Incentive realignment
Every organizational dysfunction has an incentive structure behind it.
People respond rationally to their incentives. If the incentive structure rewards local optimization, you'll get silos. If it rewards heroics, you'll get hero culture. If it punishes failure, you'll get risk avoidance.
The dysfunction isn't the problem — it's the symptom. The incentive structure is the problem.
Common misaligned incentives
Team velocity as a performance metric → creates silos. If each team is measured on their velocity, they'll optimize for throughput on their own backlog, not for organizational outcomes. Cross-team collaboration becomes a cost, not a benefit.
Individual reviews based on heroics → incentivizes firefighting over prevention. If the person who fixes the outage at 2am gets praised and promoted, but the person who prevented the outage by writing good tests gets no recognition, you'll get more outages and more heroes.
Estimation accuracy as a target → creates sandbagging. If hitting estimates is rewarded, teams will pad estimates. The actual delivery capacity decreases because everyone is protecting themselves from the downside of being wrong.
Manager headcount as proxy for importance → resists AI transition. If a manager's influence is proportional to their team size, they'll resist any change that reduces headcount — even if it increases output.
How to diagnose
For any dysfunction, ask: "What would a rational person do if optimizing for the current incentive structure?"
If the answer matches the dysfunction, you've found the root cause. Fix the incentive, and the dysfunction resolves across the organization — without having to fix individual behaviors.
How to fix
- Name it. Make the misaligned incentive explicit and visible. "Our current structure rewards X, which is causing Y."
- Design the new incentive. What behavior do you want? What incentive produces it?
- Change it visibly. Don't just change the metric — change the conversation. When a leader makes a decision that optimizes for the new incentive, celebrate it publicly.
- Give it time. People test new incentives cautiously. They'll watch to see if the organization actually means it before changing behavior. Consistency over 2-3 months is required.