Motivation and Incentives

Have you ever done something to motive someone else to take a particular course of action? That is called an incentive scheme. 

Successful people know how to create incentive schemes that work because they think through every situation. Leaders know how to motivate people to work through incentives.

Incentives, from the outside looking in, seem straightforward. But they are not, they are very tricky and can backfire easily if not thought through. I am going to explain a story to illustrate what I mean.

Mexico City is known for it's extremely heavy automobile traffic which creates large amounts of pollution and constantly packed roadways. A few years ago, the government thought it would make an incentive to lessen driving and reduce these problems. The government made a law that each weekday, license plates ending in certain numbers were restricted from driving. For instance, Monday, license plates ending in 5 or 6 could not drive and so on. Did people break the law? No. They did something perfectly legal, they bought two cars.

This law was supposed to give people an incentive not to drive as much, but people still had to drive, so instead it gave them an incentive to get a second car. This law was supposed to cut down on driving in Mexico City, however, the total number of cars on the road increased.

Human beings are smart and will try to find any way around a bad situation. Because of this, sometimes the result of an incentive is very unpredictable. In this case, not only was the government of Mexico City unsuccessful in their goal, their tactic actually made the problem worse.

This phenomenon has a name, The Cobra Effect. Years ago, in the capital of India, there was an increasing problem with too many cobra snakes so the government decided to reward people who killed cobras and brought in their skins to trade for money. What happened? People started breeding cobras and creating cobra farms, causing the total number of cobras to increase.

A large part of being a successful leader is knowing how to motivate people. Incentives are a great way to motivate people, however, they are tricky and can easily backfire. Successful leaders think through every outcome and can think like other people. If you know what another persons motives are then you have a good chance at guessing how they will behave. Leaders can guess how others will behave.

The problem with Mexico City's solution is that people needed to drive. Getting to their jobs is what motivated them to buy a second car and drive even more. A better incentive scheme would be to find a way to reward people for carpooling. That would be one of the few ways to get less cars on the road.

I challenge you to motivate someone else, and think through how they are going to behave. What are their own incentives? Why would they do this for you? Everyone has their own well-being in mind when they do something. If you want to motivate people to do something for you or do something for the greater good, you have to find a way that it will help them.

Leadership is the art of getting someone else to do something you want done because he wants to do it. -Dwight D. Eisenhower