November 10, 2026
Ask a company whether it makes quality products and it will say yes, of course. Ask how many years of warranty it offers, and the conversation changes: a company with a product that lasts answers without thinking, the others usually change the subject.
Writing “superior quality” costs one line, the same line for the serious manufacturer and for the one hoping nobody checks. Few companies promise ten years of warranty, because then they have to honor it. Economists built a theory on it, and a Nobel Prize.
Michael Spence got there by thinking about the labor market. His paper dates from 1973, the Nobel from 2001, shared with George Akerlof and Joseph Stiglitz. The starting problem is one we all know: an employer can’t tell whether a candidate is really good. They see the résumé, the degree, the grades. Spence asked under what conditions a degree can say anything at all, and the answer is stranger than you might expect.
For it to work, the degree has to cost something, and it has to cost less for those who are capable. That’s it. Whether it actually helps do the job is secondary: a degree could teach nothing useful and still work.
Picture two candidates. One is very good, the other less so, and the employer can’t tell which is which. The employer says: I’ll pay more to people with this degree. For the first, earning it is hard but doable. For the second it would be a hopeless undertaking, and so they give up, because the numbers don’t add up. In the end almost only the good ones have the degree, and all the employer has to do is look at that. It didn’t teach anyone anything: it acted as a filter.
If earning it took the same effort for both, they’d both get it and it would no longer tell them apart. If it cost nothing, it would be a mere declaration, what economists call cheap talk, talk that costs nothing. That’s where adjectives end up.
Let’s apply it to companies. When a company tells the story of something it did well, two different costs come into play, and mixing them up is the easiest mistake to make.
The first is the cost of telling: the time, knowing where to start, a place to do it. This is where many stop, almost always for three reasons. It seems normal to the people who did it, they don’t know where to begin, nobody ever asked. This cost is worth lowering as much as possible.
The second is the cost of having something to tell: the people involved, the phases, the timing, what went wrong. This is the signal, and lowering it would be a mistake. Those who did the work already have everything, and telling it costs them little. Those who didn’t would have to make things up, and every invented detail is a point where someone can ask, “Sorry, what do you mean?”
Whoever builds a place where companies tell how they did things therefore has only one thing to do: make telling easy, and leave intact the effort of having something to say.
A signal works only if someone can read it. Ten years of warranty says a lot to a buyer and little to someone with no idea what a warranty is. It’s the same with practices: the details are recognized by those who have done something similar. They know whether four months for that project is plausible, whether the stated difficulty is the real one, whether the phases are in the right order.
An adjective reaches everyone and tells no one anything. A precise account reaches fewer people, but for the right ones it says a lot.
Signals wear out. It happened to the adjective “sustainable,” as we wrote in September’s article, “When Everyone Says It, No One Hears It”: when everyone uses it, it no longer distinguishes anyone. It can happen to an account too. A practice full of phrases like “we installed solar panels and care about the environment” looks like a good practice and says nothing. A well-built structure isn’t enough; you need details: a date, a name, a number, an admitted difficulty.
No signal is a guarantee, of course. A precise account can still be made up. But making it up costs more than telling it, and a reader can always ask a question.
In Spence’s model the signal is almost a waste: the effort for the degree serves no one else, it only serves to tell people apart. A practice told in full has one more thing. That effort isn’t lost, because someone else can read it, recognize a problem they have too, and take up a solution.
The signal informs the person who has to decide and, while it’s at it, helps the reader. That’s what interests us: good practices are worth something when someone else can take them up.
In the end the math is simple. The adjective costs one line, the practice costs the time it took to do it. You can tell which one is worth reading.
By the Marketing Team
