#8 Be obsessed with people, not numbers
Old-school strategists are obsessed with numbers. Especially in the shape of long-term financial goals. And obviously, financial goals must be discussed and agreed on. But new-school strategists know instinctively that financial goals do not drive change – people, who change behaviour and work in new ways, do. This is why strategists need to be obsessed with understanding the specific behaviour that will drive real change.
Real strategy catalyses behavioural change.
“You get what you measure.” This is one of the most dangerous ideas in strategy. Most executives and strategists work hard to define long-term goals, break down goals into key performance indicators and align incentive systems to strategy. But despite extensive efforts, data show that most strategies still fail to deliver.
In some cases, measuring and incentivising new ways of working does work, but in other cases, it doesn’t. Behavioural science teaches us to distinguish between two ways of driving motivation. The key is to understand which types of motivation really work in which situations.
“Extrinsic motivation” is driven by external forces such as incentives, money or measurements. Extrinsic motivation is excellent for routine tasks and performing simple processes that don’t demand too much creative thinking. Set long-term goals, measure progress and reward success.
“Intrinsic motivation” comes from personal fulfilment, accomplishing challenging tasks and working on something that is deeply meaningful. Intrinsic motivation is critical when the path to success is challenging and high levels of creativity are needed to succeed. Create mutual trust, build shared purpose and encourage creativity.
The text continues below the field.
The trouble is that succeeding with most aspects of your strategy will require transformational change and consequently, lots of intrinsic motivation. This is why setting financial goals and aligning incentives with financial goals will not be particularly helpful when it comes to building momentum for strategic change. In strategy, you don’t get what you measure. In strategy, “you get what makes sense.”
A far better approach to goal-setting and measurement in strategy recognises that we must always accompany clearly defined financial goals by discussions about the behavioural changes needed to achieve the goals. What must we stop doing? What must change? What must we start doing? And how can we help each other overcome difficult hurdles on the journey?
In this way, we turn our attention to leading behavioural indicators of change rather than lagging financial indicators of success or failure. And by putting behaviour before financial goals, we need to have deep conversations about how to fuel intrinsic motivation to build energy, capabilities and passion for change.
Don’t set simple goals and rely on rewards to make magic happen.
Learn about the surprising truths about motivation from Daniel Pink, one of the world’s leading thinkers on business and behaviour:
Do we rely solely on the idea that “you get what you measure”? Or do we have a deep understanding of what builds motivation in different situations?
Do we spend too much time setting long-term financial goals and discussing KPIs? Or do we work together to define the specific behaviour needed to succeed?
Do we rely on simplistic carrot and stick rewards for making strategy work? Or do we focus on making strategy meaningful on the individual level to ignite a passion for change?
Implement Consulting Group is rewriting the strategy playbook. We do this by proposing dogmas for creating better strategies that are more fit for humans and fit for the future.
You can also visit the main page.
Go to Dogmas for Making Strategy Work
A winning strategy is the key to create long-term competitive advantage and to deliver superior financial returns.
What makes bureaucracies so risky?
Implement Consulting Group