fully recognizes how important incentives and disincentives are in changing

cognition and behavior. But this is not often so. For instance, I think I’ve

been in the top five percent of my age cohort almost all my adult life in

understanding the power of incentives, and yet I’ve always underestimated that

power. Never a year passes but I get some surprise that pushes a little further

my appreciation of incentive super-power.

 

One of my favorite cases about the power of incentives is the Federal Express

case. The integrity of the Federal Express system requires that all packages be

shifted rapidly among airplanes in one central airport each night. And the

system has no integrity for the customers if the night work shift can’t

accomplish its assignment fast. And Federal Express had one hell of a time

getting the night shift to do the right thing. They tried moral suasion. They

tried everything in the world without luck. And, finally, somebody got the happy

thought that it was foolish to pay the night shift by the hour when what the

employer wanted was not maximized billable hours of employee service but

fault-free, rapid performance of a particular task. Maybe, this person thought,

if they paid the employees per shift and let all night shift employees go home

when all the planes were loaded, the system would work better. And, lo and

behold, that solution worked.

 

Early in the history of Xerox, Joe Wilson, who was then in the government, had a

similar experience. He had to go back to Xerox because he couldn’t understand

why its new machine was selling so poorly in relation to its older and inferior

machine. When he got back to Xerox, he found out that the commission arrangement