Unintended consequences

In yesterdays mental models email from George Mack.

Once the bounty stopped getting paid.

The cobras got released into the streets.

A way to prevent the cobra effect (from Georges newsletter):

  • Andy Grove (Former Intel CEO) has a specific tactic to prevent this from happening: Pairing Metrics. 
  • To prevent one metric leading to perverse incentives, have the opposing metric as a goal too. 
  • For example, Keith Rabois will measure fraud rate AND customer service in his business. 
  • If his customer service team was solely optimised around fraud rate, they may achieve the objectives but treat every customer like a potential fraudster. (Resulting in awful customer service) 

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