lever construction planning
15,000 years ago, early humans crossed the Bering Strait—a 55-mile stretch of frozen water between Asia and America. Their journey wasn’t motivated by curiosity; it was driven by hunger, one of the strongest forces we know. This powerful incentive is a reminder of how motivations drive us to achieve significant milestones.
In this second post about First Principles, I want to discuss incentives—more specifically, how aligned incentives can lead to great achievements. If you haven’t read my previous post on positive-sum thinking, I recommend starting there, as this concept builds on it. Now, let’s dive into aligned incentives.
Aligned incentives are motivations that encourage positive outcomes for all involved. They foster cooperation by being fair and aiming toward a shared greater goal.
Fairness is critical because when people perceive unfairness, they are less likely to cooperate. Take price negotiations as an example: if a seller maximizes profit at the buyer’s expense, they might lose a repeat customer. On the other hand, setting a fair price encourages loyalty and long-term profitability. This concept avoids a "Prisoner's Dilemma," where short-term individual gains lead to long-term losses for all.
Shared Greater Goal means everyone benefits, not just the parties directly involved. Think of building affordable housing: not only do the developers and homeowners benefit, but the community also gains as it grows, which can result in more potential customers and employees down the line.
Consider cartels: they often fix prices to maximize their profits, but the community suffers due to unnecessarily high costs. By contrast, open competition fosters fair pricing, benefiting both businesses and the community at large.
Another example of misaligned incentives can be seen in construction project delays. When contractors are incentivized with bonuses for early completion, they might rush the work, potentially sacrificing quality. This may lead to costly repairs or safety issues down the line, negatively impacting both the client and the end users. A better approach would be aligning incentives around quality and sustainability to ensure all stakeholders benefit in the long term.
Aligned incentives create direct and future benefits for everyone involved and make decision-making easier by providing a clear, shared direction. At Lever Construction Planning, we focus on establishing the right incentives to guide all parties toward a successful and sustainable future.