Experimental project
The ideas of Sofi and Rumi helping address a societal challenge, emerged out of a small R&D project funded by the Dutch Ministry of Defense. The aim of the project was to develop new thinking in arena of public procurement. Conventional thinking is seen to be costly not only in terms of the administrative costs but also in creating cheaper contracts that turn out to be costlier in the long run. The low levels of goodwill and trust were also seen as problematic because of the need to have strategic relationships with suppliers. Whereas the ideal is to have contracts that procure higher value at lower prices but with suppliers having healthy profit margins; higher profits but without ‘cutting corners’ that could cause quality, safety, health, or environmental problems. Since such optimality is hard to achieve with conventional methods, the Ministry made a small but special grant to set up an experimental team called Structural.
The small team of six set out to develop and test a few ideas with a €2 billion military procurement as the test case. The team was given documents describing the needs and requirements of the Dutch armed forces around heavy ground, the draft of commercial agreement, and a list of priorities and concerns. The team was also able to interview project staff. The challenge was to generate statements that define the promises of demand and supply that would be the structural basis of a 10-year maintenance and repair contract. Success was defined as creating new insights for the experienced project team; insights that would prompt changes to the traditional contract.
The task turned out to be more exciting than expected but also more difficult due an unexpected reason: war broke out in Ukraine. The defence organisation was suddenly overloaded with work. That meant the Structural team and to make the ideas work with far less input. But there is no design without constraints and the lack of abundant information drove up the inventiveness. Taking inspiration from other engineering, the team found out a way to generate high-quality output from minimal input. And new insights they did create. Several ‘aha’ moments led to the ideas of Sofi and Rumi. For example, the idea of a prospectus for promises of demand and supply, a ‘balance sheet’ that accounts for the benefits, costs and risks on both sides, and a playbook of trades that could be used during actual negotiations.
Of course, as with any experiment a few ideas simply did not work. What matters is that the pilot was successful in proving the value of mutualising multilateral risks. There are ideas for commercial development, around a multisided platform for enterprises and advisory firms, based on Sofi and Rumi. But the project is over. The team has disbanded. For now those ideas are in the custody and control of an independent board of directors that includes, Majid, Indy, and Jann. If you're interested and would like to know more, please do not hesitate to write a note to majid@strctrl.org.