Avoid the Cobra Effect
Are you creating unintended consequences?
The Cobra Effect became famous from the time when the British government was concerned about the number of dangerous cobra snakes in India. The government leaders decided to offer a financial incentive for every dead cobra that was turned in.
Initially this was a very successful strategy as quite a lot of snakes were killed for the reward. Instead of creating a huge decrease in the snake population though, something else happened. Enterprising citizens eventually began to breed cobras for the income.
When the government realized this, they quickly pulled the plug on this fee-based program. So, guess what happened next? The “innovative” cobra breeders all set free the now-worthless snakes. As a result, the wild cobra population further increased. The apparent solution for the problem made the situation even worse!
We see this all too often in business. Leaders unknowingly create rewards for the wrong things, thus creating their own “Cobra Effect”. Take for example, compensation plans for the sales team. Many sales leaders create plans that are almost solely focused on rewarding new revenue with a high commission percentage. They are very pleased as they begin to see the new accounts roll in until they realize…
…that the new accounts are coming in at a significantly lower margin and/or that the current account retention rate is falling… both unintended consequences of the new sales compensation plan.
We often see the Cobra Effect rear its head in strategies around both talent and client development. Further examples of such unintended consequences include:
Deciding to no longer support a legacy product to force customers to migrate to a newer product, only to discover that you’ve pushed customers to a competitor's product instead
Assigning an employee to create and operate a blog only to realize that this employee’s revenue-generating activities are suffering
Training a group of sales people on how to cultivate and close new deals only to find out that the leadership doesn’t know how to execute the new strategies because they didn’t participate
The Cobra Effect is usually a result of decisions made without first determining how all the people and clients will be affected by the decision and/or not fully understanding the effect on both the talent engagement and client engagement.
Here are 3 best practices that Butler Street employs to help you avoid the Cobra Effect when considering strategic changes within your organization:
1. Form a “Knowledge Team”
We work with clients to ensure that key stakeholders (including key customers) are part of these strategic decisions and that a 360-degree view of the effects of the strategy is considered. It helps to successfully turn theory into practice. Download our whitepaper on Knowledge Teams for a recommended framework.
2. Hold a “pre-mortem”
Organizations are often good at post-mortem reviews of projects or strategies. Hopefully, the results of these meetings is that they have learned from their mistakes or missteps. That is the positive. The downside is that they had to live through the challenges. What if you instead get into the habit of holding a pre-mortem? A pre-mortem is a process that allows the key constituents the time to thoroughly brainstorm, discuss and walk through all the potential outcomes, specifically negative consequences, and put the plans in place to avoid them – before they happen.
3. Implement a Continuous Improvement process
Putting a strategy in place to continually assess and gain feedback is a critical step in any change management process. At Butler Street, we are big believers in “progressive improvement is better than postponed perfection.’’ It is very, very rare to experience successful change without a process for monitoring and making adjustments as close to real time as possible.
We know that companies need to move fast to capitalize on opportunities and we also know that organizations are often stretched for resources. The leaders at Butler Street have all been trained in Six Sigma and change acceleration programs. We can help you form the habit of creating Knowledge Teams, holding Pre-mortems and implementing Continuous Improvement processes. They are proven to deliver results while significantly reducing or eliminating unintended consequences.
Contact us - we know, we have been in your shoes.