Dead trees and venomous snakes; how bad targets can kill your vision
Trudging on leaf litter and soft earth, my partner and I walked through our local woodland. We happened upon an opening to find tree saplings growing amongst scattered sunlight. “They’re planted too closely to be viable”, said Agnė. Having volunteered as a conservationist, she made a phone call to some friends
I assumed whoever planted them had messed up. But it turns out they hadn’t — at least from their perspective. And rather than being a unique case, this is a common story around the world. If we imagine a vision of healthy and thriving woodlands, how can this behaviour be explained? Why are trees planted to die?
The answer is incentivised targets — “plant a million trees to get your funding”. Whilst it sounds sensible, planting does not mean establishing a tree. Incentives can be a very powerful tool to drive behaviours and get results. However, bad targets can have unintended consequences. A programme in Mexico pays farmers to plant new trees; however, some slash healthy rainforests to do it [1]. An anecdote from British-ruled India describes this as the “cobra effect”. To reduce venomous snake injuries, the government paid rewards for dead cobras. This worked initially, as locals trapped and killed them. However, it soon became increasingly expensive to fund… some had started to breed the snakes to collect the rewards. When the rewards stopped, breeders set their snakes free, resulting in a much bigger problem [2].
Targets within any organisation are by default incentivised — employees don’t want to be fired. Tie compensation to a target, and you can expect to see ruthless focus. Whilst celebrating the immediate results, many won’t realise they’ve stumbled through a one-way door [3]. Some unintended consequences are often slow to be realised:
- Less innovation: Not wanting to risk the results of today for the results of tomorrow, new initiatives get deprioritised. Not an issue, until an innovative competitor eats your lunch.
- A new culture: Repeat a process enough and it becomes your culture [4]. Once you’ve worked this way for some time, expect this behaviour to stick, even if you change direction.
- Straying from the vision: Prolonged short-termism means when you eventually look up, you might not be where you expected.
Targets are hard to get right, and not only for big incumbents. Three years ago, Multiply launched a consumer app to bring financial advice to the masses. In an effort to make it as affordable as possible, we included usage targets for our integrated accounts (used by our customers to easily implement our savings and investments advice). As a result, we spent time building executional experiences; and even happily acquired a new segment of customers that didn’t take advice. Fortunately, we stopped and took stock; our core capability is financial advice technology; our vision is accessible advice for everyone. We changed those targets and got back on track.
Setting good targets is hard, but essential. Here are some hot tips to consider:
- Don’t set too many: The more you set, the less focus you have.
- Air them early: Don’t miss out on input from the right people.
- Design your organisation: Short-term incentivised targets might make sense for a particular part of the business. Consider spinning out a separate unit to keep innovating [5].
- Think slowly: Often rushed at the end of a quarter, instead carve out time for deep thinking. Understand the context — your vision, capabilities, strategic intents, and roadmap. Play through how your targets might drive behaviours. And finally, consider putting on your boots and taking a walk in your local woodland 🌳
