Agile Contracts - The only Template you’ll ever need!
Agile collaboration became the new normal to deal with the ever-changing demands of today’s business. Often this collaboration isn’t supported enough with an as agile contract.
Agile collaboration became the new normal to deal with the ever-changing demands of today’s business. Often this collaboration isn’t supported enough with an as agile contract.
In this blog post you’ll learn about the only template you’ll ever need.
Agile Collaboration - Houston we have a problem!
With Lean-Agile Procurement we’re fostering collaboration and co-creation of e.g. the solution design, a joint agile roadmap, the proposal, etc. between all parties even before signing a contract. This is also because it turned out that the social- and cultural fit are as important success criterias, then the business fit. Nobody chooses his partner in life just because of her/his looking too. If we’re looking closer to an agile collaboration we’re constantly re-agreeing because of an ever changing environment. The interdisciplinary team consisting of internal- and external people is e.g. re-agreeing and improving their collaboration model, their joint agile roadmap, their joint business objectives of the next iteration, down to the concrete implementation of a customer need, etc. with every feedback cycle. These good practices e.g. applied with the help of Scrum became the new normal. So all good? Unfortunately not, Houston we have a problem!
The problem is that a lot of agile cross-company delivery teams lack of a legal foundation based on agile values & principles, that supports this kind of agile collaboration. Furthermore there hasn’t been a „standard“ yet, what an Agile Contract really is and what not. This made it difficult to onboard the legal community and even worse created an even bigger confusion in the agile community.
The Solution - The only template you’ll ever need!
The easiest solution for defining a standard would be creating a, or even better THE template of an Agile Contract. This has served us very well up till now, where the things have been predictable. As Agile Collaboration tries to embrace uncertainty every contract became very contextual. To put it on one extreme: Sometimes the only thing we have is a vision like e.g. how Artificial Intelligence (AI) could support our business?-So time-n-material is the only way to go?-A clear NO!-T+M is just one possibility. But there is a whole spectrum of potential agile contract types e.g. driven by the level of risk-sharing.
The only solution for a standard left is to take it to the next level of abstraction: Values & principles. Please welcome the Agile Contract Manifesto (ACM), created by a global group of experts from agile-, commercial- and legal communities.
It consists of 4 main values..
Image source: agilecontractmanifesto.org
.. and 10 principles
Image source: agilecontractmanifesto.org
ACM in Practise - How to apply the ACM?
Similar to an Agile Contract are values & principles contextual too. So as a first step it’s recommended to create a joint understanding. The easiest is e.g. by sharing examples. Then you could take an existing „agile“ Contract and assess and improve it based on the ACM. It’s recommended to include all parties in that exercise such as e.g. Product Owner, delivery team members, agile coach or Scrum Master, lawyer, etc. as development of this legal foundation becomes a team effort as well to create the maximum ownership and minimizing risks at the same time. Tipp: Check out the Lean Procurement Canvas, which gives a lot of guidance to ask the important questions.
Furthermore it’s very important to understand that an Agile Contract is not just the Statement of Work (SoW). It includes all parts of a contractual framework such as e.g. None-disclosure Agreement (NDA), General Terms & Conditions (GTC), Master Service Agreement (MSA), etc. If you think of e.g. your latest NDA you’ll agree there’s a lot of improvement to assign agile values.
Conclusions
In other words if Agile Contracts embrace the values & principles of the ACM we could create an even bigger impact than just supporting a more agile collaboration. The potential is huge. Take the example of an outcome-based contract by the New Zealand Government. They took the outcomes of the partnership to society and sustainability into consideration of the services and goods they’re buying. Read more about it here: https://bit.ly/3H1iFnw
Become part of this movement and sign the ACM: https://bit.ly/34IVuS7
Be the change you wanna see in the world. As an agile coach / Scrum Master get in touch with your legal team or the other way round!
Wanna become an Expert in Agile Contracts?
The LAP Alliance offers a unique Certified Advance LAP Module on the topic, where you learn the different agile contract types, how to apply the ACM and coach your peers in this important topic.
Find out more, or register: https://bit.ly/3I0B6tM
ACCONOLOGEMENT
A Big thanks goes to my peers of the ACM Creators Group!
Author
Sources:
Original Article in German flowdays.net
There are NO Agile Contracts!
Similar as there are no unicorns, even no cats with one :-), there also don’t exist agile contracts!-In my opinion we not just need get rid off this term, we also need to rethink how we come to an agreement.
In this blog post you’ll find out why and learn alternatives to overcome the dilemma of Business Agility and handling the legal aspects with your partners.
Similar as there are no unicorns, even no cats with one :-), there also don’t exist agile contracts!-In my opinion we not just need get rid off this term, we also need to rethink how we come to an agreement.
In this blog post you’ll find out why and learn alternatives to overcome the dilemma of Business Agility and handling the legal aspects with your partners.
Unfortunately we need to inform you, that there’s been a big misunderstanding the last 15+ years. The agile community has come up with new concepts around contracting, even contractual templates have been developed, etc. However, there is no silver bullet and for sure there are NO agile contracts!
Why an Agile Contract doesn’t make any sense?
Have you ever thought about the words „Agile Contract“?-„Agile“ (1) stands for values & principles where we act on the same eye level, looking for people, partners, etc, that are able to respond to change more effective together. While „Contract“ has the word „Contra“ in it, which means against or opposite (2).
“Contract is legally an agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration.”
However „agreement“ is part of the definition, in practice it’s much more of the „against or opposite“ behaviors we recognize. Borders of responsibilities are usually cemented in a contract, so that lawyers increase the chances to win at court if something goes really wrong. In fact a contract is more of saving the buyer’s, or vendor’s interest and tries to reduce it’s risks as much as possible. Btw. There’s nothing wrong about that. However, it’s more of the way it’s getting approached. We’ve somehow lost the aspect of „agreement“. I often experience „take it or leave it“-situations, predefined contracts with penalties, etc. in place where there’s no opportunity to improve it together. Doing so we are not applying any agile values & principles to the process of agreeing even though we refer to it often in the contract. How weird is that?
Even if we’ve put good practices such as „money for nothing“, „changes for free“, a more outcome based focus of the contract, etc. it’s still missing the collaboration aspect of an agreement!-Even worse than that put people who aren’t so deep in agile think by such good practices of a silver bullet and put everything in one new big template and call it an agile contract. Or others call a true agile contract has been based on time and materials. All of those are wrong!
The reason why nobody has found the silver bullet yet is there is none!-It depends on the context, the parties involved, the people and their values/cultures, etc.
So, what’s the alternative?-Goodbye Agile Contract, welcome Lean-Agile Agreement
First of all we’d like to change the term „Contract“ into „Agreement“, because it has „agree“ in it and if we’re believing in true agile values such as trust, honesty, etc. we’d also respect a co-creation of the legal agreement. In our cases with Lean-Agile Procurement we’re applying this principle of co-creating very successfully which leads to more honest conversations between all parties about each others concerns, risks, cost-drivers, etc. A CEO of one of the vendor’s recently even said, this is the fairest agreement we’ve ever signed!
“This is the fairest agreement we’ve ever signed!”
We also need to understand, that there are no agreement, that are evil. We should more think of all the different agreement types as of a continuum, or different meals we can choose from depending on our context. Find some listed the following.
Time & Materials is one of those agreement types, that could make sense in certain contexts. But and there is a big BUT, we need to have a honest conversation about the risks we’re transferring to the buyer side and how to handle those. Of course there are quite radical agreement types, such as e.g. „Outcome-based with profit sharing“, service subscription, etc. that might even change the business model. Do you remember, that e.g. Rolls Royce - one of the biggest suppliers of aircraft engines and services - switched to a service subscription where the airlines „just“ pay per flying hour?-But that’s another story.
On the continuum you’ll not find fake agile agreements such as e.g. Story point based agreement or Sprint-based agreement. Just think about who is in control of story point estimation and you’ll realize that this makes no sense. If any kind of estimation point makes sense it would be Business Value Point estimation. Or why should we create more legally overhead at the end of a sprint e.g. every week as an iteration is more an opportunity to test our assumptions and learn together.
As we’re also not looking for 100-pages legal documents we also should consider to keep an agile agreement as lean as possible. That’s why we’d like to introduce to the community a new term „Lean-Agile Agreement“!
Goodbye Negotiation, welcome Commercial Conversation
As mentioned above a key aspect of a Lean-Agile Agreement is collaboration between the parties and taking this to an even further level of co-creation. On the other hand we need to say goodby to endless negotiations, approvals, etc. Here Lean-Agile Procurement as an approach could be beneficial. We often spend less than 20min for finalizing the agreement with a 3rd party thanks to the fact, that we have all the right people in one room simultaneously.
We’d like to have honest commercial conversations where we act on the same eight level and improving of the Lean-Agile Agreement together is not an exception but more of the new normal. To foster collaboration and this commercial conversation we’ve asked ourselves what are the key aspects that drives, or blocks an agreement. Find a collection of topics as cards for self-printing the following.
Get a joint understanding what each of the topics means to you, what other topics might be important to you and try to prioritize the LAP Agreement Cards together to get an understanding about each others values, concerns, etc. Btw. have I mentioned that „negotiation“ is a term from the past too :-)?-We’re also looking to improve this wording into „Commercial Conversation“.
Our key take-away
Agile Contract is an unfortunate term because it consists of „Contra“, that doesn’t fit really with agile values & principles.
We therefor should start using Lean-Agile Agreement, that pushes the principle of lean, joint agreement, co-creation more explicit.
There are no agreement types, that are evil. We should more think of all the different agreement types as of a continuum to choose from depending on our context, people, culture, etc. The LAP cards are supporting us here.
The LAP Agreement Cards also support us in the commercial conversation based on agile values & principles instead of traditional negotiations.
Find out in our next blog post why we need a major upgrade of the agilemanifesto.org
Author
Sources:
Header image: https://cutecatsinhats.com/unicorn-cat-hat/
1) agile https://agilemanifesto.org
2) https://dictionary.cambridge.org/de/worterbuch/englisch/contra
2) Legal dictionary https://legal-dictionary.thefreedictionary.com/contract