The culture of contracting: do tech contracts kill creativity?

If Covid has taught us anything, it’s how fast businesses can adapt when they need to. organizations have had to accelerate their digital transformation programs, as they pivot their businesses to survive in this new world. 

Our priorities have shifted. We know now that teams can work from home without reducing productivity. Great customer service can actually be delivered from a back bedroom or kitchen table. Children don’t have to sit exams in halls to achieve their GCSEs.

All of this, of course, relies on technology that organizations can deploy as fast as the world is changing. Gone are the days of siloed technology delivery, starting with long consulting periods, moving through development to production, and ending up with testing – all delivered by different teams, or even different contractors, duplicating efforts in some cases, and always slowing down the process.

We know that agile development is the way to go to remain truly competitive, but to become an agile organization, businesses (and the providers that support them) need to create contracts that support, rather than hinder, this new agile way of working.

Agile development has  replaced ‘waterfall’ in almost all instances  

Agile development, or building software iteratively, has  been replacing traditional ‘waterfall’ methods of development for many years, but the pedal hit the floor during the pandemic. No one has the time or desire to spend months or even years rolling out huge, lumbering one-off projects, we needed the changes to happen now. 

In an agile framework, change happens both incrementally and quickly, in continuous cycles, so the benefits of new technology (to revenues, growth, customer experience and interaction – and ultimately to the business) are felt immediately.

Change begets change: insights from each development release are gathered in real-time, fed back into the design process and inform the direction of the next release. Development happens in ‘sprints’ – small components of delivery that build on each other to constantly improve results. This is a way of developing and learning from technology that moves as fast as the changing behaviours of consumers, and the changing needs of the business. It is a continuous evolution. 

Team structures are adapting to service the new agile model

Developing at this kind of pace requires new team structures, too. In an agile framework, one ‘scrum’ team takes accountability for the delivery of a project from beginning to end, combining different skill sets and roles, and collaborating across traditional divisions and departments (or even across organizations). Siloes are broken down to foster the kind of innovation that only comes from a team of people with different and diverse experiences and viewpoints. This is a way of working that is a true collaborative partnership, where everyone takes responsibility and plays their part in the process, all with a common purpose, aiming for the same ultimate business goal.

And yet, the way organizations structure their contracts to deliver transformational technology kills any real opportunity for creativity or innovation. Traditionally, contracts focus on the process rather than the end goal. They are often based on penalties rather than incentives. They focus on how a product should be developed, rather than why. They fail to look at the outcome the business wants from the technology, documenting instead the process of delivery. 

That leaves little room for true agility, to adapt to changes along the way, and continuously improve and evolve. A traditional contract will drill down into the component parts of the technology to be delivered, rather than allowing the flexibility to think creatively about how to deliver the business goal. 

A bad contract can kill creativity

Contracts generally don’t leave room for creative thinking and agility. They deal in units, prices, delivery dates, and penalty clauses – all tangible things that can be measured at set times. Instead, they should focus on the ultimate goal – the impact of the solution on the organization. Value to the business in an agile framework will be delivered incrementally, at pace, and can be measured in hard terms: the difference the product is making to the organization; improvements to customer experience; increased interaction levels; improved revenues; take-up of new features. 

Redefining ‘done’ 

Achieving these kinds of results is, to me, the difference between a project that is ‘done’, and one that is ‘done, done’. Traditional contracts deal in ‘done’. ‘Done’ says: “I’ve delivered this piece of software that you asked me for. It looks exactly like the contract said it would a year ago. It followed the precise process laid out on paper. It might not do exactly what you need it to do today, but here it is.”

‘Done, done’ is more dynamic. It says: “The latest incremental changes to your technology are already showing value to your business. The product is meeting all your goals of interaction, experience and revenue. And what’s more, I’ve got some great ideas for the next release, based on what we’re seeing in user behaviour, so let’s work together to agree KPIs for that, too.”

Because this approach is agile, rather than prescribed, it takes trust between the business and the delivery team, and trust often requires a different mindset and way of working. It requires a true partnership, based on trust, between the provider and the organization it’s serving. Sometimes it jars with a company’s culture, if that company is used to more traditional ways of working. It’s not something that procurement and legal teams can measure easily and it’s hard to establish in law.

Trust and contracts aren’t natural bedfellows, but they should and can be. Establishing trust is critical for successful agile development projects, which are based on collaboration, open communication, cultural fit, and a strong working partnership.

So, it’s time to rethink how we structure contracts for agile delivery, and create contracts that are dynamic, focused on the big picture goals, and flexible enough to incentivise creativity and innovation.

It is only then that organizations will really reap the full benefits of the agile development methods that can deliver so much value to their business.

•  These are the best free software for small businesses available now 

Edward Batrouni, Director and Cofounder, Zenitech