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The margin problem facing CFOs – and the commercial solution · The Leading Edge

0:02
SPEAKER_01: Well, hello and welcome to the Leading Edge, a series which offers in-depth insights into the key challenges, innovations, and evolving dynamics of the contract and commerce landscape.
0:14
SPEAKER_01: I'm your host, Nikki Mackay, Chief Development Officer of the Commerce and Contract Management Institute.
0:20
SPEAKER_01: Now, in today's episode, The Margin Problem Facing CFOs and the Commercial Solution, we are looking at a paradox facing many organizations.
0:33
SPEAKER_01: So revenue may be growing, but margins are not necessarily following.
0:38
SPEAKER_01: So our latest article argues that the instinctive response, which is pushing harder on costs and supplier pricing, can actually deepen that problem, particularly when organizations are already facing systemic uncertainty and supply chain risk.
0:58
SPEAKER_01: So the bigger issue may be how commercial value is created, negotiated, and managed across the organization.
1:06
SPEAKER_01: Contracts, procurement, sales, legal, finance, and delivery all hold pieces of that picture.
1:13
SPEAKER_01: But when those functions operate in isolation, value can leap between them and risks remain hidden until they reach the PL.
1:22
SPEAKER_01: So what would it take to remove from a cost-focused approach to a genuinely integrated commercial operating model?
1:33
SPEAKER_01: How should leaders think about the trade-off between margin and resilience?
1:37
SPEAKER_01: And can better use of commercial data and AI give CFOs and COOs earlier visibility of where value is being created and where it's being lost.
1:51
SPEAKER_01: So we're excited because this episode is the second in a four-part series called A Letter to the CFO, which we have created in collaboration with Maulbeck.
2:01
SPEAKER_01: Now, the first part on the neglected asset shows why the contract portfolio is finance's richest signal of both value and exposure and how to make it visible.
2:14
SPEAKER_01: So if you missed that, make sure you head over to the CCM Institute website to catch up.
2:19
SPEAKER_01: But today, the second part is the base of our conversation.
2:23
SPEAKER_01: And I'm very lucky to be joined by two experts, Matt Patel, who is co-founder and COO of Malbec, and Craig Conte, global and UK lead partner of contracts at Deloitte.
2:37
SPEAKER_01: Matt and Craig are here to guide us through this evolving landscape.
2:41
SPEAKER_01: Welcome, Matt.
2:42
SPEAKER_01: Welcome, Craig.
2:44
SPEAKER_03: Thank you, Nikki, for having us.
2:46
SPEAKER_02: Thank you.
2:46
SPEAKER_02: Great to be here.
2:47
SPEAKER_02: I'm sorry, I think I didn't I've been saying your last name the wrong way for the last like 10 years.
2:51
SPEAKER_02: So sorry about that.
2:54
SPEAKER_01: You can make you can make up for it today, Craig.
2:56
SPEAKER_01: That's all right.
2:57
SPEAKER_01: So let us dive in.
2:59
SPEAKER_01: I want to start with the paradox at the heart of this piece, because um more than half of CEOs expect revenue to grow, yet a third expect margins to fall.
3:12
SPEAKER_01: So what does that tell us?
3:15
SPEAKER_01: Is it really a pricing and cost problem or something deeper in how commercial commitments turn into financial outcomes?
3:24
SPEAKER_01: Matt, I'm going to come to you first to dive into this question.
3:28
SPEAKER_01: What are your thoughts?
3:30
SPEAKER_03: So as I look at the industry and I'm often watching the news or the posts on social media, LinkedIn, whatnot, everyone is revenue focused.
3:40
SPEAKER_03: What is my annual revenue?
3:42
SPEAKER_03: Everyone is top line focused.
3:44
SPEAKER_03: Very little few focus on profitability, margins, and the actual cost of doing business.
3:52
SPEAKER_03: CFOs are tracking it.
3:53
SPEAKER_03: But think about contracting.
3:55
SPEAKER_03: How often is a CFO involved in making a decision on what the contracting system should be, how it should be used, configured?
4:04
SPEAKER_03: They're often there to approve the budget for technology investment.
4:08
SPEAKER_03: But in our world and the way we believe contracts are an enterprise asset, CFOs can absolutely benefit from this investment because while they can see the revenue side of things in the contract and commercial terms, if you connect all of the dots between your revenue and customer contracts tied to your suppliers and supply chain agreements, where you're sourcing your product or services to service your customer needs, then you start to make sense out of, okay, what is my cost of goods and services that I'm actually selling to these customers?
4:48
SPEAKER_03: Am I paying the best price across my suppliers selling similar products or services?
4:55
SPEAKER_03: What rates am I paying?
4:57
SPEAKER_03: And start to analyze that data so that you can negotiate better terms going forward.
5:03
SPEAKER_03: The CFO can actually be involved in that whole process to ensure that the margins rise.
5:09
SPEAKER_03: It's not always about, you know, what's the most I can get out of a customer and increase my top line revenue growth, but being able to get that visibility and insight into my current landscape of contract families and supplier agreements, um, and calculating the margin in advance or even doing what-if scenarios, being able to see that, okay, at this price, here's what my margin results would be, uh, and allow you to negotiate better.
5:36
SPEAKER_03: So I think it's um pricing and cost is certainly a part of the issue, but the deeper problem is how CFO is often relying on Excel sheets or accounting and ERP systems to analyze and make decisions when the contracts have the deeper insight uh to complement that information.
6:00
SPEAKER_03: Um so, Craig, I know you work with a lot of organizations from Deloitte and often CFOs.
6:08
SPEAKER_03: Uh, what do you hear from them?
6:10
SPEAKER_02: Yeah, no, well, I think that that's an excellent answer.
6:12
SPEAKER_02: Matt, I haven't seen you in a while, you're still very smart.
6:15
SPEAKER_02: I think it's it's good to have you know, I think those connections that you're talking about and those insights, that's I mean CFOs are are funny beasts, right?
6:24
SPEAKER_02: You know, I think that a lot of times, you know, they're very busy, their time is constrained, and they kind of just really want to know, tell me the answer.
6:31
SPEAKER_02: How do I fix this?
6:33
SPEAKER_02: You know, how do I do this?
6:34
SPEAKER_02: And I think the points you made about the connectivity, the insights and and and doing something clever between your supplier and other contracts is I think it's spot on.
6:44
SPEAKER_02: And I think people tend to, you know, it's it's very easy, I'm sure we'll talk more about it that you know that it's very easy to argue on price, but it's very hard to create value.
6:53
SPEAKER_02: Those are two different things.
6:54
SPEAKER_02: And don't confuse the two, please.
6:56
SPEAKER_02: Um, so yeah, I think I agree.
7:00
SPEAKER_02: It's a nice way to say that.
7:04
SPEAKER_01: Matt, uh Craig, I'd like to extend on that question a little bit more now.
7:10
SPEAKER_01: Um because when things get uncertain, the instinct is to squeeze harder on cost.
7:17
SPEAKER_01: But the article argues that driving procurement savings and supplier pricing can actually increase risk.
7:25
SPEAKER_01: So, how how would you say executives should think differently about costs, margin, and resilience?
7:34
SPEAKER_02: I think it's uh it's not binaries, right?
7:37
SPEAKER_02: And I think also too that that push there, and I'll say the same people from procurement listening to this, which I hope they will.
7:44
SPEAKER_02: Like, you know, we always hurt the ones we love.
7:46
SPEAKER_02: I think you know, you need your suppliers.
7:49
SPEAKER_02: Fundamentally, you need your supply chain.
7:52
SPEAKER_02: You know, that there's very few companies, unless you're gonna go buy the supply chain, like you know, that you know, that that that shopping company, right?
7:59
SPEAKER_02: You need your suppliers.
8:00
SPEAKER_02: So what happens in real life if you squeeze the supplier on there?
8:04
SPEAKER_02: Do you think you're gonna get the best service?
8:07
SPEAKER_02: Like if you're mean to your waiter, is the food gonna be better?
8:12
SPEAKER_02: Or could something else potentially happen to your food?
8:15
SPEAKER_02: So I think just being realistic about this, and I understand what they should always argue and try to get the most price about this, but you should be more resilient.
8:23
SPEAKER_02: I think COVID taught us a lot of these lessons there too, that you know, companies you know dealing with these big changes, you know, the ones who got through it together worked together.
8:34
SPEAKER_02: Yes, there were force majeure clauses, yes, there was all sorts of problems going on, etc.
8:38
SPEAKER_02: But the companies that worked really well is they engaged their suppliers and had open discussions about how do we do this, right?
8:46
SPEAKER_02: I need to ship X to Y, but I can't go this way when I do it.
8:50
SPEAKER_02: And you see it now with the you know situation in the street and other things that are going on out there.
8:55
SPEAKER_02: And I think these uncertain times, see, that's really sort of the underlying issue here, right?
9:01
SPEAKER_02: Is you know the reason why the margin and revenue discrepancies are there, it's it's easy to sell stuff when you have inflation, so things cost more.
9:10
SPEAKER_02: Right?
9:10
SPEAKER_02: You know, the you know the inflation's hitting a certain level, you know, your net revenue just goes up.
9:15
SPEAKER_02: And that's not necessarily because you're selling more, it's just because money is worth less.
9:20
SPEAKER_02: Uh the margin issue then becomes because you know, look, I'm I'm a posner guy when it comes to economics, look that up, in terms of you know, he's looking for like free trade, less, you know, more efficient markets.
9:33
SPEAKER_02: We have incredibly inefficient markets right now, and the reason for that is you know, like it starts with T and Ramsa tariff.
9:39
SPEAKER_02: And you know, all the trade issues and all those disruptions out there, they're hitting both the suppliers and customers and everyone else out there.
9:46
SPEAKER_02: So I think just trying to make this someone else's problem, just like in real life, doesn't work.
9:52
SPEAKER_02: It's not going to work with your contracts or your suppliers.
9:55
SPEAKER_02: And I think the smart CFOs and COO organizations are doing the ones that say, like, hey guys, you know, this is a problem.
10:04
SPEAKER_02: Let's engage on it.
10:05
SPEAKER_02: And you know, that tends to be a more, you know, with the insights Matt's talking about tends to lead to a better answer than just you know doing like procurement 101 from 1995.
10:16
SPEAKER_02: I think I get 10% lower.
10:19
SPEAKER_02: That's not gonna do anything good.
10:21
SPEAKER_02: So I hope that answers.
10:22
SPEAKER_01: Yeah, it does indeed.
10:24
SPEAKER_01: Um, Matt, does that resonate with you?
10:27
SPEAKER_01: Do we hurt the ones we love?
10:28
SPEAKER_01: How should executives be thinking differently?
10:32
SPEAKER_03: So the famous saying of you you get what you pay for, and Craig's analogy of the restaurant is so true.
10:39
SPEAKER_03: Uh if you're gonna squeeze every dollar out of your caterer or your restaurant, they're gonna use bad produce, bad supplies, and your food is gonna taste like crap.
10:50
SPEAKER_03: You know, you got your price, but your guests are not happy.
10:54
SPEAKER_03: So, how do you uh protect your side and ensure profitability and margins and all while still working with those suppliers?
11:04
SPEAKER_03: One of the best negotiations and customer relationships I've had in my journey at Malbec, we were selling our CLM solution to a large media company.
11:12
SPEAKER_03: And when came time to negotiate the terms, they came to the table and said, Okay, Matt, here are five important things for us as a business.
11:20
SPEAKER_03: Tell me your five important things so that we can negotiate on terms that helps both of us.
11:27
SPEAKER_03: That's so powerful because when you work with suppliers, you've got to also analyze their financials.
11:35
SPEAKER_03: Are they squeezing every dollar out of their own suppliers to service your needs?
11:41
SPEAKER_03: Because it's a supply chain.
11:42
SPEAKER_03: You're talking about pricing between you and your customer or your supplier, but they also have the same situation with their own counterparties.
11:53
SPEAKER_03: So when executives are negotiating or reviewing contract terms or amending or renewing uh future agreements and pricing, they have to take into account the economic and global situations, as Craig mentioned, um, the tariff or the fuel price for transportation.
12:15
SPEAKER_03: You know, you can't force a supplier to say, hey, you cannot increase price no matter what.
12:20
SPEAKER_03: If the gas price doubles, they're not gonna lose business.
12:24
SPEAKER_03: They're either gonna shut things down or they're just not gonna transport the goods or they're gonna do something that doesn't help you.
12:29
SPEAKER_03: So help them help you, I guess, is is uh what I would say in this situation.
12:34
SPEAKER_01: Yeah, absolutely.
12:35
SPEAKER_01: Great insights, Matt.
12:36
SPEAKER_01: So let's that leads us on to the next question.
12:39
SPEAKER_01: Because if cost cutting isn't the answer, perhaps the problem sits somewhere else.
12:44
SPEAKER_01: And the article says um value is lost in the gaps between functions, not within them.
12:51
SPEAKER_01: Um, so back to you, Matt.
12:53
SPEAKER_01: Why has that fragmentation been so persistent?
12:57
SPEAKER_01: And what would actually have to change in the operating model to manage value across the life cycle?
13:05
SPEAKER_03: So historically and even today, every function operates on a solution technology platform of its own.
13:12
SPEAKER_03: And then yes, they're all integrated, but the transfer of knowledge and data is 70, 80% at best.
13:18
SPEAKER_03: So if you think about your customer-facing revenue sales team and they're operating in CRM, and and that data then gets passed down to, let's say, the contracting system, a CLM, you know, you might get 70, 80% of that data into CLM.
13:36
SPEAKER_03: Contracts are negotiated.
13:38
SPEAKER_03: Umstream, the fulfillment obligation teams, CFO, are using an ERP or a supplier, vendor management system or finance system, or all of the above.
13:51
SPEAKER_03: All the data being out of the contract is now, again, 70-80%.
13:57
SPEAKER_03: So you lose another 20-30%.
13:59
SPEAKER_03: So operating in these systems in a silo, even with integration, is not giving you the 100% picture.
14:07
SPEAKER_03: Uh with the advancements in AI and analytics, I think organizations have to look at overall landscape sitting above each of these technology platforms, of how AI, and I know we have to talk about AI before we end, right?
14:24
SPEAKER_03: So I'm gonna start it here.
14:26
SPEAKER_03: Um, how can AI help analyze the data points between these systems and using some kind of an analytics platform so that each function can do their job, work within the data that they have, but they they get the bigger picture across the commercial value, uh across the life cycle, rather than each department, you know, being focused on only their task and not thinking about downstream or upstream impact of what they're about to decide on.
14:56
SPEAKER_01: Yeah, absolutely.
14:58
SPEAKER_01: Craig, you work with so many organizations, you must see this that you must be sick of uh hearing working in silos.
15:05
SPEAKER_01: Um, but what what's your what's your thoughts?
15:09
SPEAKER_01: Like how what needs to change?
15:12
SPEAKER_02: Yeah, it does kind of get to like busted contract karaoke now.
15:16
SPEAKER_02: Like I kind of hear it over and over again.
15:18
SPEAKER_02: Yeah.
15:19
SPEAKER_02: Uh but you know it's the same issue.
15:21
SPEAKER_02: You know, contracts are touched by everyone, no one.
15:24
SPEAKER_02: And you know, all the things that Matt you know so artfully described there, you know, these are the problems.
15:29
SPEAKER_02: It's it's like the old uh the old parable of the three blind men touching the elephant.
15:34
SPEAKER_02: You know, one touches the nose, thinks it's a snake, one touches the leg, thinks it's a tree.
15:39
SPEAKER_02: You know, one touches, I forget, but something.
15:41
SPEAKER_02: But you see what you know, no one's seeing the elephant for what it is.
15:45
SPEAKER_02: No one's seeing the absolute value.
15:46
SPEAKER_02: And you know, I I you know I wish I had the answer.
15:49
SPEAKER_02: I've been you know posting about this, traveling about this.
15:52
SPEAKER_02: You know, maybe I need to get Jude Law to help me.
15:56
SPEAKER_02: That seems to work in this industry now.
15:58
SPEAKER_02: So maybe I need to go that way.
16:01
SPEAKER_02: But I mean, you know, companies just do this, it's just the way they're built.
16:04
SPEAKER_02: You know, the structures and the pyramids, and we all kind of know, well, I need an HR department, I need a you know procurement department, I need a legal department, never the never the three shall meet.
16:15
SPEAKER_02: It's just the way we sort of built that.
16:16
SPEAKER_02: I think you know, you would never build that, you know, organically yourself.
16:21
SPEAKER_02: Like if you guys were all, if you're all going out to eat together, you know, I'll use another analogy.
16:25
SPEAKER_02: Like you don't say, okay, like you know, Nikki, you're gonna eat the appetizer, Matt, you're gonna eat the mane, and Craig, I'll eat the dessert.
16:32
SPEAKER_02: So you're all gonna go together because you care about the whole meal, and you're gonna say, Do you want Italian?
16:37
SPEAKER_02: Do you want Spanish?
16:38
SPEAKER_02: Do you want something?
16:39
SPEAKER_02: And I think that it's just like dumb stuff like that, which we would handle as normal humans, because humans are pretty smart, despite the evidence.
16:48
SPEAKER_02: We can handle these things, but for some reason when we go into a corporate, you know, we're we're locked into our teams and tribes, and we just don't share information enough.
16:58
SPEAKER_02: And we forget why we're doing something.
17:00
SPEAKER_02: It becomes more important that it has to get done by November 5th, and why we're doing the thing in the first place?
17:09
SPEAKER_01: Oh, so what does fixing it look like, Craig?
17:13
SPEAKER_01: The article sets out four changes.
17:15
SPEAKER_01: Um, they are common uh contracting baseline, integrated data and AI, a commercial integrator capability, um, and of course, new commercial skills.
17:27
SPEAKER_01: So, which one demands the biggest mindset shift, do you think?
17:31
SPEAKER_01: Um, what happens if you invest in the tech without just changing decision rights, roles, and behaviors?
17:39
SPEAKER_02: This is the classic.
17:40
SPEAKER_02: There's like what 100 reports a year that comes out about this.
17:43
SPEAKER_02: Everyone's adopting AI, but no one has any, uh no one has proven any ROI.
17:47
SPEAKER_02: I wish I could have bet.
17:48
SPEAKER_02: I wish I could have placed a bet somewhere on that.
17:50
SPEAKER_02: Actually, in America, you can't, you can bet on everything, can't you?
17:55
SPEAKER_02: But that's not a good thing.
17:58
SPEAKER_02: Uh but I mean, I think that it's that commercial mindset.
18:01
SPEAKER_02: I think it's understanding, I think people there still is out there that, well, it can go faster.
18:08
SPEAKER_02: We have to break the chain of thinking that efficiency equals value.
18:15
SPEAKER_02: It doesn't, right?
18:17
SPEAKER_02: It may make something faster a little bit.
18:19
SPEAKER_02: That's sort of interesting, but that doesn't actually make the value of something.
18:22
SPEAKER_02: So I think having that commercial mindset of saying, like, what is the thing that we want to accomplish here?
18:27
SPEAKER_02: Like, what is the like to give you a live example?
18:30
SPEAKER_02: I used to work in a company, you know, doing this in-house, and we you know, we weren't losing money on like you know, our confidentiality clause, you know, our limitational liability clause, which no one ever had to enact, right?
18:41
SPEAKER_02: Or anything like that.
18:43
SPEAKER_02: Where you lose money in a services business actually is about people being on the bench.
18:48
SPEAKER_02: So what we decided to do was change the deemed acceptance clause.
18:52
SPEAKER_02: Now I'm getting contractually wonky here, but if you give a client something in a service and they have a five days to you know accept, reject, or respond, if they fail to do anything because they're busy or whatever, we had a clause in there that said deemed acceptance, which means that then we had contractual right to say we can move forward.
19:12
SPEAKER_02: And we would argue for this and we would we would put this in most of our clauses, but those those those engagements that have that clause are much more profitable and moved a lot smoother because we focused actually on the thing that affected us and not just all the noise that happens in organizations.
19:30
SPEAKER_02: So I think that mindset, that commercial mindset, picking you know, all four of those things are good ideas.
19:35
SPEAKER_02: So whoever wrote that should be spot on, good idea, you should do all those things.
19:39
SPEAKER_02: I think that mindset of just thinking about what is real value to us in this relationship and understanding that, if you get that unlocked, it's a very good North Star.
19:51
SPEAKER_01: Yeah.
19:52
SPEAKER_01: Um, I'm loving all the analogies today, Craig.
19:55
SPEAKER_01: Um, Matt, what uh what about you?
19:57
SPEAKER_01: What are your thoughts on this one?
19:59
SPEAKER_03: I'm compelled to use an analogy myself, Matt.
20:03
SPEAKER_03: Well, uh okay, I will, because we're talking about food.
20:06
SPEAKER_03: Clearly, all of us are hungry.
20:07
SPEAKER_03: It's lunchtime here in the US.
20:10
SPEAKER_03: Um, when you go into a restaurant, you don't sit down and say, Hey, I will only pay for my meal if I accept your food and I like it.
20:21
SPEAKER_03: Right?
20:21
SPEAKER_03: Um, you're paying.
20:23
SPEAKER_03: I mean, obviously you can argue and all that, but typically we pay.
20:26
SPEAKER_03: Worst cases, if you don't like it, you might write a bad review.
20:30
SPEAKER_03: So in our personal life, when you buy a car or anything, you don't walk out, drive it around, and say, I'll only pay you if I like the car.
20:37
SPEAKER_03: We pay and we hope for the best.
20:40
SPEAKER_03: Now, I'm not saying that's how you negotiate contracts, but oftentimes I see the customer who's in the driver's seat pushing the vendor saying, Hey, I will only pay you if I accept your technology or your service.
20:52
SPEAKER_03: Think about what that means.
20:54
SPEAKER_03: You're putting that other side in a bind because technically you can hold them hostage.
20:59
SPEAKER_03: So is that the right way you want to negotiate?
21:02
SPEAKER_03: Um come up with a way where both sides can succeed that, hey, you know, I will try to accept a reasonable uh level of success.
21:10
SPEAKER_03: But if there are ch challenges and issues, we need your commitment to work with us to solve them.
21:16
SPEAKER_03: And that's the best you can hope for.
21:19
SPEAKER_03: Yeah, and that's a good relationship to have.
21:21
SPEAKER_03: Now the uh biggest shift in the executive mindset here is I think hold each uh department accountable and measure them not only on their own responsibilities and tasks, but overall success of the initiative or the company or the margins or the ARR, whatever it is that you're measuring on.
21:47
SPEAKER_03: So when sales is selling, their targets are monthly, quarterly, annual revenue targets.
21:55
SPEAKER_03: But also tie in some way of the success of that revenue.
21:58
SPEAKER_03: Did that customer or Or the supplier or whoever succeed in getting the results that you wanted to achieve with that contract.
22:05
SPEAKER_03: Contract is just a legal piece of paper, but they're supposed to be objectives and milestones and um initiatives that you have to deliver on.
22:13
SPEAKER_03: So measure them on that.
22:15
SPEAKER_03: Legal should be measured on, okay, which clauses did you push hard on and redline and spend months negotiating?
22:22
SPEAKER_03: And out of the you know, thousands of agreements, what percentage of those contracts ever got into any of the provisions that you harped on so much?
22:31
SPEAKER_03: Right.
22:32
SPEAKER_03: Supply chain or vendor vendor supplier team, you know, procurement, measure them on third-party paper and your suppliers and how successful has that been really.
22:41
SPEAKER_03: I know we're running out of time, but what I'm saying is expand that goal and the how you measure each department so that um organizations can invest in not only the technology but the people to succeed as a whole.
22:56
SPEAKER_01: Yeah, great points, Matt.
22:58
SPEAKER_01: So finally, let's let's just bring it back down to earth.
23:01
SPEAKER_01: Matt, I'm gonna come to you with this last question.
23:04
SPEAKER_01: Um, you're sitting with a CFO or a COO who accepts their commercial model is eroding margin, but they have no appetite for another big transformation, what they perceive to be another big transformation.
23:19
SPEAKER_01: What should they do differently in the next 12 months and where should leadership intervene first?
23:25
SPEAKER_01: So, Matt, you can go and then and then I'll come to you, Craig.
23:30
SPEAKER_03: Um, this is a tough one because there's no right answer.
23:34
SPEAKER_03: If you don't have an appetite for another transformation program or even a small one, uh, then it's business as usual.
23:42
SPEAKER_03: But we have to do something, right?
23:44
SPEAKER_03: Change is not gonna happen if you don't try to change.
23:47
SPEAKER_03: So pilot something.
23:48
SPEAKER_03: Pick a particular uh customer, supplier, agreement type, um corporate initiative, whatever it is that you can chunk into a few weeks project and try to change that and see how it results before you go for the large transformation across sales and finance and revenue uh procurement teams.
24:11
SPEAKER_03: Uh the leadership, you know, appoint a steering committee and create a small manageable uh uh transformation project and pilot that.
24:22
SPEAKER_03: Um and then you'll see, okay, did it result in a 10, 20% improvement, 50% improvement, or 0% improvement?
24:29
SPEAKER_03: And then you can make a decision, okay, do we want to try this again on a different area or just not do it because it's not gonna succeed?
24:36
SPEAKER_00: Yeah, yeah, great thoughts.
24:38
SPEAKER_00: Craig, what uh what advice would you give?
24:41
SPEAKER_02: Well, first of all, you should obviously get a great consulting firm to help you do the biggest transformations you should do.
24:46
SPEAKER_02: I I don't I don't even understand the question.
24:49
SPEAKER_02: Like I don't even understand that mindset now, but kid aside, uh I think Matt's saying the right stuff.
24:56
SPEAKER_02: I I think you know and I think you saw this with sort of the AI way that we're going.
25:02
SPEAKER_02: You saw companies like say, Oh, we're gonna go all in on Company X and get everyone licenses to do stuff, and you know, that you know, you know, I could see why you don't have the appetite for a big transformation because you thought you tried one before, which really wasn't a transformation.
25:19
SPEAKER_02: You just gave you know everyone water guns and wanted to see what would happen.
25:22
SPEAKER_02: Well, guess what?
25:23
SPEAKER_02: They all got wet.
25:25
SPEAKER_02: Yeah, so I think what you what you have now, I think it's about to say is like you'll pick like my previous hands, like, pick the thing that's gonna be effective to you, you know, pick one or two or three, right?
25:35
SPEAKER_02: Because it's hard to say, hey, my contracting's broken.
25:37
SPEAKER_02: Of course, it is getting line.
25:39
SPEAKER_02: You know, that's a very existential thing to fix.
25:43
SPEAKER_02: But if I say, look, look, I think I wish I could do my clinical trial, my CTAs faster, that would have a big impact on me.
25:50
SPEAKER_02: I can get drugs out you know, faster.
25:52
SPEAKER_02: That's good you know, for people, because people like drugs, but also it's good for the bottom line because it generates revenue.
25:59
SPEAKER_02: And that's a very defined case.
26:01
SPEAKER_02: And you can say, well, look, you know, whatever technology I'm using, a fine platform like or otherwise, right?
26:07
SPEAKER_02: To to be doing something like that.
26:09
SPEAKER_02: You know, victory has a thousand fathers and failures and orphan.
26:14
SPEAKER_02: Pick something that you know, what's and in strangely enough, if you get that, and then I get that mindset, everyone will say, Hey, you know what?
26:20
SPEAKER_02: I have you know, I see how you solved that problem.
26:23
SPEAKER_02: Can we do something like that over here on X?
26:27
SPEAKER_02: And guess what?
26:28
SPEAKER_02: Lo and behold, accidentally, you will fall into an ongoing transformation program.
26:35
SPEAKER_02: One thing that works and has impact, and do that first.
26:40
SPEAKER_01: Well, I think that's a great place to leave it, Craig.
26:44
SPEAKER_01: Um, that's all we've got time for.
26:46
SPEAKER_01: I mean, we've talked about water guns, elephants, dining out, broken contracts, and lots, lots for CFOs to dig into in this conversation, but I've really enjoyed it.
26:56
SPEAKER_01: Uh, what today's conversation has highlighted uh is that the margin challenge is not simply a question of cutting costs.
27:04
SPEAKER_01: If commercial value is being lost across fragmented processes, functions, and commitments, then protecting margin requires a different operating model, one that connects commercial decisions to the outcomes that they ultimately produce.
27:18
SPEAKER_01: But I would like to say a very huge thanks to my friends Matt and Craig for joining me today.
27:24
SPEAKER_01: Thank you.
27:25
SPEAKER_03: Thank you.
27:27
SPEAKER_03: My pleasure.
27:27
SPEAKER_03: Thanks for having me.
27:28
SPEAKER_03: Great conversation.
27:29
SPEAKER_03: And I think I'm going to go to a restaurant this evening and try some of this out.
27:32
SPEAKER_01: Yeah, absolutely.
27:34
SPEAKER_01: Me too.
27:34
SPEAKER_01: Uh well, if you liked what you heard today, stay tuned for our next episode in this four-part series on The Margin You Borrow, where we'll continue to explore the ideas, innovations, and leadership shifts shaping the future of commerce and contracting.
27:51
SPEAKER_01: Until then, keep challenging, keep adapting, and keep leading.