Traditional approaches to negotiating and contracting are to learn and then do, often accompanied by role-playing. Innovative educational approaches are allowing companies to make the shift from role-playing to “real-playing,” where buyer and supplier teams create strategic Vested outsourcing agreements through real-time “learning-by-doing.”

The result? Take a class and the contract is your homework. 

The University of Tennessee (UT) began studying complex outsourcing deals in 2003 as part of a research project funded by the United States Air Force. Researchers took their learnings and developed what they coined “Vested Outsourcing” — a methodology and business model for creating highly collaborative win-win outsourcing deals. When the first book on Vested came out in 2010 — Vested Outsourcing: Five Rules That Will Transform Outsourcing — the response was strong. People loved the theory of Vested, but how do companies turn theory into practice?

The challenge was that negotiating and contracting skills have been pretty much taught the same way for decades. Take a seminar or course and do role playing to learn the skills. Then take the learnings back to the office and apply the skill in real life on your own. UT researchers knew if they were going to get traction, they would have to come up with a practical way to help teach companies the theory and practice of creating a Vested agreement.

How does it work? A buyer and supplier team (typically executive level professionals doing the deal, such as commercial managers, account and sales executives, or procurement professionals) first take an online or on-site course to get the basics of the why and what of Vested outsourcing. They then take the online Creating a Vested Agreement course where they learn the how and the why: their homework becomes the contract. Gone are the days of role-playing, replaced by UT’s innovative RealPlaying techniques, which couples just-in-time online course resources with a comprehensive toolkit and field-based support from a Vested Center of Excellence that can provide coaching support. 

By integrating the learning-and-doing process, it significantly increases an individual’s ability to successfully apply their learnings in practice. By working through this process, students have gone through an apprenticeship program in the art, science and practice of structuring an outsourcing relationship. Students can then take additional coursework and applied work where they can become a Certified Deal Architect. 

UT’s innovative and practical approaches for bridging the gap between theory and practice are gaining traction. Contract Management magazine calls UT’s approach “innovative” and the Economist Magazine ranked UT’s graduate education #1 in the world for “relevance.” But the real proof is in the pudding when companies like Dell/Genco (FedEx) and Intel/DHL use the program to generate real win-win results — for the buyer and supplier.

The Outlook

Organizations looking for a fresh approach to implement modern, relational contracts need to have the proper tools and resources at hand. This means a shift away from the traditional learn-and-do-later model to one of an integrated learning-by-doing approach. It’s no longer role-playing in how to negotiate; its “real-playing,” where teams come together and learn by doing, using a common framework and a coach to provide real-time, hands-on feedback.

Kate Vitasek is a faculty member at University of Tennessee’s Haslam College of Business Administration.