Be careful what you measure and reward

I never figured out how to use this sad, but true, story in my big book.  I'm releasing  it here ... I hope you enjoy it :)

1.  

Once upon a time, one morning, in a MAGICAL kingdom far, far away, the manager of  Magic Factory Inc stood in front his magic mirror, reflecting on life, business, things and (literally) himself.

He was worried.  

He had a big problem and he didn't know how to solve it.

2.  

The problem was thus: many of the potions and spells created by the Magic Factory Inc were of poor quality.  

Some of them failed to work at all; some of them failed to live up to expectations; some of them worked quite differently to what was expected; some of them caused bad and dangerous consequences.  Some of them, to be fair, worked okay.

Customers were unhappy.  Revenues were down.  The factory magicians were depressed - they were crafts-folk, bringers of joy and magic; they hated it when their magic failed.  

It was an unhappy place to work.

Hmm...

The pressure was on. Time for breakfast.

3.

After breakfast, The Grand Wizard  (whose real name was Roy, but everyone called him the Grand Wizard out of respect, fear and tradition), climbed aboard his broom, flew into work.  

Once there, he went straight to his magic chamber (the en suite in his office), took the golden key which hung from the golden chain around his olden neck and carefuly unlocked the secret chamber hidden within (the cleaners also stored their cleaning potions, and such, there).  From the secret chamber, he removed his old, magic, crystal ball, dusted it off then took it through to his office where he placed it upon his magic desk.

Nervously, he sat down at his desk then reached out two hands and placed them firmly on the crystal ball.  With his other hand, he scratched his nose.  He leaned in, muttered several magic words, then waited.  Nothing.  He muttered several un-magic words - the sort he wouldn't mutter in front of his mother - then tried again.  This time the magic worked.

The crystal ball clouded over, the room cooled, then a shrill voice said, "What?"

The Grand Wizard whispered his problem to the ball.  

The ball clouded over, said, 'Please Hold', then started playing gentle elevator music.

Six minutes and sixty-six seconds later the music stopped and the ball said, 'What good behaviours do you want to see?'

The Grand Wizard thought, then thought some more, then said, 'First, I want our tester wizards to find more defects before the potions and spells leave the factory.'

The ball said, 'Okay.  Find more defects. I'm sure that's possible. What else?'

'And, second, I want our developer wizards to fix all of those defects before they leave the factory.'

'Before the wizards leave the factory or the defects the factory?'

'Both.'

The ball clouded over, the elevator music played and played and played, then eventually, the ball said, 'Measure the behaviours you want.  Reward them.'

4.  

So that's what The Grand Wizard did.

He paid each tester wizard 20 Coins for every defect they found.

He paid each developer wizard 20 Coins for ever defect they fixed.

5.  

And the tester wizards promptly started finding more defects.

And the developer wizards promptly started fixing more defects.

This was their focus.

The Grand Wizard was very happy.

The tester and developer wizards were very happy.  Some of them bought new cars.  And iPods.

Quality went up, a bit.  Customer complaints went down, a bit.

The Grand Wizard was delighted 

6.

Months passed, 

More months passed.  

Then one morning the Grand Wizard stood in front of his bathroom mirror.  Devastated.

Quality was up.  But production had dropped, And so had sales and therefore revenue.

That was understandable, he thought.  

The tester wizards and the developer wizards spent so much of their time finding and fixing defects that production was bound to drop.  

That, surely, was the cost of quality?   

7.  He put on his Wizard's hat.  Hopped on his broom, opened the window and took off.

As he flew he worried.  He worried because Magic Factory Inc. was going broke.  He knew that.  No one else did.

How could this be?  Quality, or rather, the number of defects found and fixed, was up.  They were the same thing weren't they?  You measure one, you get the other ... right?

He threw his arms up in the air, in dispair, then caught them on the way back down.

8. 

When he reached the factory, he decided not to go directly to his office.  Instead he flew up, up, up above the factory and hovered there.  He looked down at the he car park, full with nice shiny new cars.  His poor employees couldn't afford brooms, they had to buy cars. 

He felt sad.  If things didn't pick up he would have to close the factory down.  All the wizards who worked there would lose their jobs.  They might have to sell their shiny new cars.

He felt sad.  Never in all the years he'd worked in the factory had he ever seen the staff so happy.  He had been particularly pleased with how, after many years seemingly at war with each other, the test and developer wizard teams had started working together.  

Recently, he'd even noticed the tester wizards and the developer wizards lunch together!

They started collaborating shortly after the defect numbers dipped.  He felt proud when he'd noticed that.  They must have felt bad about the drop in quality.  Work harder to find defects wasn't enough so they collobarated.  And it worked!  As if by magic, the defect numbers went up.    

He imagined them, his magical staff, sitting there, eating their lunch, pondering how they could - if they just worked together - find more defects and fix them.  

That MUST BE what they were talking about.  

That, and football.  

And magic.  Of course.  Wizards always talked about magic.  You couldn't stop Wizards talking about magic.

9.

The Grand Wizard never figured out what the wizards were talking about.

They'd stopped talking about Magic months ago.  They talked about cars instead.  

And how to ensure they could afford to keep their monthly car payments up.

---

You get what you measure and reward.  Be very careful what you measure and reward.

This is based on a true story.