Incentives can get the animal spirits out - even in the kindest of creatures

By George ILIEV
CorporateNature Metaphor Series, No 74.

Kelly the dolphin was an obedient and fast-learning mammal in a park on the Gulf of Mexico...until it all got out of whack. She was trained to bring pieces of rubbish from her pool and would receive a fish in reward. Then Kelly realised she could manipulate the system. First, as the reward did not depend on the size of the rubbish, Kelly started breaking up large pieces of paper into smaller pieces to get multiple rewards. Then, she figured out something even more sinister: if she used her reward fish as bait, a seagull would get tempted to fly into the water, Kelly would catch it, drown it and hand over the bird's body to get more rewards. Kelly also made sure to teach her child these tricks, who in turn taught other young dolphins.

Does this remind you of investment bankers before the 2008 global financial crisis? Just like Kelly the dolphin, they would chop up sub-prime mortgages into collateralised debt obligations (CDO) and got handsome rewards for doing it.

But who is to blame: the perpetrators, be they animals or humans? Or the human creators of the incentive systems?

Dolphin (Source: Wikipedia)

We count animals precisely but humans loosely to guarantee human responses

By George ILIEV
CorporateNature Metaphor Series, No 72

When we count the animals in a zoo, we count very precisely and in great detail. For example, the London Zoo counted 19,289 animals in 2018.

When we count humans in a census, we omit a lot of details. For example, the US census conducted every 10 years does not ask for the citizenship of the people who get counted.

The reason for this discrepancy is simply... complexity. Whereas it is us humans who do the counting of the animals, in a census the humans are supposed to count themselves. This may trigger a complex reaction of avoidance in case the incentives for declaring all details are misaligned.

Just like dogs and wolves roll in animal carcasses to mask their scent to be more successful in hunting their prey, so people may try to hide from the census to avoid disclosing information that they find sensitive. Thus, we end up counting humans not with a fine pen but with a broad brush.

Penguins at London Zoo (Source: Wikipedia)

Bacteria form protective biofilm in same way as companies engender loyal workforce

Molecular glue keeps bacteria together just like incentives keep employees cooperating
George ILIEV

When in danger, some bacteria shield themselves by creating a biofilm of slime that protects them from physical threats and from antibiotics, research published in the Journal of Biological Chemistry reveals. Such biofilms cause dental plaque and sinusitis in humans, as well as antibiotic-resistant infections. A protein switch triggers the production of the film-forming molecular glue that keeps the bacteria together and isolates them from the outside world. When the glue-production mechanism is not activated, the bacteria carry on living independently.

In the business world, this molecular glue exists in the form of "incentives". Companies which use incentives to reward cooperation and long-term performance fare better in the dog-eat-dog corporate world. Partnerships are the best in engendering a loyal workforce, according to Colin Mayer, the former dean of Oxford Said Business School, and his book "Firm Commitment". In a partnership structure, the incentives are more likely to ensure alignment between the interests of the employees and the organisation, thus promoting cooperation among the stakeholders. 

Even business schools have cottoned on this idea. Some schools have a policy of non-disclosure of the GPA of MBA students to potential employers in order to enhance cooperation (e.g. Chicago Booth). Other schools do not even calculate a GPA for the graduates, so that the MBAs have an incentive to work together during business school and after graduation (e.g. Emory University).

(Photo: New York Stock Exchange, old trading floor. Source: Wikipedia)