Think Like A Freak by BusinessNews Publishing

Author:BusinessNews Publishing
Language: fra
Format: epub
Publisher: FichesdeLecture.com
Published: 2015-03-15T00:00:00+00:00

People often say one thing in public and then turn around and do something entirely different in private. Economists term this “declared preferences” versus “revealed preferences”. If you want your incentive to work, find out what their revealed preferences are and align with those.

You have to provide incentives which move the needle for the other person – which are valuable enough to make them willing to act differently. If you're smart, you will find a dimension that matters to them but which is not really that expensive for you.

Incentives are very personalized and therefore sometimes you have to try one thing or another until you get the blend just right. To reduce air pollution, the Mexican government introduced car rationing. Rather than reducing pollution, the scheme generated more. Why? To skirt the ban, lots of people bought a second car to use which generally were older and produced more air pollution.

The best incentives to use are cooperative rather than adversarial. When advertising guru Brian Mullaney sold his agency, he set up a nonprofit called Smile Train to raise funds to provide children in developing countries with routine plastic surgeries. He came up with a unique "once-and-done" fundraising strategy for Smile Train. Potential donors were told: "Make one gift now and we'll never ask you for another donation ever again." Smile Train's donations rose 46 percent using once-and-done, and interestingly more than two-thirds of donors gave the charity permission to keep mailing them for future donations as well. That's what collaboration and cooperative incentives can achieve.

Keep in mind that no matter how carefully you plan your incentives, there will always be someone who games the system and finds different ways to win. Applaud their ingenuity. A good example of this phenomena in action was the United Nations which recently offered carbon credits (which could be sold on the open market) to companies which destroyed a greenhouse gas called hydrofluorocarbon-23 or HCF-23. The HCF-23 gas is a by-product of making another greener refrigerant so when theUNinitiative launched, factories swung into action generating more HCF-23, not less. Embarrassed, the United Nations canceled the bounty on HCF-23 meaning there is now many more tons of HCF-23 sitting around which is now worthless. It is expected that over the coming years, most of this excess HCF-23 will end up being released into the atmosphere and that in turn will mean greenhouse gas emissions will skyrocket. In effect, the UN will wind up paying polluters millions of dollars to create additional pollution.

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