Friday, May 18, 2007

A Business Meeting to Remember

This video clip from "Saturday Night Live" should strike a chord with anyone who has suffered through at least one business meeting.

While peaceful commercial activity has done wonders for the world, it cannot eliminate human folly. Humanity is accident prone, in the boardroom, in the legislature, and on the battlefield.

The amazing thing is not that we live in a world with so many mistakes. Rather, it is that the world works so well.

When mistakes occur at the individual level, the consequences are often inconspicuous, at least to the rest of the world. When mistakes occur at the level of small groups (like the ones in the video), the mistakes are more visible, but the consequences are relatively contained. But when mistakes occur at the level of the state, two things happen.

First, thanks to the taxpayer, the mistakes acquire a much longer life. Second, the consequences are felt by everyone. Imagine, not a building imploding, but an entire nation-state, and you get the picture.

This leads us to an important conclusion: the most adaptable form of social organization is one that encourages risk-taking and mistake-making at the lowest social cost, i.e. at the individual level or the small-group level. In other words, social organizations that distribute decision-making, risk taking, and the information feedback we call failure will be more innovative and successful than social organizations that centralize decision making, risk-taking, and information feedback.

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