Right Attitudes

Ideas for Impact

Archives for September 2017

Incentives Matter

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Incentives are Powerful Extrinsic Motivators

The bedrock premise of economics is that incentives matter. This is a powerful device because it applies to almost everything that humans do.

Changes in incentives—monetary and nonmonetary—can sway human behavior in foreseeable ways.

For instance, if a resource becomes more expensive or scarce, people will be less likely to choose it. Higher prices will reduce the quantity of goods sold. Fewer people visit outdoor recreational areas on chilly and rainy days. Whenever fuel prices soar through the roof over a prolonged period, consumers buy less gasoline—they eliminate less important trips, carpool more, and purchase fuel-efficient cars.

Incentives Shape Behavior

If the payback from a specific choice increases, people are more likely to choose it. Students focus in classes when their professors declare what course material will be on the examinations. Pedestrians are more prone to leaning down and picking up a quarter than they would a penny. Traditional incentive systems for executives give rise to corporate “short-termism”—executives’ annual bonuses are often awarded for achieving targets that are insubstantially linked to long-term value creation.

Incentives shape behavior. The economics of wrongdoing and crime suggest that fines be increased to offset the rewards from lawbreaking—for example, traffic fines for speeding are typically doubled in construction zones. Ryanair, Ireland’s pioneering discount airline, purposefully uses exasperating fees for checked bags, airport check-ins, and printing boarding passes to “reshape passenger behavior” and focus on getting passengers punctually to their destinations with the least overhead costs.

Incentives Can Backfire Even If Launched with the Best of Intentions

The “incentives matter” framework of economics explains why bad behavior happens whenever the payoff for such behavior is high and the odds of getting caught and reprimanded are low.

People will scheme—even perpetrate fraud—to achieve the incentives they’re offered. If targets are impracticable and employees realize that they can achieve those targets by cheating, then they will cheat.

Incentive structures are partially to blame for the recent Wells Fargo accounts scandal. Even if Wells Fargo established incentive arrangements with the best of intentions, it tied a substantial percentage of employee compensation to immoderate sales targets. This compelled employees to open millions of sham bank accounts and credit cards in customers’ names, infringing on their trust, and costing them millions of dollars in fees for services they did not willingly sign-up for. As this case makes obvious, incentives intended to stimulate people to do their best can sometimes push them to do their worst.

Idea for Impact: A Little Incentive Goes a Long Way

Incentives matter. They influence choices that humans make. Changes in incentives influence their choices. However, designing effective incentives is a painstakingly difficult problem. Do not underestimate or ignore potential undesired results—increase in dishonest behavior, over-focus on one area while overlooking other parts of the business, imprudent risk-taking, deterioration of organizational culture, and diminished intrinsic motivation.

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Inspirational Quotations #701

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A celebrity is a person who works hard all his life to become well known, then wears dark glasses to avoid being recognized.
—Fred Allen (American Humorist)

He who is aware of his folly is wise.
—Yiddish Proverb

Sometimes the best deals are the ones you don’t make.
—Bill Veeck (American Sportsperson)

It is inevitable that some defeat will enter even the most victorious life. The human spirit is never finished when it is defeated… it is finished when it surrenders.
—Ben Stein (American Lawyer)

You will get all you want in life, if you help enough other people get what they want.
—Zig Ziglar (American Author)

Appreciative words are the most powerful force for good on earth!
—George W. Crane (American Psychologist)

Love has a way of finding you when you stop seeking it and start being it.
—Mastin Kipp

As long as the world shall last there will be wrongs, and if no man objected and no man rebelled, those wrongs would last forever.
—Clarence Darrow (American Lawyer)

For the world is in a bad state, but everything will become still worse unless each of us does his best.
—Viktor Frankl (Austrian Physician)

Trouble shared is trouble halved.
—Dorothy L. Sayers (British Novelist)

What a grand thing it is to be clever and have common sense.
—Terence (Ancient Roman Playwright)

A good conversationalist is not one who remembers what was said, but says what someone wants to remember.
—John Mason Brown (American Columnist)

Bullets cannot be recalled. They cannot be uninvented. But they can be taken out of the gun.
—Martin Amis (American Novelist)

There is no easy walk to freedom anywhere, and many of us will have to pass through the valley of the shadow of death again and again before we reach the mountaintop of our desires.
—Nelson Mandela (South African Political leader)

What I cannot create, I do not understand.
—Richard Feynman (American Physicist)

The most precious gift we can offer others is our presence. When mindfulness embraces those we love, they will bloom like flowers.
—Thich Nhat Hanh (Vietnamese Buddhist Religious Leader)

In all your gettings, get wisdom.
—Anonymous

To be a critic is easier than to be an author.
—Hebrew Proverb

Confidence is contagious. So is lack of confidence.
—Vince Lombardi (American Sportsperson)

Seek Fame by Associating with the Famous?

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Dale Carnegie (1888–1955,) the author of the perennial self-help best seller How to Win Friends and Influence People, wasn’t related to the Scottish-American steel magnate and philanthropist Andrew Carnegie (1835–1919.)

However, Dale Carnegie changed the spelling of his last name from “Carnagey” at a time when Andrew Carnegie was a widely recognized name.

Dale Carnegie was born Dale Carnagay on a Missouri farm. After trying his luck as a salesman and as a failed actor, Carnagay moved to New York and began teaching public speaking at the Young Men’s Christian Association (YMCA.) His courses got popular and, in time, Carnagay opened his own office in the Carnegie House, adjacent to the famous Carnegie Hall, which is named after Andrew Carnegie, who funded its construction.

Shrewd marketing indeed!

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Death to Bureaucracy

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Bureaucracy can suck the life out of any organization by rewarding complacency and inertia.

Efficient managers are annoyed with the speed of bureaucracy. Internal rules and policies for making and approving decisions slow down managerial undertakings. In a world where fast, disruptive innovation has become foremost, any company can ill afford the time or expense of operating with bureaucratic mindsets.

Management pioneer Peter Drucker’s enduring condemnation of bureaucracy, formalities, and rules and regulations hit the peak with his ground-breaking editorial called “Sell the Mailroom,” first published in the Wall Street Journal in 1989 and then republished in 2005.

At a time when the great majority of businesses were engaged in making an effort to improve the efficiency of support staff, Drucker brashly advocated that bureaucratic support should be eliminated by outsourcing their work to outside contractors. Drucker observed,

In-house service and support activities are de facto monopolies. They have little incentive to improve their productivity. There is, after all, no competition. In fact, they have considerable disincentive to improve their productivity. In the typical organization, business or government, the standard and prestige of an activity is judged by its size and budget—particularly in the case of activities that, like clerical, maintenance, and support work, do not make a direct and measurable contribution to the bottom line. To improve the productivity of such an activity is thus hardly the way to advancement and success. When in-house support staff are criticized for doing a poor job, their managers are likely to respond by hiring more people. An outside contractor knows that he will be tossed out and replaced by a better-performing competitor unless he improves quality and cuts costs.

Idea for Impact: Drop unnecessary work.

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How to Learn Anything Fast // Book Summary of Josh Kaufman’s ‘The First 20 Hours’

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Every Discipline, Hobby, or Sport Has Its Learning Curve

'The First 20 Hours' by Josh Kaufman (ISBN 1591846943) One of your core productivity principles should be to learn to do things to a good-enough level—but not to perfection.

In the pursuit of self-improvement, when you start to study a field, it seems like you have to learn hundreds of principles and skills. If you’re interested in no more than gaining an adequate amount of fluency in any skill, you have only to identify the crucial few core principles, learn them, and diligently practice them “in the trenches.”

According to self-described “learning addict” Josh Kaufman’s The First 20 Hours: How to Learn Anything… Fast, with a bit of strategy, you can learn just about any skill to a sufficient level with twenty hours of focused effort:

In my experience, it takes around twenty hours of practice … to go from knowing absolutely nothing about what you’re trying to do to performing noticeably well. … It doesn’t matter whether you want to learn a language write a novel, paint a portrait, start a business, or fly an airplane. If you invest as little as twenty hours in learning the basics of the skill, you’ll be surprised at how good you can become.

Learning is Fun but it is also Dedicated Work

One of the real challenges for rapid skill acquisition, according to The First 20 Hours, is to get past the beginner’s blockade, which is the frustration that occurs when learning something new doesn’t come as naturally as you’d hoped for. The solution is to build in focused learning time into your daily routine.

Make dedicated time for practice. The time you spend acquiring a new skill must come from somewhere. Unfortunately, we tend to want to acquire new skills and keep doing many of the other activities we enjoy, like watching TV, playing video games, et cetera. “I’ll get around to it, when I find the time,” we say to ourselves. Here’s the truth: “finding” time is a myth. No one ever “finds” time for anything, in the sense of miraculously discovering some bank of extra time, like finding a twenty-dollar bill you accidentally left in your coat pocket. If you rely on finding time to do something, it will never be done. If you want to find time, you must make time.

The First 20 Hours tells you how to use the initial learning time to maximum effect and have as steep a learning curve as possible. To learn a skill, you must deconstruct the skill into its constituent subskills and learn enough about each subskill to be able to practice effectively and self-correct. For instance, Kaufman finds a shortcut to learning how to play the ukulele by memorizing the three chords needed for the majority of songs, which happen to be C, F, and G.

How to Learn Anything Faster

The first three rambling chapters of The First 20 Hours introduce many general principles of rapid skill acquisition and effective learning. The six succeeding chapters give Kaufman’s firsthand accounts of how he applied these principles to learn yoga, programming, touch-typing, a Chinese board game called Go, ukulele, and windsurfing. The chief takeaways from these chapters are,

  • Study, by itself, is never enough. If you want to get good at anything where real-life performance matters, you have to practice that skill in context.
  • Invest your limited time on the sub-skills with most payback and avoid those elements of the skill that are non-essential.
  • Create mental models and checklists for remembering the things you need to do each time you practice. It helps make the learning process more efficient.

Recommendation: Skim Josh Kaufman’s The First 20 Hours: How to Learn Anything… Fast. Start with the author’s TED video and then speed-read the first three chapters (39 pages) and the prologues. Read the subsequent six chapters only if the subject matter particular skills fascinate you—these monotonous chapters expose the many nuances of the trial and error in the course of learning.

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Inspirational Quotations #700

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Age is not a particularly interesting subject. Anyone can get old. All you have to do is live long enough.
—Groucho Marx (American Actor)

He abused me, he beat me, he defeated me, he robbed me,–in those who do not harbour such thoughts hatred will cease.
—The Dhammapada (Buddhist Anthology of Verses)

Winning is a habit. Unfortunately, so is losing.
—Vince Lombardi (American Sportsperson)

The guilty think all talk is of themselves.
—Geoffrey Chaucer (English Poet)

There are compensations for growing older. One is the realization that to be sporting isn’t at all necessary. It is a great relief to reach this stage of wisdom.
—Cornelia Otis Skinner (American Dramatist)

You can never get enough of the things you don’t need, because the things you don’t need can never satisfy.
—Marvin J. Ashton (American Mormon Religious Leader)

All paths are present, always… and we can but choose among them.
—Jacqueline Carey (American Novelist)

Man is the creature of circumstances.
—Robert Owen (British Social Reformer)

Be tough where you must be, kind where you can be.
—Marty Nemko (American Career Coach, Author)

Spirituality is neither the privilege of the poor nor the luxury of the rich. It is the choice of the wise man.
—Swami Chinmayananda (Indian Hindu Teacher)

Good ideas are not adopted automatically. They must be driven into practice with courageous patience.
—Hyman G. Rickover (American Military Leader)

That is true wisdom, to know how to alter one’s mind when occasion demands it.
—Terence (Ancient Roman Playwright)

A man must be obedient to the promptings of his innermost heart.
—Robertson Davies (Canada Journalist)

Doubt is the incentive to truth and inquiry leads the way.
—Hosea Ballou (American Universalist Clergyman)

The more specific and measurable your goal, the more quickly you will be able to identify, locate, create, and implement the use of the necessary resources for its achievement.
—Charles J. Givens (American Self-Help Writer)

An Old Joke about Accounting and Leadership

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A man in a hot air balloon gets lost over Nebraska. He has no idea where he is or where he is going. He does not see anybody… nothing but farmland as far as the eye can see.

Eventually, he sees a woman down in a field. He goes down and cries out to her, “Where am I? I’m already an hour late for an appointment!”

She hollers back, “You’re at 42 degrees 15 minutes and 4 seconds North latitude and 98 degrees 12 minutes 15 seconds West longitude.”

The man yells out, “You must be an accountant.”

“Hmm … how did you guess?”

“Your information is absolutely precise and accurate … but totally useless.”

“You must be an executive.”

“Yes … but how do you know?”

“You’re higher up, you do not know where you are, you do not know where you’re going, you’re over-scheduled, and you blame your subordinates—someone below you.”

Reference: A Year with Peter Drucker by Joseph A. Maciariello

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