Ep.335 How Good Intentions Create Bad Incentives

Sometimes the perfect fix makes the problem worse. In British-ruled India, the government tried to reduce deadly cobras by paying citizens for every one killed. It worked—until people started breeding cobras for profit. When the program was canceled, breeders released their snakes. The cobra population skyrocketed.Decades later, Wells Fargo made the same mistake in a suit and tie. Leaders tied bonuses to aggressive account-opening targets. The goal was growth. The result: 3.5 million fake accounts, $185 million in fines, and a shattered reputation.This is the Cobra Effect—when incentives reward the wrong behavior. People optimize for the payout, not the purpose.The lesson is simple: design for outcomes, not optics. Reward fewer cobras, not more dead ones.Today’s Move: Review one incentive in your business. Does it drive the behavior you want—or the one that’s easiest to game?Send us Fan Mail