Should teams operating with opposing incentives be given counter-metrics to prevent optimizing against each other?

Sri Batchu · Jul 26, 2023

Growth teams should pair every volume North Star goal with an efficiency or profitability metric tracked from the start, rather than only chasing top-line goals

Under pressure to hit top-line goals, teams skip premortems and paired metrics, so programs can grow while quietly hurting the business — an early profitability tracker on the Opendoor listed-homes program would have caught it

15:04 20Growth: Biggest Growth Lessons from Instacart and Opendoor, Why 70% of Growth Experiments Should Fail and How to Fail Fast, How to Hire a Growth Team; Secrets and Tips & Why Operator Investors WIll be the Best Investors in 10 Years with Sri Batchu @ Ram

Matteo Franceschetti · Nov 20, 2023

Teams should always be given paired opposing metrics rather than one, because a single metric lets them game it

A growth-only goal gets hit by spending 3-5x more CAC; a CAC-only goal removes the pressure to unlock new growth channels; the tension between them is exactly what you want

30:52 20VC: The Ultimate Hiring Playbook: Five Questions to Ask Every New Hire | What Makes Truly Great Leaders and How They Give Feedback | Do VCs Really Add Value; Lessons from Hard Fundraises with Matteo Franceschetti, Co-Founder @ Eight Sleep

Matteo Franceschetti · Nov 20, 2023

Most of his operational excellence mistakes came from letting one side of an opposing pair dominate, such as improving software reliability until shipping a feature took months

You always have to find the balance between the two opposite parts of the business

32:27 20VC: The Ultimate Hiring Playbook: Five Questions to Ask Every New Hire | What Makes Truly Great Leaders and How They Give Feedback | Do VCs Really Add Value; Lessons from Hard Fundraises with Matteo Franceschetti, Co-Founder @ Eight Sleep

Chandra Narayanan · Mar 13, 2024

Growth teams should adopt counter metrics, because teams optimizing opposing metrics without each other's metric as a counterweight end up working against one another

At PayPal the revenue growth team and the fraud team each blocked the other but neither carried the other's metric, so neither wanted the other to succeed

69:25 20Growth: Top Five Lessons from Leading Analytics at Facebook and Data Science at Sequoia Capital, The Two Skills Required to do Analytics Well, The Three Types of Execs within Companies and When and How to Hire for Growth with Chandra Narayanan

Kipp Bodnar · Sep 28, 2022

Cross-functional collaboration problems are always goal and incentive misalignment problems, so the fix is aligning goals, SLAs and attribution first; relationship building is secondary.

Humans are incentive-based creatures — if collaboration is failing it's because goals or incentives compete; most people fail because they skip that foundation and over-index on relationship building and budget haggling.

39:18 Goal and incentive misalignment not relationship quality is the root cause of cross functional friction