Mandelbrot!

One of the challenges that arise when putting together a contract is deciding how much to future-proof it – i.e. how much to cater for hypotheticals.

Most contracts assume, implicitly or explicitly, a number of variables. It’s the allowance for the interaction of these variables over time that makes a contract complicated.

Mandelbrot diagrams provide useful guidance for those putting together contracts and worrying about how much complexity to cater for. If you’re not familiar with Mandelbrot diagrams, take a look here. When you get to the image, drag on it to draw a box and it will automatically zoom in to the area you select.

The key point about Mandelbrot diagrams (for the purpose of this piece) is what happens to the jaggedy lines. Take the coastline of a continent on Earth seen from space. It’s not a straight line – it’s jaggedy. Zoom in x10. It’s still jaggedy. Zoom in until you’re standing on the beach where the land meets the sea. It’s still jaggedy. Zoom in until you are looking at the line-up of molecules that make up that bit of the coastline. It’s still jaggedy.

It’s the same for contracts when you are trying to cater for hypotheticals. You will never get to a straight line – it’s always going to be jaggedy because that’s the nature of (business) life.

The question then becomes – how much jaggedy-ness can you live with? And that depends on two main factors.

  1. How much impact is that level of jaggedy-ness likely to have on your business?
  2. How much are you willing to spend to cater for the next level of jaggedy-ness?

The key point about Mandelbrot diagrams (for the purpose of this piece) is what happens to the jaggedy lines.