Posts tagged ‘ Incentive ideas ’

Friday, September 18th, 2009

The X-Prize for motivation

Categories: eBusiness, Featured, Incentives

In an interesting presentation from the July TED conference, career analyst Dan Pink makes a convincing case that incentives are ineffective at enabling innovative thinking. This is something that social scientists know, argues Pink, but that business seems keen to ignore. Incentives are only effective at improving performance along already established paths, not in enabling the forging of new paths.

It’s an interesting presentation because it should force all operators of incentive solutions all to think about whether they are stifling the behaviours we are trying to promote.

There is a flip side to this, and this is the success of prize funds such as the X-Prize, or the Netflix recommendation engine prize.

Called the Netflix prize, a reward of $1 million dollars was offered by the movie rental company, to any team that could improve film recommendations that were 10% better than those produced by its current system. Earlier this year, a team managed to achieve this, after nearly 3 years and a massive collaborative effort. In fact, thousands of people entered the competition, many of whom would have had no chance of winning, but saw the opportunity to learn about machine intelligence with a state of the art set of test data.

So the question is whether the prize hindered the finding of a solution, or enabled it? Certainly Netflix has earned marketing and PR coverage and respect from the development community to more than justify the $1 million prize, but how many teams would have persevered if there had been no prize at the end of it.

Perhaps the answer lies in a blog post by one of the participants of the Netflix contest, Justaguyinagarage. In his post, Reflections on the Netflix competition, he gave kudos to Netflix for running the competition in such a well structured way:

“It was run in an exemplary fashion throughout and should, I believe, become the model for other competitions that people might choose to run. Some of the key features that made it such a success are:

a. A clear, unambiguous target and challenging target. How a 10% target was chosen, will I suspect, remain forever a mystery but it was almost perfect – seemingly unattainable at the beginning and difficult enough so that it took almost 3 years to crack – but not so difficult as to be impossible.

b. Continuous feedback provided so one could identify whether the approaches you were investigating were going in the right direction.

c. A forum so that the competitors could share ideas and help each other (more about that later).

d. Conference sessions so competitors could meet and discuss ideas.

e. Zero entry cost (apart, of course, from the contestant’s time).

f. A clear set of rules.”

As a set of guidelines for anyone looking to run an incentive, these could hardly be bettered. An objective, unambiguous target, a clear set of rules, feedback and discussion forums to promote knowledge sharing – these are surely the ingredients for successful incentives, whether the objectives are simply to sell more stuff, or something that requires creativity or innovative thinking.

For Dan Pink, the answer lies in what he calls “intrinsic motivators”, understanding peoples inner desires, which Pink subdivides into three categories: autonomy -”the urge to direct our own lives”; mastery – “the desire to get better and better at something that matters”; and purpose – “the yearning to do what we do in the service of something larger than ourselves”, which can be achieved giving employees more freedom to choose their own destiny. So is it possible to use incentives to drive people to achieve these goals? The Netflix prize would seem to show that it can.

Tuesday, July 28th, 2009

Fail often, fail better

Categories: eBusiness, Featured, Incentives

failoften

The low risk of incentives make it easier to fail often, and fail better.

People are conditioned to try and avoid failure, but this often prevents them taking chances. In looking to create a marketing promotion, too many companies avoid creating memorable and effective campaigns because the costs of implementing the campaign are so high that they can’t afford to get it wrong. “Not getting it wrong” is more important than “getting it right”, so the results are often just “kind of okay”. Or worse still, having invested so much money into a marketing campaign, more money is poured in, trying to turn a donkey into a racehorse. Economists call this a sunk cost fallacy.

The low cost of implementing an incentive campaign, using a system like iD-points, allows a company to try different approaches to drive sales. If one approach is not working, it’s easy to change the parameters, to move the goalposts, to create a different set of drivers and incentives, until an effective one is found. It’s possible to take a risk, get the feedback and measure the success, without incurring high sunk costs where the temptation is to keep plowing in more money. If something isn’t working, try another approach. Crucially, if the effectiveness of incentive activity starts to fall away, the parameters can be shifted and the activity refocused.

Incentives are the low risk marketing option.