Many moons ago I wrote a story about Collin the Hackney minicab owner was managed to destroy his business from some foolish decisions. If you haven’t read it, then this post will not mean much so I encourage you to do so before continuing.

Thanks to Ed Blackburn, I am now finally getting around to responding to this, I suppose I have left you all hanging long enough..

I chose the act of driving to the Airport as a deliberate metaphor as many of us can relate to such an activity. The drive to the Airport usually means driving on busy roads and for some distance, essentially a task that is full of unexpected delays. Most of us would balk at thinking we could nearly half the drive time to the airport or even attempt to accurately predict our arrival time. Though this happens every day in business, in situations with even more variability.

There are several unfortunate things going on here for Collin.

1. First and foremost Collin shows no understanding of variation. A goal was set based on beating the competition, not actually based on reality of what is possible within the system of roads driving to the Airport.
2. Performance in a system such as this is a lottery due to natural variation. All drivers will have both good and bad days due to events outside their control. Setting goals in this environment will yield winners and losers naturally, and will mostly be orthoganal to driver talent. Collin, by selecting the fastest drivers again ignored variation and for most part selected lucky lottery winners.
3. Unintended consequences of goals and bonuses. When Collin offered a bonus for 30 minutes to the airport, he created a pseudo goal and focus for the drivers, which forced them to break the rules to achieve it to the detriment of the customer. In fact all other goals such as pleasent journey, passenger safety, road rules and courtesy were abandoned, because the new goal with reward took precedence.

Have you experienced similar situations in your job?