In mid 2009 I received an e-mail from Mark Hurd, then CEO of Hewlett Packard. This wasn’t unusual because I was at EDS UK and we all got an e-mail from our new CEO. He wanted to explain that over and above the 26,000 people he was already getting rid of in the new enterprise there would be further reductions.
He went on to write that earnings were down 20% so his investors wanted to know when he was getting rid of another 20% of his workforce. He went on to add that he was resisting their advice as it would hurt us on the rebound.
The point of the story is how one determines, precisely and effectively, what are the right parts of your cost structures are the ones to get rid of? Typical commercial reasoning suggests that the best cost structures to cut are: headcounts, marketing, training, procurement and travel. These are the easiest but you don’t have to be Lou Gerstner to realise that you shouldn’t cut marketing or travel in a downturn. Pick up any edition of HBR and you’ll know that you need to focus on core business and cut the rest.
So how do we find core business and what on earth does it have to do with my legal costs?
Have you ever done a push-up? What muscles do you think are used? Chest? Yep. Triceps? Oh yeah. What about anterior deltoid? What about the supraspinatus or the infraspinatus or the teres minor? What about the teres major and the suprascapularis? These are all synergistic muscles in the push up that help hold your shoulder girdle stable and stop you toppling over to one side. Likewise with business. There are an enormous number of synergistic activities which assist core processes.
Don’t worry we’re getting to the bit about legal costs.
Your core business will be the fundamental raison d’être of your company. For instance. You might think that you own a network outsourcing company but when you ask yourself why your company really exists and what it seeks to really achieve, you might find the answer being that it transforms the customer relations of client companies? Now you need to determine what are all the essential processes which support transformation (which we’ll look at another time). After that one must discover the dependent, people, information, systems and infrastructure for these processes.
That’s the easy bit.
Now you need to architect it into some form of commercial reality and make it happen. Once this beautiful strategy is executed in a new and improved operating model you will be left with a pile of paper which enshrines the agreements you have made with partners to make this reality. Contracts – and they don’t come cheap.
Did you notice a theme? I talked thereabove about the seamless architectural process which blends to bring synergy to the design and form of your new business. The realistic amongst us will know there is always a great crash as the momentum behind any deal brings it into contact with the immovable object of the law. The beautiful deal we created is then mangled through lawyers until what we wanted is barely recognisable.
What if this horrid legal process was an integrated part of the architectural process? What if our business architects, our technicians and deal-makers were all joined in a common, collaborative architectural process which derived legal clauses directly from the technical and commercial detail of the deal? Wouldn’t the contract then become a dynamic and fluid document which formed part of the management of the program? Wouldn’t the contract(s) be lean, precise and swift to negotiate and put in play?
Welcome to Citadel, where enterprise architecture meets the law.