Sunday, 19 December 2010

The Notion (Ink) of Agreements

The content of this post was inspired by reading Rohan Shravan of Notion Ink's blog post entitled "What we have learnt in the past 2 days?". Specifically, the reference to agreements and the length thereof. The original was sent as an email to Rohan, who had been somewhat battered by a rocky launch process of what promises to be the most innovative product for years, as a gesture of support. Ironically his response suggested my assumption regarding lawyerly influences was a little off the mark regarding his reference to length, but the advice stands anyway! And in the context of one of this blog's common themes, it is sound advice for CIOs too. So...

Don't have agreements whose value is measured by length; agreements (contracts) should be as long or as short as is necessary, and if on the long side should have a summary section on the front page that sets out the objectives and intentions of the agreement to serve as a reminder as to why the agreement exists, while the lengthy part is there for accuracy, for detail and for the lawyers.


Don't fall into the trap of thinking business relationships are or should be governed by agreements/contracts, or specifically not the written parts; the written parts are just there for if the relationship goes wrong. Relationships are between people, whether it is groups of people or between individuals. This is true whether the relationship is with a customer, a supplier, a partner or a possible contributor or employee. It is the relationship that is the powerful part in terms of getting things done and sorting problems out. The value of the informal part of the relationship can be made to seem insignificant if overshadowed by other things, such as relative size of the two parties in the relationship (think Rs 300,000 crore[1] Tata and a buyer of a Rs 1 lakh[1] Nano), but while an asymmetrical agreement means the larger party might not always value the relationship with the individual customer, in the end it remains more important than the written agreement, and never more so than in the era of the Internet.

The relationship with the individual is more important for an innovative startup like Notion Ink that needs goodwill to generate its marketing profile and drive sales, whose business model is dependent on the members of the Notion Ink customer family telling others about how great the product is and how great the experience is buying from Notion Ink; a positive relationship will result in further success, a negative one will, at best, not. At worst a negative relationship with a customer could be destructive. The relationship with suppliers is also an particularly important one for a start-up, where key parts of the early adopter customer experience is dependent on those suppliers e.g. hitting shipping dates, handling payments, and ensuring the product quality.

The written legal part of a contract is important, but it is essentially about recompense if all else fails, it is the safety net. Like all safety nets you don't want to end up depending on it. It is important the written contract is correct and balanced, that it protects all parties, because sometimes things go wrong and the courts are needed. But it is the relationship that can mean the law is not required, that the issue facing one party is resolved by the other going outside of the terms of the contract; it is the relationship that makes things work.

[1] Crore and Lakh are words used in India to mean 10,000,000 and 100,000 respectively (although the numerals would be written differently in India and are commonly used as shorthand. So 300,000 crore is 3,000,000,000,000 in this case Rupees (INR), or £42bn, while the Nano is priced at Rs 100,000 or £1,425.

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