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Incentive by Numbers
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  • August 11, 2013
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Bernard Ebbers, Bernard Madoff, Kenneth Lay, Barry Jay Minkow, I could go on and on.  Most would credit greed for the downfall of these arguable business geniuses.  Does that really make sense though?  I mean sure greed was involved, but how responsible was it for their downfall.  They had everything they could dream of and could guarantee it in their future.  So why?

Calling it greed is like calling someone crazy.  It often dismisses a deeper issue.  I’m all about personal responsibility, but we can’t ignore the lessons we are taught throughout our lives.  I always tell people, that in order to find out how someone will act, find their intent.  Find out what would benefit them, in other words find their incentives.
The real problem is the incentives we’re taught from a young child.  The incentives are always based on the bottom line, the numbers.  On the other hand we penalize people who think only of the bottom line.  Our society doesn’t care how you get there unless you get caught getting their illegally.  That’s the very problem!
If the incentive ignores the process, then of course you will get these people.  We say it’s not all about winning but how you play the game, but everything costs money and no one cares or gives you anything unless you win.  So what’s the real communication here.  Why does it seem like we’re spending millions of dollars to correct these wayward children when we, as a society, create them.  It’s a huge game of do as I say not as I reward!  We expect “adults” to adjust their entire education to fit the standards we set on them from the outside.   How is that supposed to work?
Let’s not recreate in our businesses and companies the obvious disconnect that exists in our society.  In our management style either as an entrepreneur or manager at a company let’s try to reward based on more than the numbers.  Reward on the intangibles.  The reality is that most of the highly successful people became successful by following their gut and making mistakes.  The path to great success is no one is rewarded by society until the very end.  The argument I’m making is for rewarding the characteristics of success and not the numbers that follow.  If you reward the means and not the ends the ends will follow in great ways.
A great example of this could be found on my highschool basketball team (back in the day).  If during a game I showed off by putting the ball behind my back and going for a reverse layup and missed, I would get benched for the rest of the quarter, but if I made the layup, everyone, including my coach would applaud.  What’s the deal?  It’s the exact same process, and lets be honest here, despite my being the greatest ball player of all times (ahem) I had a 50/50 chance of making it each time.  But the reality is that no one cares as long as I make it.  But what if the results didn’t matter as much as the process.  What if we trained our players to take high percentage shots rather than rewarding a showboater with some luck. I would bet that the ultimate results would be greater than 50/50 and we would be building dependable stars.  Players who knew their fundamentals and played smart.
That’s the kind of work we want in our businesses.  We want people to focus on the process not the ends and trust that when the process is done correctly, the ends will follow.  That is the future of business, that is inspired entrepreneurship.
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