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Quintessential Thought
Incentives are powerful, affecting behavior…but not always in the intended direction. The story of the “cobra effect” underscores the importance of careful consideration when implementing rewards or metrics. Incentivizing the killing of cobras led to a boom in breeding, and when the program ended, more cobras were released into the wild, worsening the problem leaders were trying to solve. Similarly, metrics like velocity or customer reviews can be manipulated when incentives don't align with genuine value.
Two critical elements will help you avoid these unintended consequences:
- Focus on the value and larger vision you're aiming for, and always view the numbers within that context. Otherwise, we may “lose sight of the forest for the trees,” working hard to win with a measure that reflects something irrelevant to the product goal or company mission.
- Remain curious about the results and the effect of incentives on behavior. When dealing with human behavior, curiosity helps us consider whether the numbers have been gamed, avoid confirmation bias in our interpretations, and explore next steps openly.
With a curious spirit and our focus on the vision, we can navigate the complex landscape of incentives.
Quotes
“Incentives are not strategy, they are tactics.” - Carlos Ghosn
“It's stunning to me what kind of an impact even one person can have if they have the right passion, perspective and are able to align the interest of a great team.” - Steve Case
“What is clear is that business leaders must commit to champion change - to be transparent about their goals for change, to align their incentives systems to drive the change, and to make sure their work environments are flexible in a way that allows men and women who choose to work to be able to achieve all of their potential.” - Beth Brooke
Quick Step
Pick one incentive used today and get curious about it - how might it be gamed and how could you improve it so you’re more likely to achieve your goals?
Question
Where have incentives driven good behavior in the past? How about bad behavior? What can you learn from these?
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