The Cobra Effect

During the time of British rule of colonial India, the government became concerned that too many deadly cobras roamed the streets.  The leaders came up with what appeared to be a clever solution – pay a bounty to any citizen who brought forward a dead cobra.  The “cash for snakes” program worked like a charm for a while, and the streets became clear of these poisonous reptiles.

But then a shift happened.  The payouts began to increase at a staggering pace.  When British officials investigated, they discovered an unexpected consequence.  Entrepreneurs started breeding cobras in mass numbers, so they could be killed and delivered to the Government for a handsome reward.  Outraged and refusing to be taken advantage of, the British officials immediately canceled the program.  At that point, the market for dead cobras dried up completely for budding snake startups, so the entrepreneurs cut their losses by releasing the snakes into the streets of Delhi, making the original problem of wild cobras far worse.  The government wasted tons of cash, only to end up with a much bigger problem.

Now known as the “Cobra Effect,” the incentive clearly drove an unintended consequence.  And the plague of unintended consequences has only grown since the days of British colonial rule.

Too often in both business and life, we solve problems impulsively.  We hastily install a new policy, offer a shiny incentive, add just one more step to the production process, cut price to get the deal, or reduce quality to save costs.  But these duct-tape solutions rarely stand the test of time.  Like the old cartoons, when a finger is placed in the dam to stop a leak, the pressure increases elsewhere and a new leak begins to spout.

You can conquer this whack-a-mole issue, where beating down one problem results in new problems popping up.  The trick can be linked to a simple line of computer code.  In software development, one of the most basic commands is IF/THEN.  In other words, IF a certain thing occurs, THEN respond in a certain way.  With this framework, software engineers think through all the possibilities and develop a game plan to address each of them.  They think through the implications of how one action will impact the next, and so on.  In your case, put the same IF/THEN thinking to work by thinking several moves down the chessboard to avoid the sting of unintended consequences.

IF you cut training to get sales people in the field more quickly, THEN what will happen to closing rates?  IF you complicate your internal processes to reduce errors, THEN what will happen to speed and efficiency?  I’m not suggesting a recipe to maintain the status quo, but rather a game plan to properly handle the implications of one domino tipping over the next.

Rash fixes often backfire, producing a longer route to success rather than a shortcut.  Crafting a more deliberate approach will save time, resources, and headaches in the long run.  A good imaginary road sign to memorize: “WARNING:  Beware of Unintended Consequences.”  Follow it, and you’ll avoid those pesky, slithering cobra-like problems.