We all love a good incentive program. A chance to earn rewards motivates us to push harder, achieve more, and contribute to the team’s success. But what happens when those incentives backfire? When, instead of driving positive behavior, they nudge us in the opposite direction? This is the dark side of motivation: perverse incentives.
What are Perverse Incentives?
Perverse incentives are rewards or punishments that lead to unintended and undesirable consequences. They’re like a game with hidden rules, where players optimize for the reward system, not the actual goals.
Here’s a classic example: The Cobra Effect. In the 19th century, the British government in India offered bounties for killing cobras. This incentivized people to breed cobras, then kill them to collect the reward. The result? More cobras!
Perverse Incentives in Business Agility
The world of business agility isn’t immune to perverse incentives. Here are a few common culprits:
- Focus on Speed Over Quality: Rushing to meet sprint deadlines can lead to buggy releases and rework, ultimately slowing progress.
- Metrics That Miss the Mark: Over-reliance on vanity metrics like story points completed can distract from delivering real customer value.
- Individual Recognition Over Team Wins: Rewarding individual performance in a collaborative environment can create competition and siloed thinking.
Identifying and Fixing Perverse Incentives
The first step to fixing a problem is acknowledging it exists. Here’s how to identify and dismantle perverse incentives in your agile journey:
- Track the Outcomes, Not Just the Outputs: Don’t just measure velocity, measure the impact of your work on real customer problems.
- Align Incentives with Team Goals: Reward behaviors that contribute to the team’s success, not just individual heroics.
- Focus on Continuous Improvement: Make learning and adaptation central to your agile practice. Celebrate failures as opportunities to learn and improve the system.
By recognizing and removing perverse incentives, you can unleash the true potential of agility. Remember, incentives are powerful tools, but they need to be wielded carefully. When designed with the right goals in mind, they can propel your team towards a truly agile and successful future.
Let’s keep the conversation going! Share your experiences with perverse incentives in the comments below.
