Incentives rule your life.
People ignore the “power” of rewards. Evolution programmed our brains with a simple command: repeat what works. This creates “incentive-caused bias.” You do what benefits you, then you invent a story to justify it.
There are some examples in history of business which shows this the best. Like in the Fedex miracle and Xerox blunder.
- FedEx couldn’t get their night shift to move packages quickly enough to ensure the integrity of the system. They tried begging and threats. Nothing changed. Then, they stopped paying by the hour. They paid by the shift instead. They told workers to go home the moment the planes were loaded. The backlog vanished. The workers didn’t hate work; they hated staying late.
- And similarly early in its history, Xerox found its new, superior machines were being outsold by older, inferior ones. Xerox salesmen ignored new, superior machines. They kept pushing old clunkers. Why? The commission for the junk was higher. The salesmen weren’t stupid. They followed the money.
By knowing these two examples surely helps you understand the power of incentives. Because this tendency is so deeply ingrained, it requires proactive management.
Then how to Manage the Bias
If you want to change a mind, facts won’t help. People aren’t rational; they are directional. They go where their interests lead. So what you should do is-
- Fix the Rewards: If the behavior is bad, the reward is wrong. This is the first rule of management.
- The Speed of the Reward: Timing matters. A small reward today beats a huge reward next month. Our brains crave the “now.” Immediate prizes drive persistence.
- The Office: Frequent, small bonuses work better than one big check at Christmas.
- The Gym: Forget the twenty pounds. Focus on the high you feel right after the workout. Some people got so addicted to this feeling so they never stop.
- Appeal to Interest: Never appeal to reason when you can appeal to interest. Show people how they win.
- Logic feels like an attack. It makes people defensive. Interest feels like an opportunity.
- Don’t tell your boss the new software is “technically superior.” Tell him it saves him five hours of work. Don’t argue over a “fair” price. Find what the other person craves and offer it.
- Watch the “Experts”: Be wary when a professional gives advice that fills their own pockets.
- Granny’s Rule: The rule is that you first “Eat your vegetables before you get dessert.” means “First do a less preferred task/thing, then you get more preferred task/thing.”
- Pair a task you hate with an activity you love. Tell yourself, “I can swill a beer after I finish this report.”
- For Kids: “When you pick up your toys, then you can play outside”.
Never ignore incentives. If you forget the reward, you’ll get the punishment.