Better contracts, Episode 8: the Four Dimensions of design (the one with the sparks)

What you’ll get out of this episode

I will introduce you to the Four Dimensions of design, the second component of the Better Contracts Canvas. Design is the light that shines the way to a better contract experience.  I will demonstrate the different aspects of design that need to be part of your toolkit, if you want to really transform contracts, rather than just tinker with efficiency.

The backstory

If you’re in the business of building relationships (and who isn’t?), the contract is the last mile. A painful last mile. Businesses recognise there’s a problem, made more acute over the last year when everyone’s working from home. Hence the post-COVID wave of interest in automating contracts.

But why is the contract experience so painful, and why is fixing it so hard?

Building relationships means bringing people together, getting them on the same page, creating clarity and getting to “yes” fast. Lawyers and businesses are fighting harder than ever to do that. But so often they’re fighting with inadequate tools. From my work as a consultant and designer of contract tools, the common thread is that people think of contracts in terms of managing information and creating process efficiencies. The usual mantra of people-process-tech doesn’t necessarily help, if all you’re doing is oriented to internal process. When you build a contract process around that, it might lead to efficiencies, but it does not help with people and relationships.

Fixing it needs more than process

To truly create a better contract experience (and therefore become better at relationships), it’s necessary to look outside of process and information, and at much more exciting dimensions like communication, behaviours, user-centricity. We did a bit of that with the Four Dimensions of Contracts in Episode 7.

In looking at communication or any other of the dimensions, you need to look at all the outcomes including risk and business needs. You also need to make sure that users experience the process in a positive way. And you need to make it all scaleable and actually work inside an organisation. You’ve got to take all those components and you need to balance them out.

Introducing the Four Dimensions of Design

My definition of contract design is very simple: “design thinking applied to contracts”. So the Four Dimensions of Design is a tool that helps me look at the multiple facets of design when addressing any particular challenge along the contract journey - whether that’s communication, data, content or systems.

The Four Dimensions of Design, part of the Better Contracts Canvas (c) Denis Potemkin 2020-2021

The Four Dimensions of Design is about having a clear purpose, delivering outcomes, with a great experience of all users, and in a sustainable way: 

1. Purpose: Why are you doing it? What is the purpose you are trying to achievettain? What are the objectives that will get you there? 

2. Outcome: The outcomes of your contract or contract process should go beyond the legal and risk outcomes: the commercial, human and ROI outcomes are just as important. 

3. Experience: An improved contract or contract process should strive for clarity, simplicity and usability. It should be a joy to experience.

4. Sustainability: The best design is scaleable, resource-efficient and durable over time. Hence sustainable. 

I believe all these elements are needed to turn contracts into working tools for building relationships.

How does it work in practice?

Let’s see if we can apply it to communication. A recent survey by WCC shows that 65% of companies want to improve how they communicate. From my own experience as a lawyer and consultant, communication is a critical success factor in whether a contract experience is a good one or a bad one. Projects where communication occurs early, frequently and with clarity tend to create less friction and more trust, and usually result in speed and lower cost. Poor communication creates collateral damage across the entire journey.

In the typical contract process, communication strategy - internal and external - is rarely thought through. Internally, companies focus on approval processes, but not on how to ensure clear visibility of and alignment on risk. Externally, the “market standard” is shooting your template over and hoping for the best. This means that the way users experience the contract journey is left to chance, brute negotiation leverage, and individuals’ people skills.

So let’s have a quick go at applying the Four Dimensions of Design to the communication problem. We’ll take a more detailed view of the canvas to help us:

The Four Dimensions of Design (c) Denis Potemkin 2020-2021

The basics: Outcomes

We know that contracts need to manage risk. However if that’s the primary focus, then all the documents along the process end up looking like defensive disclaimers or aggressive posturing. That’s one of the key dysfunctions of contracts because it creates friction and erodes trust. 

Even a term sheet or “key terms” summary - in itself a great way to align early with the other side - will typically contain language that is biased towards risk, starting from the opening paragraph that tells the other side that this is just a summary and in no way detracts from the full set of terms that will come their way. 

What if you look at these documents with a different lens: trust and early alignment (so, human and business outcomes)? That drives a different approach to the language, structure and content of the term sheet.  If you treat the outcome as a human outcome rather than a business outcome, that will take you even further from risk-biased language.  So to be effective, communication needs to balance the risk, business and human outcomes and the Four Dimensions reminds us to do that.

Thinking about the user: Experience

An excessive focus on risk means ignoring the experience of your users (both internal and external). The outcomes have to be balanced - and can be improved even - with attention to the user’s experience of your documents and communications.  

A human touch is something that lawyers are often too scared to apply on paper. One way to add a human touch to legal documents (especially complex agreements and term sheets), is to have opening paragraphs that explain in a really down-to-earth way what the document is and what you’re trying to achieve. This is a simple but effective technique. Adding a helpful visual, like an agreement map that gives the user an overview of the document is another way of being helpful and creating trust.

Intro and agreement map examples implemented in Majoto. (c) Denis Potemkin 2020

Having a document that is a pleasure to handle, will improve the user experience and is actually proven to reduce the level of unnecessary scrutiny and push-back. Introducing humour can be a huge added differentiator - look at anything that South African law firm Novcon does and you’ll see what I mean.

Going pro: Sustainability

A perfect process could be built around user friendly documents supported by a nice phone call at each stage. But that’s not resource-efficient or scaleable. So how do you make a relationship-focussed communication strategy scaleable?  Adding the human touch as described above has the added virtue of making human-centric experiences actually scaleable. 

Another aspect of sustainability is simplicity. It’s well known that complex systems are more prone to stresses and break-downs. Simpler system may lack precision, but they more than make up for it in resilience.  When designing documents and processes, consider whether the additional detail is adding certainty but creating more complexity, more maintenance effort and increases the risk that the document or process needs amending as soon as anything in the organisation changes. Less can be more and the same applies to communication: the more you say and the more words you use, the higher the risk that a miscommunication occurs compared to simpler, more frequent touch points. 

Thinking like a boss: Purpose

Getting the balance right is impossible if you don’t have a clear idea of what your purpose is. That’s why purpose is the starting point and is also the way to sense-check what you’ve done. That’s why purpose is at the heart of this model. 

Most businesses have some sense of their objectives when starting a contract improvement project. But objectives are not the same as Purpose. Objectives answer the “what”, not the “why”. That “why” answers the most fundamental questions and can only be answered correctly if all the stakeholders are considered.

The way you communicate along your contract journey is going to be different depending on whether your “why” is focussed on cost, deal velocity, risk visibility, relationships, trust or team dynamics. For example, if creating confidence for management is part of your purpose, your internal reporting system is going to look different than if the primary purpose is risk visibility. If you want to improve your negotiating position and call the shots more often with your counterparties, then the confidence with which you communicate becomes more important than if you have the negotiation clout already. In an ideal world you would be amazing at all those things, but your solution also needs to be sustainable and show ROI, so a clear purpose helps you to prioritise.

Final thoughts

In the next episodes, I will be zooming into the various facets of contracts and looking at how they can be improved, using the Four Dimensions of Design.  If you don’t want to miss it, sign up to my newsletter!

To see how I turn these concepts into practice, take a look at Majoto: everything I know and believe about contracts, wrapped up in an automation solution. Majoto works across the four dimensions of design, to turn contracts into truly useful tools for building relationships.