Defining moments

Many, if not most, communication breakdowns can be traced to a failure to agree on basic terms of discourse, otherwise known as definitions. When such failures occur in large, complex business transactions, the economic cost can be substantial in subsequent litigation.

Touching on this topic in today's NY Times DealBook, Steven M. Davidoff writes about the considerable lawyering that went into constructing the agreement which made this $39 billion AT&T Deutsche Telekom deal possible. As the writer points out, the document is dense with detail. " One of the reasons is because they use a common trick that lawyers do in drafting agreements: they make the definitions do the work." In the document, he notes, there are 15 pages of definitions alone.

Making the definitions do the work is a concept that applies to many day to day situations in business. For example, when a team comes together to lead a company or complete a project, it's essential to define at least two things clearly and succinctly  -- the mission and what constitutes success.  Another instance is defining strategic boundaries within which the company chooses to compete. An operating budget is, in essence, a definition of the company's resources and how they will be allocated.

The cumulative effect of these definitions is to literally define the nature and character of an organization. Similar to the AT&T Deutsche Telekom document, it is in effect a "contract" that binds the members together in a common effort.

In the end, it pays to start with agreeing on the meaning of key words. As Socrates put it, "The beginning of wisdom is the definition of terms."

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