World Domination: The 3 Traits of Effective Incentives

October 08, 2015  |   Blog   |     |   Comments Off on World Domination: The 3 Traits of Effective Incentives

If you want to rule the world, build a company or use the collective capability of your digital community, mastering Incentives is non-negotiable!

Effective Incentive structures enable us to communicate priorities and amplify our influence beyond those with which we have immediate contact. Executive teams use them to ensure key business imperatives are met, marketing teams use them to lure new customers to their products and social technologies use them to guide user behaviour toward ongoing engagement.

Incentives are so critical they sit as one of the five components of strategy that must be present for success to occur (Read more about BITIL™ here)
Trinity of effective incentives

Effective incentives exist at the intersection of three critical components:

  • *Motivators
  • *Rewards
  • *Behaviour

Motivators provide the fuel for action while a reward provides context when linked to a desired behaviour… let me explain:

For many years I have spoken about formal and informal incentives… these are the dynamic and structured currencies on which community transactions (aka behaviors) occur and are given context. At a base level these are things such as “likes”, “comments”, “praise”, “followers” etc.… from the currency perspective, a “like” is a point-in-time social reward targeted toward the personal motivator of recognition, and tied to the specific behaviour of posting – its a form of incremental status allocation.

For me, the interesting think about “likes” as a currency is that they depreciate in value, which then fuels the need to engage over time; so the likes we receive today are worth less to us as time goes on – we all receive a buzz when something we post goes viral, but that buzz fades as time passes – this is why “likes” are referred to it as a transactional incentive (there are 3 horizons of incentives).

Normally in my talk I will refer to a reward schedule called “SAPS”, which refers to Status, Access, Power Stuff:

  • *Status: is putting people on the pedestal e.g. Employee of the month
  • *Access: is access to some scarce resource or commodity e.g. Lunch with the CEO
  • *Power: is the ability to make decisions over others e.g. The admins of Wikipedia get to vet the contributions of others
  • *Stuff: is give aways e.g. Money, movie ticket etc.

Now, at this stage it’s worth reiterating that rewards are all very good and well as a concept but a reward only gain relevance when linked to a base motivator… Rewards married to a motivator become amplified while Rewards without a motivator are offensive.

A motivator can be defined as something of value to the end user that drives them to action; if it has no value to the end user, or is not strong enough to inspire action, it ceases to be a motivator.

Motivators are complex and there are a number of people that have done excellent work in this space: Daniel Pink and Steve Sims being two of my favorites. Both of these guys break motivators into two areas:

  • *Intrinsic motivators: Autonomy, Mastery, purpose according to Pink; or Smart, successful, socially valued and a sense of structure (certainty) according to Sims
  • *Extrinsic motivators: Give aways, stuff people want etc. (according to both Pink and Sims)

Each agree that intrinsic motivators are by far and away the most powerful types of motivators, and from my experience the incentives that are forged from an intrinsic motivator always outperform those that are not (by a factor of about 10 times). The coolest thing about this is that intrinsic incentives are usually FREE!!!! (I.e. it costs $0 to be the employee of the month)

For my money Pink and Sims are onto something big with their work, yet neither have nailed it completely as people are complex and I believe there is further refinement to come; Pinks work is quite good at defining individual motivators; whiles Sims work is good to define social motivators; when combined they form a compelling and almost holistic picture.

Regardless of our definition of motivators, the result is people are inspired to take action either toward their desired outcome or away from an undesired outcome.

  • *Toward motivators = Carrot
  • *Away from motivators = Stick

Realistically rewards and motivators are two sides of the same coin, each of which is distinct, but only relevant within the context of the other.  The reward/motivator coin is a powerful currency but it only becomes effective when you know what you want to spend it on, and this is where behaviour steps in.

Defining the behaviours that are key to driving your business objectives is the foundation stone of social strategy… without an anchoring behaviour incentives lack purpose.

The guiding principle for allocating rewards is to provide rewards to the behaviours you want to see more of.

So there you have it… Effective Incentives are three fold: Behaviour, motivator, and reward…

Get your incentives right and people will literally work for free, get them wrong and there is not enough money in the world to keep your community functioning.

There is a lot more to be said about how to combine these elements as part of a strategy including triggers, reward stacking, incentive horizons, social frictions etc., but not today…

Today I want to hear from you:

What interests you about incentives? What areas should we explore next?

Scott (30 Posts)

CEO Digital Infusions

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