An interview with Merrick Walford
Our discussion painted a clear picture of the state of contracting and commercial management today - one that highlights the need for better alignment, clearer roles, and contracts that are far more adaptive to fast-moving and often unpredictable market conditions. Organizations are navigating increasing complexity, and in many cases, commercial managers and contract specialists find themselves stretching beyond their traditional roles. Too often, there is a disconnect and in those cases, rather than contract management supporting commercial goals, it becomes a barrier.
These challenges point to a broader conversation about modernizing contracting practices and improving collaboration and shared understanding with both internal and external stakeholders. While commercial and contract management are inherently linked and should operate as integrationist disciplines, they are too often treated as separate. This disconnect results in inefficiencies, misaligned goals, and strained relationships - ultimately limiting an organization's ability to maximize the potential of its suppliers and the value provided to its customers.
Why Commercial and Contract Management Must Work Together
Managing customer and supplier relationships is not just about enforcing contracts. Success depends on a balance between commercial management, which develops the commercial models on which contracts and relationships are based, and contract management, which oversees the financial, legal and procedural framework that governs those relationships.
It is the role of Commercial management to define and implement policies, practices and procedures that support market engagement. At a transactional level, it may involve negotiations and strategic alignment, ensuring the selected contract model is structured to deliver value beyond basic compliance. Contract management, in turn, then ensures compliance, risk mitigation, and performance of agreed terms - but it also needs to support dynamic business needs, not just lock parties into rigid agreements. Where problems often occur is in the use of standard templates, applied by people or systems that have limited understanding or authority in determining their suitability.
A well-structured contract reflects commercial goals and market reality, but it alone cannot ensure success. Commercial management should ensure the necessary business capabilities for contract performance. For example, performance or outcome-based agreements require systems and skills very different from those needed to support standard product sales or acquisition contracts.
Without effective contract management, commercial objectives can be undermined by a failure to understand rights and obligations, misinterpretation of terms, unrealistic expectations, or contractual structures that fail to support flexibility. These two disciplines must work in tandem, ensuring that agreements are not only well-drafted but also well-executed over time.
Why the Disconnect Persists
Despite the clear interdependence, many organizations still treat commercial and contract management as separate functions or activities. They may not have clear ownership of either, relying on the informal performance of these roles. The failure to establish alignment often stems from how these activities are perceived.
- Contract management is often seen as a discipline to enforce compliance, focused on legal obligations and risk mitigation. The role is frequently viewed as transactional and administrative, with little ability to influence commercial strategy.
- Commercial management, where it exists, is more strategic, focused on market relationships, financial outcomes, and ensuring long-term commercial success. However, it may not always provide the mechanism to align contract structure or governance, missing opportunities to shape more flexible, value-driven agreements.
Procurement teams may be part of the problem, since they frequently drive the contract terms. Instead of regarding themselves as the guardians of the alignment of the commercial and contracting activities, it is not unusual for them to be motivated to reduce risk through the use of standardized contract templates. While this approach ensures consistency, it can create a culture where compliance to process becomes misaligned with commercial needs. By emphasizing rigid adherence to standard terms, procurement may unintentionally create risk through inappropriate contract terms and add to cost through unnecessary or ill-advised risk transfer.
The Cost of Misalignment
When commercial and contract management activities are not aligned, organizations face several critical issues:
- Execution inefficiencies – Contracts may be difficult to implement effectively if commercial priorities are not clearly reflected in contractual terms.
- Missed opportunities – Without a strong commercial strategy embedded into contracts, organizations may fail to capitalize on cost savings, growth and innovation opportunities, or performance improvements enabled by their suppliers
- Damaged relationships – Poorly structured contracts or rigid compliance processes can create friction between buyers and suppliers, reducing trust and collaboration.
- Costly overruns – When contracts fail to account for changing circumstances, organizations risk disputes, delays, and increased costs due to inflexible terms or unclear obligations.
A More Integrated Approach: Lessons from WorldCC
WorldCC has been at the forefront of advocating for a more connected approach to commercial and contract management. This requires improved analysis of required market relationships and ensuring commercial and contracting models that support these relationships. A key element of this work involves promoting a shift away from over-reliance on transactional, compliance-driven models toward contracts that support long-term collaboration or facilitate greater adaptability.
Rather than treating contracts as static legal documents, contracting should be an extension of commercial strategy. This means:
- Involving contract management early in the commercial planning process, ensuring agreements reflect strategic priorities rather than just legal requirements.
- Designing contracts that balance structure and flexibility, allowing for adaptation as business conditions change.
- Fostering and facilitating greater collaboration across stakeholders to ensure that contract terms align with business goals and support successful outcomes.
This shift requires organizations to move away from outdated views of contract management as a back-office function. Instead, contracts should be seen as a dynamic tool for value creation, reinforcing commercial goals rather than simply dictating compliance.
Conclusion
The disconnect between commercial and contract management has long been a barrier to better buyer / supplier relationships and the delivery of optimal value. However, as organizations embrace more integrated approaches, particularly with the support of more sophisticated AI-enabled systems. there is an opportunity to break down silos and unlock greater value from contracts.
By moving from rigid, compliance-focused contracting toward a more flexible portfolio of relationship-driven agreements, businesses can enhance collaboration, reduce risk, and drive long-term success. The key is recognizing that commercial and contract management are not separate disciplines but two sides of the same coin - and ensuring they work together to deliver meaningful business outcomes.
Merrick was in conversation with Tim Cummins, Tara Bevan and Cinthia Navarez Martin from WorldCC.
Merrick Walford, Founder and President, Comskicom
Merrick’s career journey began in operations and operations management before expanding into key roles across major commercial functions. With 37 years of experience at Schlumberger, he has since transitioned into commercial training and coaching as the founder of Commercial Skills Companion (Comskicom). Additionally, he is a co- collaborator of TOG Conseil, bringing his expertise to a wider network.