In a recent Harvard Business Review blog post, Vijay Govindarajan and Srikanth Srinivas argue that sometimes our incentives fail; sometimes they please some customers and stock holders but if they betray your company’s purpose, then they are no longer useful incentives. They use the example of bus drivers who get bonuses for getting riders to their destinations on time, which causes them to skip picking up riders at other stops, if they find themselves running behind schedule.
One of the big debates in economics is whether over our ability to produce and manufacture things as quickly and cheaply as possible, since that will create the most jobs and economic impact. However, others argue that there is great value and ultimate profitability in producing high quality products as ethically and safely as possible.Do we live in a time where we can indeed demand high quality, high value products that do not harm the environment, create jobs with livable wages and safe and healthy working conditions? I believe we do and we can and should make those demands both directly and indirectly, because I think there are many people who believe profitability is about more than just dollar signs. These products are worth the time, effort and higher cost, if, as a society, we believe this type of manufacturing is the right thing to do.There’s a popular phrase related to innovation: “It’s okay to fail, but fail quickly and cheaply.” Well, on the surface, that’s not bad advice. Yet, sometimes innovative ventures can fail if we quit too early or miscalculate the funding we needed to get going in the first place. Of course there’s a sweet spot somewhere in there, but the most important thing is not to come at this from a scarcity mindset, but from an abundance one. It’s not about withholding the resources we have in case of failure, but investing in the future by learning what works and what doesn’t. We need to learn so we don’t waste time and money on the same mistakes over and over again. We need to learn so we can adapt, ultimately rewarding our investments of time and money or giving us the information we need to pull the plug sooner rather than later.Most importantly we need to learn while staying true to our purpose.
If the purpose is to get to profitability as quickly as possible then our time of trial and error should be focused on doing whatever it takes to get to profitability in the quickest way possible. There is an incentive then for quality and ethics to take a back seat. If, however, the purpose of our innovations are to change the game, create significant new value and meaning and long-term sustainability, then the focus should be on quality and creating the new playing field. We’ll still make a profit, but it might not be the most or all of the profit in your market, right away. Sometimes it takes more time and investment up front, but it also takes more attentiveness and openness to learning, adapting and staying true to our purpose.In the United Methodist Church our mission is to “Make disciples of Jesus Christ for the transformation of the world,” however, because of the myth that we have to turn around our decline as quickly as possible, our incentives encourage something else entirely. If we were honest with ourselves we would change our mission to: ”Create positive worship attendance and church membership growth in our local congregations on an annual basis.” This is what we study, what we measure, what we offer incentives for and what we hold our leaders accountable to.Perhaps, for the UMC, it’s time to slow down, to spend more time listening, learning, adapting, and rediscovering our purpose. Only then we can focus on realigning our incentives in order to better fit with that purpose. It’s not the quick and cheap thing to do, but it’s the right thing to do.
This post originally appeared at Rethink Bishop