What Are You Optimising For?
Here’s a true story I observed, identifying details removed: Illustrating a point through storytelling is a great technique, but please do not attempt to correlate any story to any specific company; they’re anonymised, you won’t be able to, and if you try you’ll likely be wrong. Consider this story fictional if you wish. a COO had a vice president reporting to them. The COO wanted the company to grow in value; to do this, to steadily evolve the product such that it retained or grew in market relevance, measured by growth in sales and revenue.
The VP turned out to be very reluctant to champion projects, and oversaw a decline in sales.
Both the COO and VP were satisified, both believing they executed their roles well. Notably the COO believed the VP, who was actively overseeing a decline in product usage, directly measurable and affecting company value, was doing an excellent job.
How did this situation happen?
Responses
The COO believed that he wanted innovation, adaptation to market relevance, growth, a rise in sales. But as far as I can tell as an external viewer, what he rewarded was hearing that everything was okay: no problems, everything was running smoothly, any issues were being dealt with and didn’t need to rise to his level. As a result, a VP that should have undertaken a series of actions, overseen projects, improved internal processes, and targeted changes that would result in revenue growth actually did… nothing. In fact, he went so far that he rewarded those who obstructed projects, ignored board directives on at least one specific project they wanted to see done, and ignored reports that sales were flagging. What he reported upwards was smoothness: everything was fine. Everything was okay. No issues required action; his team were on top of it. Nothing need be done.
I can’t tell you where I saw this because you would then be able to infer who the anonymised COO and VP were. But this is true as told, and the VP’s actions, surprising though they may seem, are to my knowledge what he really did. He did this not because these decisions were rewarded (they were likely not known outside his department) but because what they let him report upwards was rewarded, despite the actions and conduct that led to those reports not being what his COO actually asked for.
There can be a strong difference between what people believe they want and reward, and their actual response.
There are many reasons, but I suspect the main one is that a response is emotional. Several times I’ve seen managers ask for specific behaviour or actions, but either not rewarded, or directly been displeased, at having to deal with those actions. What people believe and tell themselves they want, and how they respond when they get what they ask for, are often not in sync.
Therefore people give what is not explicitly asked for, but is implicitly, by behaviour, seen as asked for via what is rewarded.
Optimisation
There are terms for this: incentives (rewards), or optimisation (what a process will be most efficent at.) I like the term optimisation here because it captures the concept that the process in place Ie, you! And your implementation of management. But this can apply to processes in general, a topic for another article. may be well-intentioned but it may be inadvertently set up such that it is much better at producing something that is not the desired outcome: that for which it is, invisibly, optimised.
Once you realise this, as a manager, it can cause self-reflection. I myself remain worried at what behaviour I incentivise unaware—or what my own management optimises for versus what I really want it to produce.
What do you optimise for?