The Long Game: How to Design Incentives That Build Lasting Success
Why short-term rewards sabotage growth and how to foster patience and vision through smart incentive design.
In today’s fast-paced world, the temptation to chase quick wins is strong. Yet, Uri Gneezy’s "Mixed Signals" reveals the hidden dangers of short-term incentives that can sabotage long-term success.
Take the example of a company that made a risky acquisition to boost short-term stock prices, only to face regulatory hurdles that destroyed value. Similarly, political leaders facing frequent elections may avoid important but slow-to-payoff infrastructure projects.
Education systems are not immune. Overemphasis on standardized testing encourages teaching to the test, narrowing curricula and dampening creativity. Finland’s education model, with teacher autonomy and minimal standardized testing, consistently yields high achievement and low dropout rates, demonstrating the power of long-term thinking.
One effective tool in business is equity vesting schedules that extend over years. This aligns executives’ incentives with sustained company performance rather than fleeting stock price spikes.
Ultimately, the timeline of incentives must match the timeline of goals. Thoughtful design fosters vision, resilience, and sustainable achievement.
For a deeper understanding of aligning incentives with enduring success, Uri Gneezy’s work offers rich insights and practical guidance. 2 3
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