Firms.
In November 1937 Ronald Coase discovered Good Decision Making.
He won a Nobel Prize for Economics in 1991.
Here's the gist of what he published in his paper.
The patron of the Good Decision is the Entrepreneur.
She creates a Widget.
Other Entrepreneurs apply their Widget to hers on its way to a buyer. Each demands decisions: pricing, colour, size, insurance, contracts, transport, dispute resolution, intellectual property ownership. Each decision has a cost which is passed on to the price of her Widget.
She realises it's cheaper to bring all of those individual decisions under one roof.
The Firm is born.
The external costs of decisions move to be cheaper internal Firm expenses that still add to the cost of the Widget.
The price of a Widget is the sum of each decision that is made on its way to find a buyer.
The Firm is only viable if its Decision Making costs less than out in the market - or another firm.
Good Decision Making defines the successful Firm.
In May 2012 at age 101 and a year before his death, Ronald Coase made another contribution to our understanding of Good Decision makers.
When asked why such a great mind as his failed to predict the speed of China's rise as an economic power, he said:
'I've been wrong so often I don't find it extraordinary at all.'
Job.
The entertainment reporter Michael Idato gave us a rare and brilliant example of the relationship between Widget Thinking and Defining Moments in the workplace wild.
A leaked two year old internal email from the former executive producer of the 'Sunrise' television programme to Network management proposed replacing two presenters and the newsreader.
The leak led the 'Sunrise' presenters who remain on air to not just dismiss it, but to ridicule it and cite their continued tenure as evidence that the former producer was wrong and the email was meaningless.
Yet as Michael Idato observed:
'Sunrise's former executive producer....would not have been doing his job if, at every turn, he was not considering alternatives, lest the happy Sunrise family he had assembled passed their use-by date and started to creak with age. His first loyalty is not to them, it is to his employer, and the promise that he will deliver them an enduring hit.
'The same could be said for the Nine Network's management, who would not be delivering value for their stakeholders if they were not examining the on-air performance of their entire talent stable in minute detail, regularly, and willing to do whatever it takes - or sack and replace whoever they need to - to win.
'It was that attitude that saw Jessica Rowe wrenched from the Today line-up several years ago. Make no mistake it was appallingly handled at the time, but it was a brutal and vivid demonstration of the business of television and the very small role that human decency has to play in it.'
Amidst the denials and damage control rose the refreshing voice of Karl Stefanovic, host of the Sunrise rival, 'Today', who said (in a text book use of the three most powerful words in the English language - I Don't Care):
'I know that [network management] is actively planning to get rid of me, and I like it, I embrace it, I don't care....It's best to go, 'it's TV, eventually they will [get rid of me],' so I'm just gonna have a great time and sail on into the sunset.''
A similarly healthy response to the email came from former Sunrise co-host Melissa Doyle, who was one of the three presenters that the email suggested changing:
'It was one view....Television, radio, newspaper executives the world over are probably discussing staff, columnists, et cetera, all the time....I figure that's the nature of the job. It's television. If they didn't have that conversation then you would probably wonder.'
The producer who wrote the email was doing his job - deciding to give his best advice to ensure the success of the Widget - albeit at the public cost of three people's jobs.
The management did its job - deciding to reject the advice as not serving the Widget.
The three current presenters did their jobs - deciding to reassure viewers that they are one big-happy-family, which protects ratings, which dictate the price of advertising which brings in revenue which buoys the stock price which is their boss's Widget.
Three different decisions that may look in conflict on the surface but each serving the Widget.
Perhaps it's Karl and Mel who are the best examples of a healthy shrug at the inevitable clanging of our professional and personal Widgets.
Confidence.
'Once you surrender the idea of intrinsic, objective value, you start asking the question “if the value isn’t in there, where does it come from?” It’s obviously from the transaction: it’s the product of the quality of a relationship between me, the observer, and something else. So how is that relationship stimulated, enriched, given value? By creating an atmosphere of confidence where I am ready to engage with and perhaps surrender to the world it suggests.'
- Brian Eno
The information thuds onto our desk.
It lies there. Inanimate. Markings on paper. Pixels on glass.
We breathe in - and exhale our spirit into it.
We give it life.
We name it:
Complaint. Criticism. Appeal. Escalation. Grievance. Demand.
Or we name it:
Feedback. Evaluation. Comment. Test. Observation. Assessment. Question. Gift.
The actions that we take in response to the information and its relationship to our Widget are what gives it value. We need to engage with it with the eagerness and curiosity that serve our Widget - not our ego.
We need to be brave enough to surrender our understanding of the world for a new one.
If we are all these things - then we invite more thuds upon our desks.
Competing.
'In review tribunal proceedings there is no necessary conflict between the interests of the applicant and of the government agency. Tribunals and other administrative decision making processes are not intended to identify the winner from two competing parties. The public interest `wins' just as much as the successful applicant because correct or preferable decision making contributes, through its normative effect, to correct and fair administration and to the jurisprudence and policy in the particular area.'
- Managing Justice: A Review of the Federal Civil Justice System.
The complaint arrives.
Step 1: Step Back and feel the offence, indignation, anger, fear, fatigue or betrayal well up inside you - then allow seconds, minutes, hours, days for it to ebb away. [I'm human.]
Step 2:What's my Widget and what does this complaint teach me about it? ['The first job of a leader is to define reality.']
Step 3: Do I seek other information to help me to learn about this complaint and my Widget?
Step 4: Is there anything clouding my vision about how this complaint serves my Widget? ['A leader serves.']
Step 5: Is there anyone who might be affected by a decision I may make?
Thank you complainant for testing my Widget. ['The last job of a leader is to say 'Thank you.'']
It's rare to find anyone with this wisdom.
Because Leaders are rare.
Our Justice System is precious.
Responsible.
There's no Old Man in Israel either apparently.
Ami Ayalon served as the Chief of Navy for the Israeli Defence Force, politician and head of Israel's secret service, Shin Bet. In the documentary movie The Gatekeepers, he described his childhood understanding of decision making.
“I had a wonderful childhood,” he said. “I knew that there's a house in Jerusalem, and on the second floor there’s a long corridor. At the end of the corridor there's a door, and behind the door is a wise man, who makes decisions. He thinks. My parents called him the ‘Old Man,’” (a reference to Israel’s first prime minister, David Ben-Gurion).
“Years later, after the Yom Kippur War [1973], I went to Jerusalem, and I went to that same building. I was on the second floor, and found no door at the end of the corridor, and behind the missing door, no one was thinking for me.”
Lists.
It's the idea of creating the space.
Mundane tasks like checklists free up space in our calendars and our heads for the artistry.
The Widget is the most visible part of a ‘successful’ person’s life. We can easily assume that it’s simply the product of an innate talent or instinct or gift that we don’t have.
Perhaps the only difference between successful people and the rest of us is that the former have a spark that motivates them to invest the time in things like checklists that release the oxygen that allows their spark to ignite into a flame that attracts the rest of us.
The rest of us who don’t have a Widget to inspire us to do the mundane ’10,000 hours of practice’ stuff.
Maybe if we can overcome the reputation of Checklists and Rules and Boundaries as compliance and elevate them to being a means of freeing us up to do the interesting stuff – then we’ll be onto something.
Lie.
'The best way to get a bad law repealed is to enforce it strictly.'
- Abraham Lincoln
In the movie 'Die Hard 2', the villains hijack the air traffic control tower and program the Instrument Landing System to tell approaching aircraft that the runway is 200 feet lower than it actually is. The pilots adjust their landing speed and angle of descent according to the data they're being fed and the aircraft crashes into the truth of the earth.
Our usual response to a bad decision is a lie.
We don't comply with policies. ('It's not relevant to my work.')
We work overtime to compensate for insufficient staffing or resources. ('Others depend on me.')
We smile and rise at the end of a wasteful meeting. ('No, I don't have any questions.')
We keep turning up and doing work we hate. ('I've got a mortgage.')
We send false data back to a decision maker.
Each time we avoid responding truthfully to a decision, we affirm it.
We give an inaccurate position back to the decision maker of the lay of the land.
'All is well!' we declare to them and the organisation.
'Your policies are so practical. Don't change them.'
'Your staffing is appropriate for the Widget. Don't review either.'
'Your meetings give me such useful information. Keep them up.'
'I'm happy in my work. All is well.'
Eventually the boss brings in external consultants to manage team building/performance reviews/change management/work-life balance/staff retention/lunchtime yoga/redundancies.
The most effective way to improve the decision making of others is to respond truthfully to them with a position relative to the Widget.
At least don't lie to yourself.
Quiet.
We can make our minds so like still water that beings gather about us that they may see,
it may be, their own images, and so live for a moment with a clearer,
perhaps even a fiercer life because of our quiet.
- William Butler Yeats, The Celtic Twilight
A Leader makes decisions that others choose to follow.
They follow a better version of themselves they glimpse in the Leader.
Leaders are Quiet.
Clarity.
At Apple Inc.'s Annual Meeting last week, the CEO Tim Cook was challenged about whether Apple's environmental policies were a profitable return on investment.
'If you want me to do things only for ROI reasons, you should get out of this stock,' Tim Cook was reported as saying.
He didn't say 'You're wrong,' or 'Let's mediate and come up with a compromise'.
He said 'Here's our Widget. If it's not the Widget you want, then choose another one.'
The internet lit up with debate about the response.
Widget clarity liberates.
Follow.
Interviewer: 'We are supposed to do the right things...'
Retired US Navy SEAL: 'Do you know what the right thing is?'
Interviewer: 'Well...not to kill innocent civilians...'
Retired SEAL: 'You don't have any idea. Not to be rude or anything, but one person's...what they think is the right idea is, is completely opposite from what the other one is. That's why we have to solely focus on our Leadership, our Admirals, who have been around and have been through all of this and they make the calls and it flows all the way down to us and we follow our orders to the T. Being in the SEAL teams we're outside of the box thinkers. We're not idiots. Most SEALS have their degrees and a lot of them have their Masters and we've been in this game for a very, very long time. So the thing that we ask - not out loud - we hope and pray that the American public has enough trust and faith in us to do and make the right decision....It's war and there is no right or wrong answer...'
To dismiss this response as the predictably military gung-ho blind 'We just follow orders' is to ignore some powerful insights into good decision making in the most extreme circumstances that also translates to the every day.
Navigating a good decision requires a fixed north - the Widget.
The Widget is designated by the Leader.
The decision maker accepts the Widget as the creation of a person who they trust - even if that trust is that there will be money in their bank account each fortnight.
Implicit in the dynamic between Widget, Leader and decision maker is that the decision maker continues to choose the Widget.
If I sneer at this equation it's either because my Leaders are managers or I choose not to choose.
'Right' and 'Wrong' are irrelevant.
It's all about the Widget.
Encapsulates.
'When people ask me what I do I try and show them this. I am really proud of this clip - it encapsulates what I want to bring to every and any live performance I film or stage for the camera.'
- Hamish Hamilton, Director
What would I show someone if they asked me what I do?
Would it encapsulate what I try to bring to my Widget?
Would I be really proud of it?
Would it arouse goosebumps every time I showed it?
If not - why not?
Configuration
Flight NZ175 from Auckland to Perth was descending.
The passengers heard the whirr-thump of the wheels lowering and locking.
Then the even whine of the two Rolls Royce engines changed pitch to a roar and the aircraft accelerated into a climb.
Toppling the dominoes.
Landing slot with Air Traffic Control lost.
Ground crews, refuelers, caterers, baggage handlers reorganising themselves.
Every extra minute costing the airline $170 in fuel.
350 passengers, their waiting families, taxis, flight connections, hotel transport, crew changes delayed.
Thousands of dollars lost and hundreds of people inconvenienced.
While still airborne and circling in the landing pattern again, the pilot made an announcement.
He had aborted the landing because he had made 'a configuration error'.
Dan, my Air Traffic Controller friend confirmed that a 'configuration error' probably means that the pilot had not set the flaps correctly for the landing.
How naïve of the pilot to make such an admission of his error.
How reckless of him to say 'Hey everyone still buckled up back there that I'm carrying aloft at several hundred kilometres an hour several thousand feet above the ground and who are still relying on me to get you back to earth - I screwed up.'
Yet on reflection - how refreshing.
Honest. Confident. Respectful. Brave.
The pilot wasn't naïve. He knew what he was doing.
Just what you want in the bloke controlling the metal tube you're travelling in 10 kilometres above the ground.
Stream.
'Until one is committed, there is hesitancy, the chance to draw back. Concerning all acts of initiative (and creation), there is one elementary truth, the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then Providence moves too. All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one's favor all manner of unforeseen incidents and meetings and material assistance, which no man could have dreamed would have come his way. Whatever you can do, or dream you can do, begin it. Boldness has genius, power, and magic in it. Begin it now.'
W.H. Murray
Start with the Widget.
Save your energy arguing Widget Thinking is dehumanising for more creative battles ahead .
(Yawn.)
Remember - the Widget doesn't care.
Surrender to the cool, indifference of it. Accept its objectivity. A gift from your boss.
Make good decisions and feel Providence stir.
Promise.
'We've just listened to you explain how you went about doing what you did,' the Plaintiff's barrister asks the Respondent Promise Maker in cross-examination.
In courts and tribunals today, the same exchange will occur in some form.
'Yes,' the Promiser answers.
'Can I ask you to look at this document?'
'Yes.'
'Do you recognise it?'
'Yes. It's the Contract of Employment/Agreement/Thing I Promised To Do.'
'I'll take you through your Promise and make you say out loud the things you Promised to do'
'I'll then take you through the laws that you also Promised to follow by virtue of being a citizen'
'I'll call five witnesses to produce forty two documents that will prove what you actually did.
'I'll then summarise in excruciating detail the gap between your Promise and what you did.'
Sit in the public gallery or read any transcript or reasons for judgment online, and this is the story arc that will almost always unfold. A journey from Expectation to Reality.
In the year that I asked more than 500 new employees at each induction session how many had read their employment agreement - the Promises made between them and their employer - only one said that they had. Among those new staff would have been new managers.
When organisational conflict arises we call HR to show them the pieces of Promises we've laid out and they show us the picture on the lid as we nod and smile and tell ourselves they match.
Good decision making is honouring our Promises.
Doubt.
'Perplext in faith, but pure in deeds,
At last he beat his music out.
There lives more faith in honest doubt,
Believe me, than in half the creeds.'
- Alfred, Lord Tennyson
'One of the reasons that a person is interested in what other people have to say is they know they don't know. Doubt is the place in me for you to affect me.'
- John Patrick Shanley
A Leader holds certainty with doubt.
A Leader is someone whom others choose to follow. People won't easily abandon their driftwood and tread water over to your raft if you're bailing water.
Doubt is never on the PowerPoint list of The 10 Qualities of a Leader.
Yet Leadership is inherently a transitional state between certainties. Leaders are on a journey from here towards their belief in Something Better Over Somewhere. Otherwise it's Management. (There's nothing wrong with that.)
People who complain about their Leaders almost always don't need Leadership. They need a Manager. Or a parent.
Almost by definition, if someone has certainty about where they're going and how they're going to get there, they are not a Leader. They're an airline pilot or a train driver. (There's nothing wrong with them either.)
Each of us hears the call towards Something Better Over Somewhere. Many of us respond, only to fall back as the tether between our ego and the opinions of the world tightens.
She breaks free and suffers the whiplash of our jealous displeasure.
She lays down a pathway of good decision making to a familiar beat of self-doubt that calls:
'Come! I am just like you.'
Vows.
Monks managed and educated most of Western Europe for a few hundred years. They understand Recruit Hard, Manage Easy.
The novice monk presents himself for his final interview.
Here's the gist of what follows.
'Pay attention,' the Abbot says to the other monks and people gathered to witness and support the novice. 'Remember: Life is short. You're a long time dead. So let's not waste time.'
'Is there anyone here who wants to be a monk?' the Abbot asks.
'I do,' says the novice monk.
One of the monks who he'll have to live, work and pray with speaks.
'He's been with us on probation,' is the gist of what he says publicly to the Abbot. 'And now, on behalf of all of us, we think he's ready to become a permanent member of our team.'
'What do you want from being a monk?' the Abbot asks the novice.
'To serve by my actions.'
'Hear, hear,' is the essence of what the other monks say.
The Abbot continues. 'Are you sure that this is what you want to do?'
'I am.'
'Do you promise to commit yourself fully to this vocation?'
'I promise.'
'Do you promise to follow our rules because you know that they will allow you to reach your potential?'
'I promise.'
'Do you promise to put the needs of the team ahead of your own?'
'I promise'
'Are you resolved to strive constantly for self-improvement for the benefit of others and something bigger than yourself by zealously following the rules?'
'I am.'
'Are you resolved to serve others?'
'I am.'
'We believe that you speak with integrity,' the Abbot says. 'And we trust you.'
'Hear, hear,' the monks and those in the church say.
The novice monk walks up and stands before the Abbot. He bows his head. He slowly and purposefuly reads out loud the conditions of his contract.
He has written them all out by hand.
The monks walk up to the altar and stand around him in a large circle. He places his contract on the altar and signs it.
He then holds it up to show the Abbot. He walks around the circle of his brethren stopping in front of each one and holding his signed contract up to show them.
The novice monk holds it up to show all the people in the church.
He stands before the altar and sings the Suscipe with arms extended.
Suscipe me Domine, secundum eloquium tuum et vivam: et non confundas me ab exsectatione mea.
Here I am. Now don't let me down.
He sings it three times.
The monks sing it three times.
He's now a fully professed member of the monastery team.
Clear expectations. Clear mutual promises. Clear boundaries. Publicly declared. Repeated. Celebrated.
Smiling.
Hamish Hamilton's good decision-making and Widget Thinking have led him to be chosen to camera direct U2, the Oscars, the London Olympics ceremonies and earned him a British Academy of Film and Television Arts Award.
He was once asked how he dealt with the stress of multi camera directing.
'My talent is definitely remaining calm. Remaining polite. And in extremely stressful situations, making other people smile. Motivating people on a human level. And just providing a safe environment in which they can excel.
'I can take on a lot of the crap and a lot of the stress and if I can take it and I'm holding it in within myself, it's not permeating out into them. Sometimes that's not possible. But I do try and keep it jolly.
'Because actually you know what?
People make better decisions when they're smiling.'
Joy.
It's half time during the NBA Playoffs. 10 million people are watching you at your desk making your Widget.
Hamish Hamilton is a Director whose work directing a U2 concert in Boston in 2001 was played live around the world during the 17 minute NBA half time. He was filmed at work and these images were included in the U2 Elevation DVD.
It doesn't take an expert to recognise that we are watching a pristine practical example of how good decision making, technical excellence, widget thinking, teamwork, structure and artistry come together to create excellence.
Listen to Hamish spontaneously and sincerely praise others' work as they do it. (He doesn't wait for the annual performance review to give them feedback.) Listen to him urge the team on with raw passion. (He doesn't need to act serious, aloof and boss-like when he's really feeling like shouting 'C'mon!') Watch him sway, gesture, dance and even sing in sync with the band, losing his body in his work while his brain stays focussed on the complex director's steering wheel. (He doesn't have to wait for the staff social event and a few drinks to be himself.) Listen to him drop expletives of delight at his team's work. (He's built enough trust with his co-workers not to need to worry about a bullying or harassment complaint.) Listen to him shout 'This is what we're good at!' because he knows the real meaning of team. (He doesn't have to take them on an artificial off-site, outsourced team building day.) Hear him say 'Thank you'. (He's not so self-absorbed in his creativity to not be aware that there are people at the end of his barked directions.) Watch how he harnesses the chaos while his Assistant Director Hayley literally calls a cadence beat of structure amidst the noise, lights and confusion. Watch his sheer joy as he executes responsibility for co-ordinating dozens of people and millions of dollars worth of equipment to produce a widget that will be expected to make tens of millions in sales.
Here is proof that we can make our serious widget and dance.
Hamish is a worker who loves his job and is exceptionally good at it. He has directed an Academy Awards ceremony among other high profile events including the London Olympic ceremonies.
Yet the most powerful evidence that he is truly in the élite is among the 42 comments below the Youtube video of his work. Amidst the expressions of appreciation and praise for his direction is the inevitable criticism posted in 2012 for the world to read:
'Sorry to say this, but Hamish Hamilton was the WORST ACADEMY AWARDS DIRECTOR EVER after last year!!! The execution was such a mess, especially with "And the winner is..." replacing "And the Oscar goes to", and although I taped it I won't even bother dubbing it to DVD. I guess Louis J. Horvitz and Glenn Weiss were too busy, which is why they tapped Hamish instead. Thankfully, Don Mischer will be directing and co-producing this year's Oscarcast.'
This is the comment that Hamish Hamilton posted in response:
'Glad you liked it johnnyafairbank ! Don is indeed directing and co-producing the show this year. He will do an amazing job - he is a fantastic director, a gentleman and crucially will also be a co-producer. It may be worth noting that the show was nominated for more Emmys than any Oscars ceremony ever so some people did like it. Enjoy this years show's - your obviously glad its not me ! I can send you a DVD of last years if you wish. Respect Hamish'
The level of self-confidence that produces this measured, dignified response - written with subtle humour yet without a hint of malice or attempt at public retaliation or humiliation of his critic - can only come from someone who knows in their soul that their work is very very good.
If Hamish Hamilton hasn't found who he is - then he's very close to it.
Hamish was not misplaced in believing in 2012 that his decision-making speaks for itself. A few weeks ago it was announced that he will direct the 2014 Oscars broadcast.
Kanye.
Musician Kanye West explained how Good Decision Making and Widget Thinking help him to become who he is.
His life and creative process and therefore his mistakes are before the world. They are the product of Good Decision Making and therefore teach others so he can never be wrong:
'I'm opening up my notebook and I'm saying everything in there out loud. A lot of people are very sacred with their ideas, and there is something to protecting yourself in that way, but there's also something to idea sharing, or being the person who makes the mistake in public so people can study that.'
Kanye also understands that it's all about the Widget. And it's never about the Widget:
'It's more about the art of conversation, the companionship, the friendships, and the quality of life that you get out of working—it's about the creative process even more than the final product. I think there's something kind of depressing about a product being final, because the only time a product is really final is when you're in a casket.
My mission is about what I want to create.'