond effectively to them continues to widen across all sectors and geographies.

The most recent Benchmark Report from our friends at WorldCC makes this point abundantly and painfully clear.

So what’s going on? “WHY DON’T THEY CHANGE?!?!“

Let’s begin by mapping the terrain here.

Mapping the terrain

The insight we’ve had recently is that we can powerfully represent what’s happening for commercial organizations with two axes:

• x: uncertainty, low to high: the nature and scale of the challenges posed to organizations

• y: structural adaptiveness, low to high: the nature of how organizations operate in response

These axes give us four quadrants that describe distinct “operating realities”:

• Q1: Stable Efficiency (low uncertainty; low structural adaptiveness)
• Q2: Scalable Platform (low uncertainty; high structural adaptiveness)
• Q3: Disruptive Tension (high uncertainty; low structural adaptiveness)
• Q4: Agile Adaptation (high uncertainty; high structural adaptiveness)

[Note that Complexity is what drives uncertainty – so we refer to “C-UVA”, instead of the more familiar “VUCA” – as that’s important later.]

As you can see, each quadrant has a “headline”, and – in the four bullets – a very different modus operandi, very different goals, very different operational priorities, and very different ultimate purposes.

None of the quadrants are inherently “right” or “wrong”, or “good” or “bad”.

They can all describe valid lifecycle stages, priorities or relationships (the quadrants map neatly onto the familiar Kraljic matrix, amongst others similar matrices).

Indeed, it is possible – and desirable – to move between quadrants, and when we see how the quadrants map onto a continuum of underlying adjacent values, we can see how it is possible to cycle around the quadrants:

Where things begin to unravel is when the quadrant an organization is predominantly centered in and where they predominantly need to be centered in remain different.

And this is especially true if those quadrants are diagonally opposite: stable efficiency vs agile adaptation, or scalable platform vs disruptive tension.

So, we now know the terrain. But where are we in this terrain?

Getting our bearings

For most of us, the center of gravity now needs to be predominantly in Q4, with the aim – where possible – of scaling from there into repeatable Q2 outcomes:

The world has moved along the x-axis, with the reality of Complexity-driven uncertainty mostly all too obvious and recognized.

Some might be in denial or might assume such uncertainty is temporary, but for the most part, continuous disruption is undeniable – accelerated change, greater interdependence, geopolitical instability, and so on.

Hence the talk, especially post-Covid, of this being “the new normal”.

And Q4 is all about responding appropriately and effectively to this shift, with repeatable Q2 results the “reward” for doing so.

So Q4 is where we need to be centered, and we absolutely see calls for greater adaptability, resilience, agility, and so on: the necessary shift up the y-axis.

But – as we’ve just said, and as WorldCC’s Benchmark Report makes clear – this shift up the y-axis hasn’t happened.

And so the current operating reality remains in Q3: Complexity is biting, but in tension with familiar rigid structures and approaches, which haven’t adapted:

Where we need to be and where we are is therefore already (dangerously) misaligned – disruptive tension.

But it then gets even worse.

And that’s because most organizations haven’t even yet caught up to where they really are, with their center of gravity instead remaining stubbornly centered in Q1:

It’s not simply that organizations continue to operate with formal fixed roles, processes, and so on. It’s that they do so – even if they don’t realize it – with the assumption that the world remains predictable and stable.

Q1 is the world of standards, benchmarks, training, and capability development. All of these assume knowability, repeatability and predictability, and embody the “best practice myth” that results inevitably flow from doing things “right”.

And by far and away the most common stance organizations are taking is what we call “doubling down” – applying these approaches more rigorously.

They may say that standards are just a necessary foundation, or that they’re investing in new capabilities, but they’re still starting from the Q1 mindset of “if we get ourselves in order, results will follow“.

Even the focus on AI – which seems like something new and innovative – typically conceals this similar assumption, becoming seen as a way of catching-up to change, and freeing-up headroom to regain control: the Q1 mindset.

And so where organizations need to be and how they’re actually operating isn’t just misaligned – it’s diametrically opposed.

The gap couldn’t be any wider.

Is it really this simple?

Now, one pushback here might be that it’s too simple to talk about just one center of gravity when it comes to an organization’s operating reality (Q3) and its operational approach (Q1).

After all, there are many different roles, and many would position themselves differently, e.g.:

• Probably only Legal and Risk / Compliance would accept a formal Q1 focus to their roles, but even then they would assume they are bridging into results and adaptivity (Legal), or controlling Complexity (Risk / Compliance).
• C-Suite would particularly edge themselves into the strategic Q4 quadrant.
• The rest would consider themselves fully delivering results (Q2) or straddling into strategic adaptation (Q2 / Q4).

But, in practice, we’d suggest this is where the roles really are, and why:

• Legal and Risk / Compliance are fully embedded in Q1, focused almost entirely on standards and control.
• As we’ve just said, capability and methods are the focus in Q1 – the domain of Consultants – with Procurement and Contract / Project Management also attempting to “tame” Complexity through formal methods.
• Roles involving cross-boundary relationships are stuck in Q3 disruption.
• C-Suite are dragged back to Q3, too.

Indeed, the most familiar challenges are clustered predominantly in Q1 and Q3:

So, whilst no model can cover every nuance, and there are always exceptions, it holds up to more granular analysis to continue to say that most organizations’ operating reality is centered in Q3, whilst actual operational approach is centered in Q1.

So why is there this catastrophic mismatch between where organizations need to be, and how they currently operate?

Explaining the mismatch

To begin with, Q1 has been the operating default for generations.

It reflects the Industrial Revolution and the scientific method (where reality can be controlled and optimised); it’s what’s familiar; it’s what people have been schooled in.

And whilst Complexity-driven change has always been the fundamental nature of reality, when that change was slower – as it typically was until the explosion of technology of the last few decades (broadband, the Internet, smartphones, AI) – Q1 often worked, and worked very well.

But in doing so, it actually worked too well.

Not only does human nature naturally resist setting aside what has previously worked, but the emphasis on knowability, control and predictability has profoundly limited and warped how we see the world.

Most profoundly, what are really verbs have become nouns – the active, dynamic processes (verbs) of valuing, collaborating, managing, etc, have become static “things” (nouns) as value, collaboration, management, etc; “contracting” as a process becomes “contract” as a document.

“Things” are knowable, predictable, definable, controllable, and quantifiable.

But they lack the sense of flow, change and unpredictability that characterize a Complex world. And so even words that apply across all quadrants end-up being “heard” and interpreted (and limited) through a Q1 filter:

• “Value” becomes synonymous with price and cost, rather than subjective and fluid.
• “Capability” becomes line items in a certification to obtain, rather than servants of value (in the process, becoming “cap-ability” – a cap on ability!).
• “Negotiation” becomes a specific task and phase in a lifecycle, rather than a continuous process of trade-offs and adaptation.
• etc, etc.

Calls for “new skills” or “value creation” become subsumed into “we just need to do this… and results will follow“.

And as well as defining and limiting our language, this has even affected our brains and how we think – especially in the West – where we’re almost completely biased towards “things” and a sense of control to the left:

Put this all together, and in the bottom left of our matrix, where the axes originate – and at what we can consider as the “event horizon” of maximum certainty and maximum structure – is a “black hole”, where certainty and structure “collapse in” on themselves. This “black hole” creates a massive “gravitational pull” towards Q1:

We’re therefore not only naturally predisposed to Q1; we imprison ourselves within it.

But, again, it gets worse.

Because the “prison” of our own making is reinforced by one that isn’t – the fact that the axes are non-linear, with fault lines that “box in” Q1:

• With structural adaptiveness, organizations don’t develop naturally from formal, hierarchical and fixed roles to fluid, networked structures.
• With Complexity, predictability doesn’t gradually reduce through “complicated” until it becomes Complex; there is a seismic shift between “complicated” and Complex, where almost everything is inverted (e.g. top-down becomes bottom-up, etc).

Outside of the “prison” of Q1, the transitions around the quadrants we mentioned earlier are natural.

But when an organization is stuck inside Q1, it’s trapped on all sides, it can’t escape the pull to remain there, and there’s nothing within Q1 that can just “iterate” or “branch” out to other quadrants.

In conclusion

The quadrant model perfectly and simply explains the widening gap between today’s challenges and the ability to respond to them effectively.

It answers our partner’s impassioned “WHY DON’T THEY CHANGE?!?!”.

It shows how organizations are currently operating in a Q1 way that is the diametric opposite of the Q4 center of gravity they need to have.

And it shows how everything is currently conspiring to keep them in Q1.

But, as we’ll see next time, it also shows us what’s needed to break out of this current paradigm, and how to start doing so.