Pay Attention to Deviations from Mainstream Incentives

This is Part 2 of The Incentive Series. Read Part 1 here.


This is a companion discussion topic for the original entry at https://commoncog.com/pay-attention-to-deviations-from-mainstream-incentives/

A couple of years ago, my parents and I ate dinner at a new coffee shop in my hometown of Kuching, Sarawak (population 540k; nothing ever seems to happen when you’re living there). A typical Malaysian coffee shop works like this: an operator buys a store lot and fits it out with gas pipes and sinks and low walls to cater to food stalls. They then rent these stalls out to other food operators, who set up shop to sell their own dishes. A typical Malaysian or Singaporean coffee shop will thus have multiple food options run by different hawkers; the coffee shop owner will usually keep the drinks stall to themselves — drinks being, incidentally, the highest margin thing you can sell in the F&B business.


This is a companion discussion topic for the original entry at https://commoncog.com/blog/pay-attention-to-deviations-from-mainstream-incentives/
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To your link that you sent out with this email announcement about Cutter’s We need someone who has done ‘it’ before - this was a big problem at my former employer, but in an additional way: the company was focused on hiring “it” without knowing what “it” was. “We’re growing, and we need people with expertise in (whatever). But because we were hiring for something we assumed they knew that we didn’t, we didn’t do a great job at evaluating how to figure out if they knew what we thought they were supposed to know.

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This is a fascinating case study, I really appreciate you sharing it!

In a similar vein, a very good friend of mine worked in the Print on Demand space as a user researcher and interviewed hundreds of different types of merchants, their needs, their operations, and business models. He found significant uniform deviation with one particular user — high volume merchants (coincidentally, the smallest but most profitable user group for them). Same tools, same “business”, but totally different needs and incentives. One of the interesting takeaways for me (at the time) was that it upended what I thought of as a then-benefit of software development of being able to quickly roll out and test things. In practice, this would break all of the systems that a high-volume merchant may have created. For a non-scale consumer, quickly rolling out or updating new features was a delight. For the most valuable & scaled-up customers, this was a major pain point.

Anyway — he allowed me to blind and document his research (they never published it externally), so if you’re interested in another such case study, feel free to use anything from his research: Print on Demand: Platform Design and High-Volume Merchants

I also finally got around to listening to Nick Kokonas on the Founder Field Guide podcast (Know What You Are Selling | Colossus®), which you linked to in The Games People Play With Cash Flow … and I think it’s another great example of “aberrations in typical behaviour” that when prodded, open up totally new opportunities to pursue, told from the point of view of the person deviating.

So I guess a corollary to your post is, “If you see someone succeeding exceptionally beyond their peer group, try to figure out what they know that other people don’t know.” As the saying goes, “where there is mystery there is margin”.

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