Incentives Alignment

If there was one thing that I wish someone would have insisted that I learn early in my career, it should have been to recognise and implement the power of aligning my incentives with the incentives of the people I was dealing with day-in-day-out. It’s such a simple concept and appears to be so obvious, but in my experience, it is also one of the most under-utilised psychological frameworks used by us humans.

“There is only one way to get anybody to do anything. And that is by making the other person want to do it.” - Dale Carnegie

I’ve spent days, weeks, months and years in trying to close deals that never closed, in trying to prove to my managers that I deserved a promotion or a raise, in trying to persuade recruiters that I was a good fit for the role I was applying for. I’ve also spent an inordinate amount of time in personal relationships that just fizzled away eventually. In hindsight, had I understood what these clients‘, bosses‘, recruiters‘ and friends‘ incentives were, perhaps those outcomes would have been different.

On the other hand, almost everything that I succeeded in - in my work, in my business, in my personal relationships was probably because I was offering something that they wanted to accomplish for their success. More importantly, we both succeeded because they also offered me something that I needed to accomplish.

I define success here in a very undecorated way

  • Closing a deal that works out in the long run is success
  • Getting a job that really transforms your career is success
  • Scoring a promotion that adds to your life’s stability is success
  • Building long lasting relationships with your partner, with your friends and family is success

In first principles, everyone really has the same expectations. A deal is good deal only when it works for all parties, not just for yourself. Your boss also wants a promotion for herself, just like yourself. Your friends also expect someone to watch their back when they’re in trouble.

In the instances where I failed - which I was oddly attributing to bad luck - the biggest levers of failure were:

  1. I was too focused on getting what I wanted without considering whether I was adding value to them. I was a fool because I kept insisting.
  2. They were too ignorant to understand that their proposition had no value to add to me. I was a fool because I kept on trying.

Often, the people we are dealing with don’t even know what their incentives are. If you ask a prospect “what do I need to do to make this deal work for you?”, s/he will either draw a blank or go and ask her/his boss. I still think its a good idea to ask, but in my experience, this information has to often be diagnosed tacitly. If I struggle to diagnose, I turn to the first principles I wrote earlier about.

A former colleague who was higher up in hierarchy once said something in a moment of silly revelry that I think about quite often. She asked me what did I think was my biggest responsibility as a member of her team. I gave a weak, generic answer - dropped the usual suspect keywords like ‘revenues’, ‘profits’ etc. She gave me a dead glare and said “Just make sure, through your work, that I look my best in front of the CEO and the board.”

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