I was walking with colleagues debating the merits of the latest round of healthcare payment reforms when we came across the ultimate symbol of American entrepreneurialism. A young girl had set up a lemonade stand with a sign marketing 25 cents a cup.
“I’ll take one” I declared and was impressed with how confidently the young entrepreneur announced my total. As I settled my tab my colleague stated that he too would like a cup of lemonade and was willing to pay 30 cents. Except, he would pay half now and the other half would arrive after the cup was emptied, assuming a list of 8 pre-determined criteria were met. Before he could finish explaining the 30 possible criteria from which she could choose, the third companion announced his thirst. He would buy lemonade for two of the three of us! For this, he would offer a dollar. The catch was that two of us would receive all the lemonade we required for this flat rate. She eyed each of us up and down carefully, gauging our potential lemonade intake and asked which two were to be covered? To which my colleague answered, “you will not know until you sign the contract.”
As we watched her retreat into her home in a fit of tears we paused to consider just which proposal exactly was responsible for her early retirement? The conversation quickly turned to debate as these things tend to do.
Despite our best efforts to discredit each other’s proposals we ultimately concluded that all three were reasonable payment options. What was more straightforward than paying for the amount of lemonade consumed? And it was not at all unreasonable to demand a base level of quality – especially with an extra 5 cents on the line. None could find legitimate fault with a flat rate, assuming we behaved as the rational consumers that we are and that the girl didn’t go overboard with organic lemons and turbinado sugar. So where did it all go wrong?
“What if,” my colleague posited, “it was not the specifics of any one of our proposals that caused our young friend to abandon her lemon-flavored ambitions?” We leaned in to see where exactly this new train of thought might lead.
“What if instead, it was the pressure of meeting all three of our demands at the same time was to blame?”
And suddenly we felt terrible for what we had done. Clearly the young girl wasn’t ready for the rigors of running a business. We should never have encouraged her. Having solved the mystery we returned the empty pitcher to the abandoned stand and went on our way, returning our attention once again to more relevant topics.
Leonard D’Avolio Ph.D., is the CEO and co-founder of Cyft, assistant professor at Harvard Medical School, an advisor to Ariadne Labs and the Helmsley Charitable Trust Foundation. He can be followed on twitter @ldavolio and his writings and bio appear athttp://scholar.harvard.edu/len