How Will You Measure Your Life?-Harvard Business Review 10/5/105:10PM want from their participation in the enterprise,and the extent to which they agree on what actions will produce the desired results.When there is little agreement on both axes,you have to use"power tools"-coercion,threats,punishment,and so on -to secure cooperation.Many companies start in this quadrant,which is why the founding executive team must play such an assertive role in defining what must be done and how.If employees'ways of working together to address those tasks succeed over and over,consensus begins to form.MIT's Edgar Schein has described this process as the mechanism by which a culture is built.Ultimately,people don't even think about whether their way of doing things yields success.They embrace priorities and follow procedures by instinct and assumption rather than by explicit decision-which means that they've created a culture. Culture,in compelling but unspoken ways,dictates the proven,acceptable methods by which members of the group address recurrent problems.And culture defines the priority given to different types of problems.It can be a powerful management tool. In using this model to address the question,How can I be sure that my family becomes an enduring source of happiness?,my students quickly see that the simplest tools that parents can wield to elicit cooperation from children are power tools.But there comes a point during the teen years when power tools no longer work.At that point parents start wishing that they had begun working with their children at a very young age to build a culture at home in which children instinctively behave respectfully toward one another,obey their parents,and choose the right thing to do.Families have cultures,just as companies do.Those cultures can be built consciously or evolve inadvertently. If you want your kids to have strong self-esteem and confidence that they can solve hard problems,those qualities won't magically materialize in high school.You have to design them into your family's culture-and you have to think about this very early on.Like employees,children build self-esteem by doing things that are hard and learning what works. Avoid the“Marginal Costs”Mistake We're taught in finance and economics that in evaluating alternative investments,we should ignore sunk and fixed costs,and instead base decisions on the marginal costs and marginal revenues that each alternative entails.We learn in our course that this doctrine biases companies to leverage what they have put in place to succeed in the past,instead of guiding them to create the capabilities they'll need in the future.If we knew the future would be exactly the same as the past,that approach would be fine.But if the future's different-and it almost always is-then it's the wrong thing to do. This theory addresses the third question I discuss with my students-how to live a life of integrity(stay out of jail). Unconsciously,we often employ the marginal cost doctrine in our personal lives when we choose between right and wrong.A voice in our head says,"Look,I know that as a general rule,most people shouldn't do this.But in this particular extenuating circumstance,just this once,it's OK."The marginal cost of doing something wrong"just this once"always seems alluringly low. It suckers you in,and you don't ever look at where that path ultimately is headed and at the full costs that the choice entails. Justification for infidelity and dishonesty in all their manifestations lies in the marginal cost economics of"just this once." I'd like to share a story about how I came to understand the potential damage of"just this once"in my own life.I played on the Oxford University varsity basketball team.We worked our tails off and finished the season undefeated.The guys on the team were the best friends I've ever had in my life.We got to the British equivalent of the NCAA tournament-and made it to the final four.It turned out the championship game was scheduled to be played on a Sunday.I had made a personal commitment to God at age 16 that I would never play ball on Sunday.So I went to the coach and explained my problem.He was incredulous.My teammates were,too,because I was the starting center.Every one of the guys on the team came to me and said,"You've got to play.Can't you break the rule just this one time?" I'm a deeply religious man,so I went away and prayed about what I should do.I got a very clear feeling that i shouldn't break my commitment-so I didn't play in the championship game. In many ways that was a small decision-involving one of several thousand Sundays in my life.In theory,surely I could have crossed over the line just that one time and then not done it again.But looking back on it,resisting the temptation whose logic was"In this extenuating circumstance,just this once,it's OK"has proven to be one of the most important decisions of my life. Why?My life has been one unending stream of extenuating circumstances.Had I crossed the line that one time,I would have done it over and over in the years that followed. http://hbr.org/2010/07/how-will-you-measure-your-life/ar/pr Page 4 of 6How Will You Measure Your Life? - Harvard Business Review 10/5/10 5:10 PM http://hbr.org/2010/07/how-will-you-measure-your-life/ar/pr Page 4 of 6 want from their participation in the enterprise, and the extent to which they agree on what actions will produce the desired results. When there is little agreement on both axes, you have to use “power tools”—coercion, threats, punishment, and so on —to secure cooperation. Many companies start in this quadrant, which is why the founding executive team must play such an assertive role in defining what must be done and how. If employeesʼ ways of working together to address those tasks succeed over and over, consensus begins to form. MITʼs Edgar Schein has described this process as the mechanism by which a culture is built. Ultimately, people donʼt even think about whether their way of doing things yields success. They embrace priorities and follow procedures by instinct and assumption rather than by explicit decision—which means that theyʼve created a culture. Culture, in compelling but unspoken ways, dictates the proven, acceptable methods by which members of the group address recurrent problems. And culture defines the priority given to different types of problems. It can be a powerful management tool. In using this model to address the question, How can I be sure that my family becomes an enduring source of happiness?, my students quickly see that the simplest tools that parents can wield to elicit cooperation from children are power tools. But there comes a point during the teen years when power tools no longer work. At that point parents start wishing that they had begun working with their children at a very young age to build a culture at home in which children instinctively behave respectfully toward one another, obey their parents, and choose the right thing to do. Families have cultures, just as companies do. Those cultures can be built consciously or evolve inadvertently. If you want your kids to have strong self-esteem and confidence that they can solve hard problems, those qualities wonʼt magically materialize in high school. You have to design them into your familyʼs culture—and you have to think about this very early on. Like employees, children build self-esteem by doing things that are hard and learning what works. Avoid the “Marginal Costs” Mistake Weʼre taught in finance and economics that in evaluating alternative investments, we should ignore sunk and fixed costs, and instead base decisions on the marginal costs and marginal revenues that each alternative entails. We learn in our course that this doctrine biases companies to leverage what they have put in place to succeed in the past, instead of guiding them to create the capabilities theyʼll need in the future. If we knew the future would be exactly the same as the past, that approach would be fine. But if the futureʼs different—and it almost always is—then itʼs the wrong thing to do. This theory addresses the third question I discuss with my students—how to live a life of integrity (stay out of jail). Unconsciously, we often employ the marginal cost doctrine in our personal lives when we choose between right and wrong. A voice in our head says, “Look, I know that as a general rule, most people shouldnʼt do this. But in this particular extenuating circumstance, just this once, itʼs OK.” The marginal cost of doing something wrong “just this once” always seems alluringly low. It suckers you in, and you donʼt ever look at where that path ultimately is headed and at the full costs that the choice entails. Justification for infidelity and dishonesty in all their manifestations lies in the marginal cost economics of “just this once.” Iʼd like to share a story about how I came to understand the potential damage of “just this once” in my own life. I played on the Oxford University varsity basketball team. We worked our tails off and finished the season undefeated. The guys on the team were the best friends Iʼve ever had in my life. We got to the British equivalent of the NCAA tournament—and made it to the final four. It turned out the championship game was scheduled to be played on a Sunday. I had made a personal commitment to God at age 16 that I would never play ball on Sunday. So I went to the coach and explained my problem. He was incredulous. My teammates were, too, because I was the starting center. Every one of the guys on the team came to me and said, “Youʼve got to play. Canʼt you break the rule just this one time?” Iʼm a deeply religious man, so I went away and prayed about what I should do. I got a very clear feeling that I shouldnʼt break my commitment—so I didnʼt play in the championship game. In many ways that was a small decision—involving one of several thousand Sundays in my life. In theory, surely I could have crossed over the line just that one time and then not done it again. But looking back on it, resisting the temptation whose logic was “In this extenuating circumstance, just this once, itʼs OK” has proven to be one of the most important decisions of my life. Why? My life has been one unending stream of extenuating circumstances. Had I crossed the line that one time, I would have done it over and over in the years that followed