Managing to Avoid Cobras
Incentives are a funny thing. Done well, they can spur your team to productivity and career-advancing, win-win situations. Done not so well, they can create havoc.
As this point, I could offer up a dry explanation of the “law of unintended consequences,” but I’ll let Wikipedia do that. Instead, I’ll tell you a quick story about something that came to be known as the “cobra effect.” Snakes are clearly more interesting than laws.
In colonial India, the Brits in charge didn’t like the large number of venomous snakes that they encountered. So they did something that seems imminently sensible at first blush: they offered a bounty to locals for dead cobras. At first, things went well. Locals killed corbras, locals got their rewards, and the governing Brits saw a dip in cobra encounters. But then the cobra encounters started to creep back up, even as the number of dead cobras turned in continued to climb.
Turns out, the locals had started breeding cobras specifically to turn them in and collect the reward. Once the British government caught wind of this, they (predictably) terminated the reward program, and the erstwhile cobra breeders simply released the now-useless snakes. So the net result of this program turned out to be an increase in the cobras. Ouch.
Beware of Cobras
When I tell you to beware of cobras, I’m not talking about looking out for snakes (though, clearly, if you live in an area with cobras, you should probably look out for them). I’m talking about keeping an eye out for bad incentives. For instance, if you’re managing a software department, do a thought exercise as to what might happen if you agreed to pay testers $5 extra for each bug they found and developers $5 extra for each bug they fixed. At first, that probably seems like a good way to get them all to work a little extra and produce good results. But, channeling the cobra example, can you spot what might go wrong?
This is the beginning of a post that I wrote for the NDepend blog. Click here to read the rest of it.