How Economic Thinking Can Benefit Consumers, Managers, and Entrepreneurs (Part 5)
Barry L. Linetsky
Duke University professor Michael Munger’s interest is in political economy, but one can readily generalize beyond economics and politics to the business context as well. Awareness of the Unicorn Problem helps to shine light on why it is that our aspirational good intentions to achieve outstanding results – in politics and in the workplace – so often differ widely from our capabilities and our profound disappointment in the actual results of our collective team efforts.
Examples abound in annual reports, leadership training workshops, the pages of the Harvard Business Review, and the business press. Consider that the reason we live in a society that claims to be eager to advocate for the celebration of failure is most likely because we are good at it (after all, more roads lead to failure than to success as measured by our initial intentions) and not so good at valuing and celebrating success, which is a much more difficult yet more noble affair.
As one example of a common Unicorn Problem in business, consider that employee incentive programs often produce reduced employee motivation and engagement rather than their intended opposite.
It’s a common curse that many performance-based executive compensation packages introduce moral hazard and set the stage for executives acting to optimize their bonus in ways that may conflict with good management principles and practices and other fiduciary and governance obligations. (See, for example, Don Cable and Freek Vermeulen, “Stop Paying Executives for Performance,” HBR, Feb. 23, 2016).
For a representative example in the public policy/political realm of how reality often fails to conform to envisioned unicorns and the harm that can result, see Judicial Watch, “Judicial Watch Obtains Documents Revealing VA Ordered Nationwide Mass Purge Veterans MRI Imaging Orders.”
Our newspapers, television news shows, and twitter feeds provide a never-ending stream of examples of unicorns running amuck, in any category you choose to focus on.
Too often we advocate for actions we presume and expect to drive a positive outcome, when in fact many of the outcomes produced take us even further away from our desired goals. We invest money to enhance our standing and make us more secure against the uncertainties of life, and we end up less secure; we invest time and resources that turns out to be a waste of both, etc., leaving us worse off than where we started. We’ve become so accustomed to failure that we hardly pay attention to it anymore. We expect it, and just move on.
When we fail to take the time and commit to the effort of thinking through the likely immediate, secondary, and longer-term consequences of our choices and actions before we act, we pursue our objectives in ignorance of the real harm we may blindly create, a harm nobody would voluntarily choose if they had the insight to judge the foreseeable likely results of their actions. But instead of acting mindfully and with insight, including that which economic thinking can provide, we tend to revel in the immediacy of the warm feelings we have for unicorns playing in our imaginations and the high praise of others for everybody’s enthusiastic good intentions.
© 2019, Barry L. Linetsky. All Rights Reserved.
Barry Linetsky is a Partner with The Strategic Planning Group in Toronto, Canada, where he and his colleagues have been helping executives and owners align their business purpose with customer values since 1994. Barry is the author of the acclaimed book The Business of Walt Disney and the Nine Principles of His Success (Theme Park Press), and an Honorary Disney History Institute Historian. Barry is also a writer, photographer, researcher, and business strategy enabler. Read his blog and learn more at barrylinetsky.com.