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This month’s issue of Fast Company includes (as usual) a great column by the Heath brothers. The subject is right up my alley: using signals as diagnostic tools.  As I’ve argued before, separating signal from noise and then using those signals to inform our decisions is key to good decision making regardless of the area of application (business, politics, shopping, relationships, you name it).  The Heath brothers point to a fantastic example–the rock band Van Halen and their brown M&M’s contract clause:

In its 1980s heyday, the band became notorious for a clause in its touring contract that demanded a bowl of M&Ms backstage, but with all the brown ones removed. The story is true — confirmed by former lead singer David Lee Roth himself — and it became the perfect, appalling symbol of rock-star-diva behavior.

Get ready to reverse your perception. Van Halen did dozens of shows every year, and at each venue, the band would show up with nine 18-wheelers full of gear. Because of the technical complexity, the band’s standard contract with venues was thick and convoluted — Roth, in his inimitable way, said in his autobiography that it read “like a version of the Chinese Yellow Pages.” A typical “article” in the contract might say, “There will be 15 amperage voltage sockets at 20-foot spaces, evenly, providing 19 amperes.”

Van Halen buried a special clause in the middle of the contract. It was called Article 126. It read, “There will be no brown M&Ms in the backstage area, upon pain of forfeiture of the show, with full compensation.” So when Roth would arrive at a new venue, he’d walk backstage and glance at the M&M bowl. If he saw a brown M&M, he’d demand a line check of the entire production. “Guaranteed you’re going to arrive at a technical error,” he wrote. “They didn’t read the contract…. Sometimes it would threaten to just destroy the whole show.”

In other words, Roth was no diva. He was an operations expert.

Roth was using the M&M’s clause as a signal that, theoretically, would tell him something about the quality or ‘type’ of the stagehands–were they thorough and conscientious, or lazy and haphazard? The only way for the stagehands to know about the brown M&M’s would be to read through the entire contract–making it hard for someone who wasn’t the same type (i.e. thorough) to duplicate their behavior. In some ways it was a costly signal–sending such a signal is too costly for someone who doesn’t possess certain traits, making it harder to fake.

There is one problem, however. As long as the M&M clause remains buried in the contract and does not become well known outside of individual venues and the stagehands that work there, Van Halen could reliably use it in a diagnostic fashion. However, if the stagehands are mobile (which they likely were/are) or if that particular clause becomes a story that begins to circulate it would no longer be a reliable signal. Why? Because if stagehands know ahead of time that Van Halen requires all of the brown M&M’s to be taken out of the bowl in their dressing room they can easily do that without plowing through the massive contract. Bottom line, stagehands of one type (lazy) can pass themselves off as another type (thorough), even if they aren’t doing it intentionally.

Using tricks like the brown M&M’s clause to manufacture a diagnostic signal is a great idea, but you must remember that unless you can ensure that the signal will not be made public or travel between different contractual parties it has the potential to be gamed.