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Ep.335 How Good Intentions Create Bad Incentives

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Manage episode 519438800 series 3602431
Content provided by Rosha Entezari. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Rosha Entezari or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://podcastplayer.com/legal.

Sometimes the perfect fix makes the problem worse. In British-ruled India, the government tried to reduce deadly cobras by paying citizens for every one killed. It worked—until people started breeding cobras for profit. When the program was canceled, breeders released their snakes. The cobra population skyrocketed.

Decades later, Wells Fargo made the same mistake in a suit and tie. Leaders tied bonuses to aggressive account-opening targets. The goal was growth. The result: 3.5 million fake accounts, $185 million in fines, and a shattered reputation.

This is the Cobra Effect—when incentives reward the wrong behavior. People optimize for the payout, not the purpose.

The lesson is simple: design for outcomes, not optics. Reward fewer cobras, not more dead ones.

Today’s Move: Review one incentive in your business. Does it drive the behavior you want—or the one that’s easiest to game?

Send us a text

  continue reading

385 episodes

Artwork
iconShare
 
Manage episode 519438800 series 3602431
Content provided by Rosha Entezari. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Rosha Entezari or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://podcastplayer.com/legal.

Sometimes the perfect fix makes the problem worse. In British-ruled India, the government tried to reduce deadly cobras by paying citizens for every one killed. It worked—until people started breeding cobras for profit. When the program was canceled, breeders released their snakes. The cobra population skyrocketed.

Decades later, Wells Fargo made the same mistake in a suit and tie. Leaders tied bonuses to aggressive account-opening targets. The goal was growth. The result: 3.5 million fake accounts, $185 million in fines, and a shattered reputation.

This is the Cobra Effect—when incentives reward the wrong behavior. People optimize for the payout, not the purpose.

The lesson is simple: design for outcomes, not optics. Reward fewer cobras, not more dead ones.

Today’s Move: Review one incentive in your business. Does it drive the behavior you want—or the one that’s easiest to game?

Send us a text

  continue reading

385 episodes

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