What is Commitment Management?

In most corporations today, resources operate in a matrix that is designed to balance control with empowerment through a system of managed contention. This is an inefficient model that often erodes competitiveness through poorly managed risks, damage to valuable relationships and a proliferation in support staff.

Through focus on a few key measurements, and a shift in accountability, executive management can drive dramatic improvements in organizational performance. Specifically, they can shorten lead-times, raise productivity and increase market responsiveness and creativity.

"Commitment Management" is a radical new approach to requirement definition, negotiation and contract management. It is a discipline that accelerates high quality, low cost business transactions and relationships through applying zero-defect quality principles that enhance competitiveness and profitability. Efficient organizations achieve a high degree of standardization; market leaders sustain this ability over time - that is, they find ways to maintain dynamic review and update of their standards so they remain aligned with changing market conditions. Distinguishing attributes of these leaders include:

• Shorter cycle times;
• Greater internal productivity; and
• Heightened competitiveness through creative solutions to market or competitive pressures.

It is through requirement definition, negotiation and contract management processes that business capabilities are created or declared. Supplier relationships combine with internal organizational factors to impact operational efficiency and to define the platform for the business terms and relationships offered to the market. Failure to remain aligned with the needs or expectations of the market results either in a loss of competitiveness or an erosion of margin.

Among the key indicators of misalignment are:

• Increasing complaints about 'ease of doing business'. This may reflect in tougher negotiations, or in greater frequency of claims or disputes and an erosion of relationships with established trading partners.
• A growth in the resources, both human and financial, deployed to manage 'deviations' - that is, to respond to growing demands for commitments that are non-standard.
• Increasing internal complaints about lead-times, bureaucracy or lack of flexibility in the requirement definition and contract process (supporting either acquisitions or sales). This may be accompanied by a growth in maverick behavior.

Standards establish a platform for management to recognize deviation and to evaluate its consequence. However, recognition and evaluation depend upon capture and reporting of data. In many organizations, requirements and contract exceptions are handled at a transactional or relationship level. Depending on the relative power of the parties, they may be stifled or enabled, but in either case, they are not consolidated to recognize patterns or trends and there is no point of organizational accountability to identify opportunities for change. As a result, there is no dynamic review, update or management of commitment policies and capabilities.

Commitment Management monitors interactions throughout the value-chain, to ensure they operate with predictability, integrity and efficiency. This allows improved handling of risk and heightened visibility of opportunities for innovation or change. It is achieved by a shift in organizational accountability and measurement, requiring the quality principles used in production or service delivery to be similarly applied to business interactions - that is, overseeing the compliance of internal and external relationships with business strategy and the needs of selected markets.