By Fred Kofman
Philosopher and Vice President at Linkedin
People with targets and jobs dependent upon meeting them will probably meet the targets – even if they have to destroy the enterprise to do it.” W. Edwards Deming, Founding Father of the Total Quality Movement
The economic problem of (an organization) is rapid adaptation to changes in its particular circumstances. Then, the ultimate decisions must be left to the people who are familiar with these circumstances, who know directly of the relevant changes and of the resources available to meet them. This problem cannot be solved by first communicating all this knowledge to a central board which then issues its orders. But the “man on the spot” cannot decide solely on the basis of his limited but intimate knowledge of his immediate surroundings . There still remains the problem of communicating to him suchfurther information as he needs to fit his decisions into the whole pattern of changes of the larger ( organizational) system .” Friedrich Hayek, Nobel Laureate in Economics
If you play defense in a soccer team that pays for performance, would you rather win 5-4 or lose 0-1?
If you play offense, would you rather win 1-0 or lose 4-5?
Your commitment to the team may lead you to chose the former, but your coach’s commitment to “rewarding excellence” may lead him to cut you off the team.
This is the hardest problem any organization has to solve: How to incentivize its members to pursue the best for the whole (global objective)–which requires them to not do the best for their part (local objective)–, while evaluating these same members based on the performance of their part (local objective)–which will lead them to not pursue the best for the whole (global objective).
In soccer terms: How to incentivize the defense to win the game–which requires them not to focus only on preventing the other team from scoring–, while evaluating these defensive players on the performance of their part (goals scored against the team)–which will lead them to not pursue the team’s goal.
In mathematical terms: How to optimize the system–which requires subsystem managers to sub-optimize their subsystems–, while evaluating these same managers on the performance of their subsystems–which will lead them to optimize them, and therefore to sub-optimize the system.
In this video, you will understand why this is the hardest problem and why, as I will describe in my next post, it can only have a “soft” solution.
Find more exercises related to mindfulness at work here.
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