CORPORATE CULTURE IS WHAT ENDS UP DETERMINING HOW HARD YOUR EMPLOYEES WORK.

they don’t have the same trust problems that come from doing one-off deals, and managers don’t have to keep going to the trouble of finding labour and negotiating every time they want something done.

Firms have inefficiencies, too, of course, because they have to manage all that labour (and often, to keep more around than they may need at any given moment). But they are so good at reducing transactions costs that they are still, in many cases, more efficient than simply bidding every single service on the open market.

But one of their most effective means of reducing transaction cost is that most elusive of businessjournal ideals: corporate culture. When job performance is difficult to specify in minute detail — as one would for a contractor — corporate culture is what ends up determining how hard your employees work, how far they will go out of their way to help out a coworker in trouble, what lengths they will go to in order to satisfy customers.

This culture cannot be transmitted by writing it all down in a manual somewhere, or exhortatory speeches by managers; it is transmitted in a thousand markets you compete in, the firm’s challenges, the changes going on in management. Call it “sub-information”: the stuff people don’t even really know they know.

Electronics are a remarkably effective barrier to this sort of information. Humans are evolved for face-to-face interaction, and something about electronics stiffens us, turns us more formal and less social, even when we are still sitting in the same room. And when we’re miles apart? Forget it. We transmit our conscious knowledge, but leave out all the little things that only come through face to face, in casual conversation, unplanned and unintended, but nonetheless, the lifeblood of a firm.

When I lived in New York and was immersed in the financial capital of the world, I used to make a lot of confident and wrong predictions about politics, while tearing my hair out in despair at the stupid things Washingtonians said about finance. Then I moved to Washington and realized I was rapidly losing my savvy about the financial industry, while gaining new understanding about politics.

That’s not I’m constantly because circulating