Do you praise results or effort?

Make sure that your results-driven culture is not causing you to focus on short-term symptoms and reduce innovation.

There is a fundamental informational imbalance in the world. When we act, it is easy for everyone to see what we do and measure what results we get. What is much harder to identify is all the times we could act but don’t. How can you measure results that we could have got, but didn’t?

This imbalance shapes organizations, because performance reviews typically focus on the results of actions, rather than on the possible opportunities that were missed. Over time, this breeds a culture where people take small actions to deal with symptoms. When you attack symptoms, everyone can see results quickly and directly link them to the action you took, ensuring a good performance review. Why would anyone take action to address the root cause of the problem, which will take longer and have a more opaque cause and effect relationship?

This conclusion is echoed in recent research on raising children. It turns out that the children who excel are the ones who were praised for trying things, for persistence, for diligence. The children who were praised for results or innate talent did not achieve so much. They know they only get praise for successful results, so they only attempt small goals that they are confident they can achieve. If they never attempt big goals, they never have to face failure and never have to question their innate talent.

The purpose of a performance review is not to tick a success/failure box, but to encourage massive action.

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