Incentives - Behaviours - Culture
Building a Framework
I will begin a series of posts that touch on team and organizational culture, desired behaviours in that culture, and the incentives that drive the observed behaviours. This specific linkage has dominated my philosophy for organization building and remediation.
A fellow Principle Engineer at Amazon (he was in the Alexa organization and had come over from Valve) and I were discussing engineering quality, the evidence needed for a promotion, and the work that was rewarded in performance reviews when he mentioned that the resulting tension (and issues) that we were seeing was due to the incentive structure at the company. He followed it up with a comment that, as a gaming engineer, it was easy to see and understand how company incentives created perverse behaviours and undermined the desired company culture. I took a moment and thought about that statement. In creating video games, the team has to generate player incentives (some overt and others much less) to engage and move the player forward. Artists will light a set so that the player naturally focuses on level areas and places we want to draw their attention to. The lighting sequence will cause a player to move along a path set by the designers through a level. Game design systems create a reward loop to keep players engaged and improve their skills. A more extreme example of these game design loops can be seen in free-to-play games. We can create play-reward loops based on virtual goods that cause people to spend large amounts of money. Taking my experiences in these areas, I took a new look at the reward incentives at tech companies. After a few months of thinking (and reading), I developed the title mantra: incentives lead to behaviours that lead to culture. Work backwards through each step if there is an issue with your culture.
In 2019 in the middle of my MBA, the business class reviewed a similar case of incentives that built on these earlier insights. There was an area that was seeing a surge in the cobra population. The government wanted to address the issue and created a bounty on cobras to reduce their population. The result was that people started cobra farms to cash in on the bounty. The other problem this created was that escaping cobras (from the farms) resulted in a net increase in the number of snakes in the area. Therefore in business reviews, bad actors exploiting an incentive tend to be called “cobra farms.”
We will begin with an assumption that for any incentive, there will be some number of people who will look to gamify it for their benefit. We will also assume that people will, on average, attempt to maximize their gain (benefit, growth, etc.) when selecting which incentives to follow.