Thursday, December 29, 2011

Unintended Effects

Brief one today.

Be careful about how you structure your company. Be careful about deal terms if you take investment. Be careful about sales commissions, incentive pay, and pricing gimmicks. 

One thing is clear about human behavior: people respond to what they perceive is in their best interest. They'll go to great lengths to avoid taxes, to collect income for less work, call more if commissions are tied to volume, close more faster if there's a large bonus for clearing the pipeline, buy sooner if you drop the price or throw in lots of extras. 

They'll also operate around the constraints to effectively get what they think they deserve. Entitlement doesn't always make people lazy--sometimes it's a motivator. Sometimes toward good behavior, but sometimes toward bad. There's middle behavior though--the gray area, or white; it's without any morality applied to it, it just is. 

Consider the downstream consequences. What behaviors can you anticipate? What behavior, constructs, constraints, freedoms do you imagine? What behaviors and outcomes do you want or not want? 

The unintended consequences of how you structure the financial aspects of your company that touch people can really lead to extraordinary, crazy, great, terrible, difficult, enabling, amazing, and baffling results. 

Think ahead. Now think further ahead. That's it--what do you want the result to be? Design with that in mind. 

No comments:

Post a Comment