I was working with a pharmaceutical distribution business that needed to innovate fast. Drugs were coming off-patent, and industry forces were going to change who made money and how. The MD was worried. He was also frustrated that his senior managers, who he described as excellent operations people, were failing to come up with new ideas and implement them. As we discussed his objectives, he painted a clear picture of how he wanted these managers to innovate.
Then he said, “But they damn well better still hit their monthly KPIs.”
I understood where he was coming from, but as things stood this was not going to work.
Why? Well put yourself in the shoes of the managers. The incentives were clearly to put all their time and effort into operating well and not to worry about the innovation.
Here’s what goes on in their heads: “If I try to innovate, I’ll have to find the extra time by working longer hours, and I may well fail. Whatever people say, that will probably be held against me later. But if I just keep on operating, I’ll just get whinged at by the MD. Big deal. It’s not a sacking offence, is it? Anyway, I know the system really well. They need me to make sure the drugs get delivered. On the other hand, if I MISS my KPIs, then I’ll have real trouble.”
Only by changing these incentives could the MD hope to get these managers to give innovation some serious attention.
To find out what behaviour your culture is really supporting, think of what you need people to be doing. Then, put yourself in your employee’s shoes and ask:
- What will happen if I do?
- What will happen if I don’t?
- What won’t happen if I do?
- What won’t happen if I don’t?
People calculate the perceived consequences of their actions instantaneously, often unconsciously. If you are finding that people agree to cross-sell, report problems or support strategic changes, but then they don’t, ask yourself how they are weighing up the various incentives and start testing changes to them.