Follow the Incentives, Waze Edition
In which someone with one set of incentives becomes frustrated that people with different incentives behave differently.
Noam Bardin, recently CEO of Waze, wrote a critique of, well, everything about Waze at Google. He was frustrated and wanted to get it off his chest. A “fuck you, goodbye" message may be temporarily satisfying but it is never a good idea long-term, large-scale. But at least it gives us a good example of incentives at work.
Here are his points:
Alignment—Noam brings this up first and he could stop there. In a small company, people have naturally aligned incentives. As part of a large company, incentives diverge and lo and behold behavior follows.
Firing—In a large company the cost of firing someone is much larger (thank you unlawful termination lawsuits) than the benefit of firing them. So the team goes a little slower, whatever, who is going to notice. Yep, Noam, incentives change and behavior follows.
Distribution—Google didn’t distribute Waze aggressively. Big ol’ Google has an incentive to project an image of treating all apps equally. So they did. The loss of Waze usage was the marketing cost of pretending to be fair.
Focus—Noam complains about time spent on legal, policy, & privacy. Google has much more to lose than little, independent Waze did, so they work hard not to lose it.
Compensation—Noam bemoans the loss of incentives that come from putting compensation at risk. I’ll have much more to say about this in future posts but for now I’ll point you to this. Putting compensation at risk in a large corporation, or even basing it on narrower product metrics, leads to perverse incentives.
Directness—It’s not what you say, Noam, it’s what they hear.
Work life balance—Noam complains that kids these days don’t want to work hard. Compare their incentives today as part of Waze as part of Google with Noam’s incentives early at Waze. If he won he’d have created a legendary app and he would be financially set for life. It they win they will have a slightly quicker trip up a corporate ladder. Different incentives, different behavior.
Congratulations to Noam on a successful acquisition. It doesn’t go much better than that and it certainly goes much worse sometimes. But when incentives change, behavior changes, and complaining about that connection doesn’t make much sense.
Wow, this points to some fairly shallow management skills => "It is practically impossible to fire someone for the basic reason that you don't need this role any more or there is a better person out there or just plain old "you are not doing a great job". This neuters managers..."
I am reminded of an anecdote I heard about a senior GS tech manager who joined a new company and couldn't figure out how to manage people who didn't care if their (relatively small) bonuses were withheld. That always worked at GS!
I suspect that there is a sliver of a beast in each of us - someone who just wants to tell people what to do and be obeyed, without all that annoying, time consuming explaining and convincing stuff. I've found that beast inside myself, particularly under pressure! And of course, you've been promoted to "manager" because you're obviously smarter/more inspired/harder working than others, so it's your right to command. Surely.
Simon Wardley says the next generation of manager will come from MMORPG guild leaders - people who have learned to motivate and inspire distributed teams of volunteers. It won't consist of people who think they're right to fire is their only management lever.
Reading Noam's post, I am reminded of the book 'Loonshots' (Safi Bahcall), which goes into a lot of detail about how different types of incentives the work in different types of organizations and how that impacts the capability to innovate, going as far as to whip up a formula for it (https://hbr.org/2019/03/the-innovation-equation). The formula takes scope of management as an input, because a smaller scope of management (number of people per manager) means there's more paths to promotion. Bahcall says that means working on relationships to further promotion opportunities is a better investment than working on a project's success.
Another thought is that Noam is very, very American. The view of the world that only extreme pressures and risks can give the incentives to stimulate innovation and high performance does not match my experience. Hell, even the idea that putting incentives in place that encourage employees to put in extreme amount of hours seems pretty perverse to me.