Every Monday I throw out a challenge to readers, sometimes small and simple and sometimes larger and more involved.

This one is more large and involved, but the results can be life changing.

The Nobel Prize for Economic Science was just released, and it went to Oliver Hart and Bengt Holmström, two scientists who have studied the role of contracts in life and business. It’s called Contract Theory, and it gets to the heart of why some binding agreements work while others do not.

Contracts serve many functions, particularly in a workplace setting. They can drive expectations and guaranteed reward, as well as permit and encourage bad behavior. A contract is far more than just a piece of paper that two sides sign. It can be a model that influences outcomes in subtle or overt ways (both positive and negative for both parties involved). It’s far more complex and important than most people realize.

This Contract Theory stuff is actually pretty cool.

Your challenge this week has multiple parts and should be done over five to seven days:

1. Print the Royal Swedish Academy of Sciences outline of the award. It’s only six pages, but it is incredibly insightful, readable, and thought-provoking.
2. Take that print out to a coffee shop, turn off you cell phone, and read through it with a highlighter in hand. Highlight parts that are eye opening for you, that you didn’t consider until now. Highlight parts that spark a reaction in you, that bring forth ideas you can relate to.
3. Take a blank sheet of paper and think about this: if I were contractually obligated to do certain actions and achieve certain measurable goals, what five things would influence my short term future the most? Start listing ideas of what you know would improve your life between now and the end of the year.
4. Outline a contract with yourself. Start by outlining what you do in your job, personal goals you have between now and the end of the year, and expectations. Using some of your new knowledge about contract theory, come up with five points that you want to be held accountable for.
5. By the end of the week, hone that contract outline into something that will challenge you in the ways you need to be challenged, provide you an outline to fall back on during the busiest of seasons coming up, and provide you goals to reach that are quantifiable. It doesn’t have to be long (in fact, it should ideally be as short as possible).

The goal here is clear: develop a system of accountability while at the same time pushing out the white noise of day to day living and working. In other words, a form of focus.

At the end of the week, when you’ve developed your contract, you have to sign it. It’s a binding contract and you’re the boss. And you’re the employee. Play both sides, have fun doing it, but look at that contract seriously. Tape it up on your wall. Look at it every day.

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Shout out: I’ve been recently working with business coach Erik Therwanger, who has published two books that reflect many of the ideas briefly outlined here: The Goal Formula, and GPS: Goal Planning Strategy. I highly suggest you take a look at his publications for insight on the ideas of personal contracts and self-accountability. This post only scratches the surface, and Erik’s work can take it to the next level for you.

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Other links to read on this idea:

Sparkpeople: Write your own contract for success

Healthy Eats (Food Network): Make a Contract with Yourself

New York Times article on the awarding of the Nobel Prize