Flawed Assumptions Lead to Trouble
When it comes to airplane travel, I’m partial to early morning flights. Yes, you need to arrive at the airport first thing in the morning. But it also means that the plane is already sitting there from the night before, reducing the chances of a delay.
And so last week, my son, Matt, and I left our house in Maine at 4:00 am on our way to the airport for a 5:30 am flight to Colorado. We got there in plenty of time. Too much time, in fact, because upon arrival we learned that the flight was delayed three hours due to mechanical problems!
Uh oh. My bad assumption — that early flights are never delayed — came back to bite me. Had I checked things out, we could have slept in a lot longer (crucial shuteye for an 18-year-old!).
When it comes to contracts, flawed assumptions can also take their toll. Let’s look at three of the most common and ways to manage them:
Flawed Assumption #1 — Assuming that Contracts and Ordering Documents Can be Signed in One Day
If your transaction is being counted on to help meet a quota, quarterly target, or other company goal, be sure to figure out the customer’s internal process for getting the right documents executed as quickly as possible after the final terms have been agreed upon.
I’ve seen many cases where a vendor works hard to wrap up negotiations, only to learn that the customer’s internal process requires five (or more) business days to get the paperwork approved and signed by executives.
Don’t let this happen. Throughout the process, check in with your contacts to find out the exact steps required for final approval. Then, as negotiations continue, confirm with others inside the customer’s organization (business, legal, procurement, etc.) regarding what needs to take place. If you’re getting a different story from different folks, follow up and do whatever you can to set the table for a quick and easy approval process.
Another tip — even though you may still be negotiating business terms — such as pricing, length of contract, volumes, etc. — ask your business contacts to submit your contract to their legal/procurement team to get the ball rolling. This way, once the business elements are ironed out, legal and procurement will be familiar with the transaction and may have completed a large chunk of the initial review.
Flawed Assumption #2 — Assuming that the Customer Has Explained Your Product to Legal and Procurement
As I have written about previously, there is much more to getting a contract signed than just reaching agreement on the business points — others within the customer organization will need to approve as well.
In many cases, however, I’ve seen eager buyers hand a contract to their legal or procurement folks without providing any detail or background about the service or its importance to the company’s mission. When that happens, the potential for a smooth and painless turnaround is usually out the window.
In those cases, I’ve frequently seen the legal/procurement team, faced with many unanswered questions, follow one of these paths:
- Hold up the process until they have an opportunity to ask questions and learn more;
- Complete their own research regarding the product or service; or
- Amend the contract with significant changes that are either inapplicable or overkill — or both.
Whichever path, the destination is likely delay, delay, and more delay. A better route is to take steps to ensure that all involved are aware — from the outset — of a product’s capabilities and value.
Flawed Assumption #3 — Assuming that Terms and Conditions are Current with All Laws, Industry Practices, and Company Changes
I’ve seen many instances where vendors assume that terms and conditions, which have been posted “for as long as anyone can remember,” remain current and cover today’s business and legal requirements. These overlooked terms, however, are frequently outdated for several reasons. Here are a few:
Changes in laws. Laws constantly change. For example, laws related to privacy and data security are always evolving. In these cases, applicable terms and conditions need to be updated as well.
Changes in business norms and practices. People and their businesses change over time to meet market and societal demands. In fact, the pandemic has led to numerous changes in operating norms that may necessitate changes to governing T&C’s. A few examples: Are users required to be on-site or in a specific location? Who will actually receive a legal notice if everyone is remote? Should force majeure terms be updated to include unforeseen delays resulting from a pandemic?
Changes in product offerings. Product changes and new functionality often require updates to T&C’s. For example, are different types of data being collected or accessed? Has your pricing model changed? Are new types of third parties interfacing with your product?
The point is — things change! If you assume a static state, you’ll hit snags and suffer from delays. Keep your T&C’s current so you can close as quickly as possible.
Assumptions are mental shortcuts — they reduce a business’s need to evaluate data and consider circumstances each time a decision is made, saving time and effort in the process.
An overreliance on assumptions, however — whether gauging when to show up for an airplane flight or trying to get a deal closed — may lead to missed opportunities!