Candle problem
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The Glucksberg candle experiment is a celebrated experiment from social psychology that proves that, for non-trivial problems, an incentive structure that rewards individual problem solvers — like a traditional investment banking bonus structure, yo — will be less successful in solving the problem that a structure that rewards everyone on the group equally.
The problem asks you to figure out a way of attaching a candle to a wall using only matches and a box of tacks, In a way that ensures no wax gets on the floor.
The problem requires a small amount of lateral thinking. It turns out that greedy individuals racing to solve the problem by themselves and claim the maximum reward will be disinclined from collaborating, and will be forced into a narrow results focussed mindset probably best suited to the problem. Those without that pressure are inclined to share, and on average the sharing group apples the problem more quickly.
This really ought not surprise anyone who thinks about the problem for a moment. The incentives are all wrong and discourage collaboration of the sort which obviously will help in solving the problem.
This maddens sociologist Daniel Pink who, in a well-known Ted talk, rails at the absurdity and venality of modern institutions, whose leaders stick religiously to the traditional bonus structure when they have of this overwhelming evidence that it doesn’t work
But pink seems to be addressing the wrong puzzle here. The issue isn’t the wonder of how “autonomy, mastery, and purpose” will motivate people more than money — who didn’t, instinctively, know that? But why corporates ignore this plain,a priori fact.
As ever, the JC has a theory. It’s because the people who run corporates aren’t, actually interested in solving the organisation’s, much less its clients’ actual problems, but seeing to their own personal enrichment. That is far better served by an inventive structure under which they, as leaders, will be the ones pocketing that lion’s share. .