How Neuroscience and falling out of a tree could help you shape your next deal

Time to start blogging again. After 4 years as a CFO I am returning to the world of customers and contracts, although it was a CFO event that inspired me to write this piece. It started with a talk by the renowned neuroscientist Baroness Susan Greening. She explained that all brains develop differently in response to a variety of stimuli over time. Accordingly, the physiology of the brains of twins identical at birth would be markedly different by the time they reach adulthood as result of the different connections made within the brain in response to their different day to day interactions with the world.  This would be particularly noticeable in the event that (say) the twins had spent time apart in different classes or even different  schools. We are truly a product of our experiences.


 Research has also shown a growing inter-generational effect. So called Digital Natives (typically the under 25's that are now emerging into the employment market) have grown up with computers and have been exposed to screens and IT activities throughout their formative (physical; intellectual and emotional) years. This research has shown that consistent exposure to computer gaming inhibits the development of that part of the brain that controls risk evaluation (.... the Pre Frontal Cortex since you ask). This is probably because the consequences of failure are not really "experienced",  only "observed". For example, failure at a particular level of a  typical "hunt ' em down and shoot 'em up" game results in the player having to start over again, costing time and no doubt causing some  frustration, but no real hardship. Compare this to the development of their parents, the so called Digital Immigrants, who actually experienced the consequences of their games as they grew up.  For example climbing a tree and falling out would have resulted in real pain, and maybe a broken arm or leg - a powerful learning experience which would have effectively taught risk assessment and lead directly to the child either learning to climb more competently or to avoid climbing trees completely. 

Baroness Greening uses these sorts of examples to posit the hypothesis that we are potentially building a more reckless society without the same checks and balances in the future that have existed in the past. People who lack real experience of risk and have not  worked through the actual activities to put things right may also become a less caring society. 

What has this got to do with outsourcing ?  Consider the point of maximum risk in a deal - pre contact signature. Both parties are keen to do the deal and the inherent risks, and their consequences, need to be acknowledged and mitigating actions carefully considered.  Are these deals being done by those who have only observed the risks and consequences, and may not actually have to deal with them if things go wrong, or are these deals being done by those who have actually lived through the pain of real life cock ups ? 

My messages are therefore:

For suppliers: 
Are you letting deals be done, controlled,  or at least dominated, by your sales teams ? Have you got enough experienced operators on the bid team ? .....are there people with skin in the game ? ...who will actually have to deliver the deal when the ink is dry and the bubbles in the contract signing champagne have gone flat ? 

I believe that these folk will be much more alert to potential risks, and they will have a direct interest in up front prevention rather than post contract remediation.  

In practical terms, this means that the early assignment of Account Management and Delivery staff (and particularly Project Managers if there is a major transformation as part of the deal) to allow them to be part of the bid team. This will improve the sense of reality in the solution design and the claims made in the bid. They will also have a sense of ownership of the deal....and have a reduced amount of wriggle room for making excuses if things go awry. 


For customers:
Are you letting your Procurement Department and / or Third Party Advisors drive the agenda and evaluate supplier responses ? Have you got enough operational  IT and key business users involved in evaluating the inevitable trade offs between cost and value ? 

Procurement departments typically focus on price, and third party advisors typically focus on comparability and standardisation of solutions. They do not have an emotional connection to the real business pain points nor are they adequately equipped to make the sort of trade offs decisions set out in my earlier blog piece entitled "Palmer's Pyramid".   

Again, the practical point is that those who will actually have to live with the contract are well placed to work alongside the procurement professionals to evaluate the deal as it is being put together. They also have a role to play in selecting the supplier that they wish to work with - "chemistry" is as important as technical competence and depth of experience. 

The conclusion is that both sides need to field balanced teams and operate effective governance that considers all aspects of a deal, preferably from the perspective of having  "been there and done that". Outsourcing, like tree climbing, requires hands on experience. 

A good question for Business Leaders on either side to ask is "how many people on your deal teams have actually fallen off a rotten branch and broken their arm, rather than just laughed at someone else doing it on YouTube" ?