The Devil’s In The Details Of The Deal
It’s always very important to look at both the big picture and the details of any business deal. While the big picture can give you a rough idea of how things look, it’s the details that can add up, either in your favour, or against you.
To give you an idea of how important the details in a deal are, I’ve got two stories:
1. The Power Of Co-Branding
If you’ve checked out my About page, you know that I used to be in the bottled water industry.
Well, back then we had a good customer who wanted to put together a co-branding deal with us. Basically, that means our brand and theirs on the label. They had several brands, which complicated things. And after crunching all the numbers I found that the proposed deal couldn’t make money.
But we did it anyway. Luckily.
Within a month the volume of product they were taking literally doubled. And not only did the deal become profitable because of this, but it became one of our best accounts.
The detail we didn’t see was that our customer started pushing the product. And hard. All because they now had their branding on the label too. Co-branding deals can be very good strategic alliances.
2. The Emperor, The Mathematician, And A Chessboard Full Of Rice
This is an old fable. It’s one of those ones that you never forget.
A long, long time ago, the Emperor of India was introduced to the game of Chess by one of his wisemen who was also a brilliant mathematician. The Emperor loved the game so much that he wanted to reward the man and asked him to choose a reward.
The wise man chose rice. Yep, rice. He asked that one single grain of rice be put on the first square of the chessboard, 2 grains on the second, 4 on the third, etc. Each square would receive double the amount of rice as the last square until all 64 squares were accounted for.
The Emperor thought this was a modest request and promptly called for his servants to bring the rice.
They very quickly ran out of rice. Thanks to one little detail the Emperor overlooked; the power of exponential growth. By the time you get halfway through the Chessboard, the amount of rice adds up to about 100 tons of rice. By the time you get to the 64th square, it adds up to about 450 billion tons of rice.
Or better said, about 740 times the total World rice production in 2004.
The devil’s in the details.