Commercial Design

Much More Than Just Procurement

Tariq Rashid, October 2013

Me, Briefly

IT Reform, OCTO, global enterprises, small startups

Open - Source, Standards, Markets, SME Agenda

Reform of Security

Information Strategy

little on Commercial reform - e.g. IPR in contracts

@postenterprise

My Aim

Raise Awareness, Catalyse Debate, Support Change

public money

The Problem

Procurent

Is the legal fair process of buying something.

That's it.

Anything more is inconsistent across public sector.

What about ...

Size of supplier's footprint?

Multi sourcing?

IPR?

Market pace vs contract pace?

Performance - to inform procurement?

Finance

Procurement

"provides money"

"spends money"

commercial design?

We Can't Write Everyone's Contracts For Them

...

Principles

Let's Go Back to Basics

So what is this "commercial design"?

Commercial design is about sustaining long term value. That's it.

That's an easy phrase to repeat. What's underneath that?

1. Sustained choice and feasible ability to change ... beyond the point of initial procurement or implementation.

​2. Sustained competitive tension to keep suppliers enthusiastic even after the initial contract award.

... because choice on its own isn't enough ?!

How do we do it?

we must actively and strategically steer our organisations to stay close to parts of market subject to most competition and commoditising forces

bespoking away from market

proprietary dead ends

barriers to cost-effective suppliers

avoid

enforcing open standards

transparency on contracts

active intervention

for example, this strategic navigation allows us to ... 

know when to pay more short term for better long term value

"free ... yes, but at what cost?"

Commercial Design Principles

Diverse Supply

• Not just multiple suppliers ...
• Open to different kinds of business models
• Understand and remove barriers
• Keep pace with the market

Disaggregation

Large bundled contracts are obscure, shield from competition

Decompose to best match competing market

Smaller components = smaller commitment = smaller risk = smaller impact .... higher success rate 

Aggregated risk is not attractive to most suppliers

Autonomy

You control own your own destiny, not suppliers

Retain IPR and valuable assets, then choose to exploit / share

Don't outsource business-differentiating functions

Transparency

Informed market - buyers and suppliers

Encourages ever better behaviour - buyer and supplier

Performance and outcomes, not just pricing and contracts

Thank You for Listening!

Commercial Design

Long term value is made possible by choice and competition, and intentional strategic navigation to maintain these as both the customer and the market evolves and changes. Supplier diversity, disaggregation, autonomy and transparency are key ingredients to support this.

It is no coincidence that a more sophisticated approach to commercial design, shares with the agile agenda, the desire to minimise commitment, sustain ongoing choice and adaption — as a feature, not an inconvenience.