In a world where environmental, social and corporate governance (ESG) is at the top of Corporate Agendas and where 181 CEOs have publicly stated that putting purpose above profit is essential, I would argue that we should all care. Here’s why.
I was recently asked to present on the subject of “Contracts as Boundary Objects” at an event in Brussels where the first findings of an EU Commission feasibility study on “Modelling the EU Economy as an Ecosystem of Contracts” were being presented.
In and of itself, this feasibility study is exciting. It further enforces the view of the Nobel Prize Award Committee that “our societies are built on innumerable contracts”. And in recognising that our traditional system of measuring economies based on GDP is out-dated, it seems entirely logical for the commission to be exploring a new approach - based on contracts.
BUT… What, you might ask, is a Boundary Object? I certainly had to do my homework in preparing for this presentation! So, let’s start by defining what we mean by this term and to do so I will refer out to previous papers that have been written on this subject.
Susan Leigh Star and James Griesemer in their 1989 Paper Institutional Ecology, 'Translations' and Boundary Objects defined a boundary object as “…any object that is part of multiple social worlds and facilitates communication between them.” And as “…objects which are both plastic enough to adapt to local needs and the constraints of the several parties employing them, yet robust enough to maintain a common identity across sites.”
In 2009, Kaj U Koskinen & Seppo Makinen wrote that “A boundary object is a concept for referring to objects that serve as an interface between different individuals and/or organizations.” Role of boundary objects in negotiations of project contracts
And finally, in their 2013 Paper published in the Communication Design Quarterly, Helena Haapio and Stefania Passera refer to a Boundary Object as “an object that serves as a focal point in collaboration, enabling parties to represent, transform and share knowledge”.
Are you with me?!
My somewhat rudimentary research around this subject produced for me, a Eureka moment. Of course they are! Contracts are Boundary Objects! But as we all know from our own personal and professional experiences and as IACCM research frequently demonstrates, Contracts more often than not fall short in that aspiration - they end up being ineffective and incomplete Boundary Objects. Helena and Stefania argue that contracts are in most cases “imperfect” boundary objects: ideally, their role is extremely relevant, yet their implementation is suboptimal. And that is certainly true when it comes to that critical issues of reconciling purpose and profit. Contracts today are too often weapons, rather than objects of communication and reconciliation.
If we look back at some of the key elements of the definitions above, we know that good contracts should “facilitate communication” between multiple social worlds. An employment agreement between an organisation and an individual necessarily connects two different social worlds. A contract for the construction of a new commercial airliner will need to engage multiple user groups, multiple different professional groups, throughout its lifecycle. This contract will need to “serve as an interface between different individuals and/or organisations”.
In looking at the contracting process, it is very evident that multiple boundaries are crossed and reconciled. So, it is in many ways ironic that the produce of the process, the contract itself, is so uni-directed - between the contracting parties and the court room.
In their paper, Stefania and Helena rightly focus on the need for contracts to be communication tools which are (or should be) accessed by a multitude of stakeholders. Yet so often we see contract drafters not focusing on the need to communicate but merely on creating something that is legally sound. And whilst there is no doubt of course that agreements need to be legally sound (and lawyers and the courts are certainly one important boundary), this focus should not overshadow the critical need of the contract to communicate.
It’s why I remain bemused by dismissive views expressed on LinkedIn such as “…when we start requiring lawyers to write for users; it’s like asking a software developer to show his code on the UI (User Interface) …”! That business to consumer contracts would fall outside of the definition of a “regular business contract” (whatever a regular business contract is… I confess I am still none the wiser!) and that work with indigenous and minority communities is “marginal” activity not worthy of note in a discussion about the need to design contracts for users… In our world of ESG, I find these points of view so completely out of touch.
This is why the work that IACCM is doing, along with wonderful and dedicated people like Stefania Passera, Rob Waller and Helena Haapio, is so important and so relevant. Recently a GC posted on LinkedIn looking for people to help with the redesign of contracts and the response was overwhelming - it seems there are a lot of people working in this space right now - and that can only be a good thing! We need to design contracts with all stakeholders in mind, ensuring that they do indeed serve as an interface between different individuals and organisations. This is not only out of respect for those users, but also because it makes such obvious social and economic sense.
So, where are we today? There is clearly still a lot of work to be done. Many of the world’s contracts remain largely impenetrable by anyone falling into the ubiquitous and rather unique category of the “Non-Lawyer”. It is of immense frustration to me that contracts remain the Cinderella of business, tucked in the proverbial basement of the building, unseen and unloved!
Yet we have a lot to be extremely optimistic about. Major global corporations are stepping forward and joining the contract simplification movement, recognising the significant benefits that can be derived from this change in approach.
In concluding, I have extracted a sentence from Helena and Stefania’s paper which I am sure I will be quoting many more times:
“Existing both as artefacts that memorialize consensus and as the outcome of a communicative process of interest matching, contracts can be seen as boundary objects, focal points in collaboration reconciling the diverse worlds of the many groups involved.”
For contracts to be truly Boundary Objects - to be “perfect” Boundary Objects, they need to be treated as such. With the simplification movement and the advent of emerging technologies disrupting the world of contracting - I think it is finally time for Cinderella to go to the ball!