While striving for perfection, we may have lost our greatest strategic advantage; i.e., trust.
Paul Feldman understood the advantage of trusting others when he set up a bagel business. Feldman started his bagel days "as a casual gesture: a boss treating his employees whenever they won a research contract. Then he made it a habit. Every Friday, he would bring in some bagels, a serrated knife, and cream cheese. When employees from neighbouring floors heard about he bagels, they wanted some too. Eventually he was bringing in 15 dozen bagels a week. In order to recoup his costs, he set out a cash basket and a sign with the suggested price. His collection rate was about 95 per cent."
"In 1984, when his research institute fell under new management, Feldman took a look at his career and grimaced. He decided to quit his job and sell bagels. Driving around the office parks that encircle Washington, he solicited customers with a simple pitch: early in the morning, he would deliver some bagels and a cash basket to a company’s snack room; he would return before lunch to pick up the money and the leftovers. It was an honour-system commerce scheme, and it worked. Within a few years, Feldman was delivering 8,400 bagels a week to 140 companies and earning as much as he had made as a research analyst."
"When he started his business, he expected a 95 per cent payment rate, based on the experience at his own office. But just as crime tends to be low on a street where a police car is parked, the 95 per cent rate was artificially high: Feldman’s presence had deterred theft. Not only that, but those bagel eaters knew the provider and had feelings (presumably good ones) about him."
"He came to consider a company “honest” if its payment rate was above 90 per cent. He considered a rate between 80 and 90 per cent “annoying but tolerable”. If a company habitually paid below 80 per cent, Feldman might post a hectoring note, like this one: “The cost of bagels has gone up dramatically since the beginning of the year. Unfortunately, the number of bagels that disappear without being paid for has also gone up. Don’t let that continue. I don’t imagine that you would teach your children to cheat, so why do it yourselves?”
Despite losses from theft, not only did Feldman save money by not setting up a bureaucratic system to enforce payment, he appealed to people's most positive, uniting characteristics of trust and integrity.
Feldman scrupulously collected and analyzed data that led to his discovery of two very interesting things that say a lot about people's innate desire to unite and trust one another: (1) offices were more honest when employees like their bosses and their work (2) after 9/11, the theft rate immediately dropped 15% and stayed there.
Most large companies spend thousands of hours and millions of dollars exorting people to subscribe to a "culture" so as to keep everyone in line and increase the bottom line.
What if you created a corporate structure based on the "golden rule", unity, and trust; i.e., democracy? (1) workers would be socially incentivized to be honest, and (2) a small bureaucracy would save a lot of money.
No wonder our founding fathers decided to create a democratic government.
(Quotations from Freakonomics by Steven D. Levitt and Stephen J. Dubner)
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