A creative director explains his failure at an agency where account directors were incentivized solely on account profitability. His high billable rate meant they actively prevented him from working on their accounts to protect their margins, making it impossible for him to do his job.
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Agencies often pitch exciting, ambitious "North Star" campaigns that get one department excited. However, these ideas frequently fail because the client's internal teams (e.g., digital, PR, comms) are siloed and not aligned. The agency sells a vision that other departments ultimately block, leading to an inability to deliver.
To prevent engineers from gaming output-based pay, 10X assigns a "Technical Strategist" to each project. The engineer is paid for output, but the strategist is incentivized by client retention and account growth (NRR), creating a healthy tension that ensures high-quality work is delivered.
Drawing on Charlie Munger's wisdom, investment management problems often stem from misaligned incentives. Instead of trying to change people's actions directly, leaders should redesign the incentive structure. Rational individuals will naturally align their behavior with well-constructed incentives that drive desired client outcomes.
Startups aim for non-linear outcomes yet often default to conventional, linear compensation bands. To properly incentivize breakthrough performance, founders must reward employees who have a disproportionate impact with equally disproportionate pay, breaking from standard practices.
The primary barrier to properly valuing creativity in advertising is the industry's reliance on a service-based, billable-hour model. This is a fundamental flaw that prevents creative work from being valued on its impact and outcome, unlike in the tech industry.
Businesses invest heavily in recruiting top talent but then micromanage them, preventing them from using their full cognitive abilities. This creates a transactional environment where employees don't contribute their best ideas, leaving significant value unrealized.
Setting rigid targets incentivizes employees to present favorable numbers, even subconsciously. This "performance theater" discourages them from investigating negative results, which are often the source of valuable learning. The muscle for detective work atrophies, and real problems remain hidden beneath good-looking metrics.
Salespeople's biggest frustration with comp plans is being held accountable for outcomes they can't directly influence. This perceived unfairness is a primary driver of attrition, making it critical to align incentives strictly with a seller's direct responsibilities and control.
An employee using AI to do 8 hours of work in 4 benefits personally by gaining free time. The company (the principal) sees no productivity gain unless that employee produces more. This misalignment reveals the core challenge of translating individual AI efficiency into corporate-level growth.
Firms invest heavily in recruiting top talent but then stifle them through micromanagement, telling them what to do and how to do it. This prevents a "return on brainpower" by not allowing employees to challenge assumptions or innovate, leaving significant value unrealized and hindering growth.
