Tuesday 14 February 2012

Working with Love-blindness, a question of context?

A psychology book on How Pleasure Works reveals that most people won't notice the difference between paté and dog food, so long as the latter is suitably presented with the right sort of garnish. And as for our ability to discriminate wine, even experts may confuse a white wine with a red when it is served at room temperature in a dark glass. And we'll enjoy soggy old potato crisps, it turns out, if our chewing is accompanied (over head phones) by the satisfying sound of crunching. In the same way it is difficult to tell the difference between holding hands with someone we love and holding hands with a stranger, unless we can see them.
The importance of context
Obviously, context matters, and so do our attitudes and expectations, and all can be coloured by analysis…
So too a so-called ‘one-off’ deal with a customer. Given the unknown consequences of any agreement with even the most appealing buyer, it is important to convert uncertainty (unknown) into risk (a question of odds) by placing all deals in the context of the overall market i.e. understand and compare the profitability of the customer with other customers, starting with the major multiples. 
Only with this ‘big picture context can we remove the blindfold, explore the implications, and quantify the risk of exchanging values with the beloved buyer.  
All else is detail….

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