The key to stakeholder alignment? Incentives
Aligning research insights to stakeholder incentives to maximize the likelihood of action.
Developing multiple behavioral research practices, I have faced the need to understand how to fit my work into the more extensive system to begin generating value. This process starts with listening deeply, understanding the problems that each team member is facing, and ideating how to solve them. It ends with creating a solution, testing it, and sharing the findings in a way that makes sense to each stakeholder. The foundation of all this is good listening at inception and throughout the process to tailor it accordingly.
However, listening alone only sometimes provides a complete picture. The field of Behavioral Science suggests that we only sometimes know what is best for ourselves and, thus, do not always correctly state our desires and expectations. We may say one thing only to take a different action; we may know that we need to take a particular activity, but that knowledge alone is not enough to act. Through creating multiple research practices, I’ve learned to listen and take it one step deeper, beginning to understand what incentives drive different stakeholders to their stated goals and desires.
When I first started as a researcher, I would take it personally when I went off and conducted research and presented it, only to find that no one was willing to take action on it. My collaborators were intentionally wasting my time for some nefarious reason. After trial and error, I realized that it was not malicious but that I was only satisfying surface-level requests without actually driving at deeper-level needs. Good research pushes towards the core goal that a stakeholder is trying to satisfy, which is generally created because of some incentivized outcome.
It is crucial to start by understanding each stakeholder’s incentivized outcomes and move upward from there. The next step is understanding the goals that they have established to achieve that outcome and finally beginning to ask about their stated desires. In many cases, their stated desires ultimately don’t align with their incentivized end-state, which is the first area to correct. Being a good researcher means helping the individual understand the necessary missing data and then driving at generating the insight to answer those questions.
Illustrating this with an example, in one of my previous roles, I focused a couple of months on measuring the outcomes our features created. The product team had stated their desire to know whether features generated a behavioral change for the users. Yet, as I dove in deeper, I realized that the goals they had set themselves were actually for creating higher usage levels. Being driven by incentives of increased performance ratings in exchange for increased feature usage, at the core, they did not care about the solution’s effectiveness but only if it was used.
So, when my research showcased that features did create a powerful impact for our users, it was insightful but not utilized, and the team continued on their path of building more features that they hoped would be used. While hypocritical of their stated desires, these stakeholders’ actions aligned with what the greater system encouraged.
In this case, where I could have considered the project a failure, I instead went back to the first principles of incentives and the goals attached to them. There, I discovered my marketing team was incentivized to increase our NPS and brand recognizability. With this in mind, I reframed the results of my study to show how they could market the fact our features did create a positive behavioral outcome. They found this helpful and utilized the data in their materials. The research was not in vain, but only due to the possible repurposing thanks to revisiting deep-rooted incentives.
Common incentives
Through my experience working at multiple companies and in various consulting engagements, I have seen patterns around how different departments are incentivized. This is not an exhaustive list and only represents averages that especially call out the faults in the incentive structure. I recommend using these not as truths but as starting points and how you assess the incentives of your collaborators.
Product Management — why has feature bloat become such an issue?
Commonly having the primary incentive of shipping more features, the focus of product management is generally on increasing usage. Managing the requests of the sales team, the business, and the customer, they typically create new features to satisfy a collection of requests. Whenever these new solutions are shipped, they are likely measured depending on how much the customers adopt these new features. The downside is that there needs to be more time to measure the impact these features create and whether they satisfy deep-rooted user needs.
Engineering — why fix something that is not broken?
Commonly having the incentive of generating efficiencies, engineering is measured by cost savings and the solution of highly technical problems. As the foundation of digital products, engineers own the code that solutions are created on top of. Whenever austerity measures are at play, it is generally engineering that it falls upon to focus on reducing redundancies and finding new ways to solve problems by utilizing cheaper services. This becomes an issue when those new solutions reduce the customer experience or prevent time from being spent on developing new features in high demand.
Marketing — why are we inundated with ads at every possible opportunity?
Commonly having the incentive of getting people into a funnel, marketing is usually measured by its ability to generate leads. Focusing on the quality of these leads and, in many cases, how much it costs to create them is usually second-hand with a primary focus on growth. This becomes an issue when generating customers becomes more costly than their lifetime value is to the company. It can also come with the cost of overwhelming potential prospects and lowering brand value.
Sales — why does overpromising occur?
Commonly being incentivized, especially in this case with the use of commissions, on closing deals. Sales throughout history have had the primary goal of ultimately making revenue for the company, which is a necessary function of any successful company. A significant issue only arises when the salespeople have to use aggressive tactics, including ultimately over-promising what is possible to close that deal.
Design — why do timelines commonly slip?
Commonly having the incentive of increased user experience and satisfaction, designers are measured on their ability to create flow improvements and derisk feature launches. While a designer can make an experience better, it is sometimes worth the cost of waiting for a feature to be released or the additional research effort required for a decision to be made. Designers walk a fine line between holding up a timeline due to potential risk and letting a solution be released.
How to start today
Whether you are a researcher or in any other role, thinking about the incentives that drive your collaborators will allow you to position your work better and how you report it to others. Consider looking at other teams’ OKRs, KPIs, or other forms of creating quarterly objectives to understand what measurements they are using to determine if they accomplished their goals. With an understanding of how they fit into their department’s strategy, you can begin to think about their plans to achieve them. This is the time to pull them into the discussion and understand more deeply if your hypothesized goals match their suggestions.
You’re likely on the right page if their goals match your hypotheses. If they do not, it is up to you to determine if you are wrong or if they are on the wrong track, and there is an opportunity for you to suggest some corrections to how they are approaching the pursuit of their incentivized outcomes. Once you both have settled on some goals, you should once again think about what data is needed to resolve those goals and how you would collect that.
Working with that stakeholder, you will now have a point of view on how you can do your work to ensure you succeed while also making sure it aligns with the core desires of that individual. With these in mind, you can continue to work with the stakeholders to find a middle ground where both of you are comfortable with the work that will be done. This becomes tricky when you are managing multiple stakeholders who will have different incentive structures; tracking each group’s goals and assumptions you are making is essential here. With practice and organizational capital gained through accomplishment, you will begin to identify throughlines you can utilize to satisfy multiple parties.
Once you have some insight to report back to one or more stakeholders, adding a deeper understanding of their incentive structure will also allow you to tailor presentations accordingly. Here, you will want to have one or two valuable bits tailored to each party, so even if the research only satisfies one group’s deeper goals, you will still have language that will draw the attention and excitement of other groups.
Being a researcher means always creating new insights that are only as powerful as they are used. Investigating the incentives deeply rooted within your stakeholders is a great place to begin your work; from there, you’ll have a foundation to match insights to incentives to ensure that each party feels they are getting something out of work. From there, you will need to assess the attention and detail required in each presentation to ensure the message is delivered in a way the audience will most likely receive.
If you find this way of thinking helpful, please let me know!
Note: At one point, I discussed writing a book on this subject with Lena Belkor and Rajiv Vaidyanathan; thank you both for being great thought partners! Uri Gneezy beat us to it with his exciting book Mixed Signals, which focuses on how incentives change behavior.
