Hey!

Welcome back to another week of musings. On Friday, the US observed Juneteenth Holiday.

I hope you had a great weekend! We spent it driving around the Bay and getting to know more of the East Bay.

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Things I discovered in the past week

• Technology of the World Cup I was curious about some of the sensors on the side of the field, and started googling about them.
• I am dreading our LLM-written incident report future. Another poignant blog post around the AI-driven future for Ops teams.

When we think about incentives at work, it's generally in the context of teams with different priorities that need to collaborate for a specific purpose.

But lately, I've been increasingly affected by this because of misaligned incentives. Teams are forced to migrate or implement new solutions within an unrealistic timeframe due to the requesting teams' promising very aggressive dates. They're not trying to collaborate. They're only pushing their own goals onto other teams, with little leeway for discussion.

I think if your company's not set up correctly, you'll end up with an incentive misalignment. If you read something like High Output Management by Andy Grove. He discusses the idea of function-aligned versus mission-aligned. I think it's called that.

Where teams or a company are aligned either functionally (if you can imagine something like having all the web devs, all the Android developers, and all the iOS developers in a single team, or functions like HR), versus mission-aligned (which would be like "this team serves the purpose of user settings" or "this team serves the purpose of authentication").

This also intersects with this concept of 3 Economies from Jabe Bloom.

The 3 economies are:

• Economy of Differentiation: where the "value" of the company comes from (and aligns with the Mission-driven teams)
• Economy of Scale: where the "cost" of the company comes from, and where operational excellence matters (and aligns with the Function-driven teams).
• Economy of Scope: This is a layer between the two above, and generally, where you would place "Platform" teams

How does this come into play with incentives? Well, the main point is that each of these economies should be measured differently.

• differentiation: learning, speed of experimentation, value
• scale: efficiency, reliability, cost per unit
• scope: adoption reuse, accelerates "differentiation economy"

The incentives become misaligned when your Scale-economy team is measured by the speed of experimentation (as a Differentiation-economy team is). Also creates a lot of unnecessary pressure sometimes to come up with imaginary measures to match what leadership expects to see as "wins".

Your turn!

Have you ever thought about misaligned incentives during your day-to-day work? Let me know your thoughts by replying to this email!

Happy coding!