Inmates Now Have Control of the Asylum

Call me crazy, stupid, weird but I'm going to try something a bit different and maybe just plain dumb.

I’ve gone out on a limb and created a website called Transparent Incentives using Google Sites and will allow ANYONE with any knowledge in the incentive and reward space to contribute and collaborate.  If you want to contribute simply email us at [email protected] and I’ll put you on the roster of collaborators.

I was going to use NING but that idea died along with the free version.  I’m keeping my fingers crossed that google won’t do the same to me.  Google sites operate in a similar fashion to Ning but with a few less bells/whistles.

I hope to get a good number of people willing to share.  

Don’t worry – I’m not sharing any info with anyone.  However, if you use your real email address it will be visible to other contributors – but you can always sign up with a fake google email address.  I don’t care.  

My goal is to open up the way incentives are priced, sold, bought and operated in order to provide a bit more symmetry to the marketplace.

Asymmetric Information and Markets

I got this idea because I’ve always felt there was a huge problem with asymmetric information in the incentive marketplace.  It’s not that there aren’t a lot of people who don’t know the information but there doesn’t seem to be anyone talking about it and putting it out there for the world to see.

Asymmetric information is an imbalance in the quality or quantity of information possessed by two or more people.  Typically in a buying and selling situation the seller has more information than the buyer.  This is definitely true in the incentive market.  It’s surprising how much less information the buyer has about the models incentive and reward companies use. 

This can cause some real problems in the market and I think it has.

Problems With Asymmetric Information

Adverse Selection

A problem that arises from asymmetric information is adverse selection.   What this means is that a buyer knows that some products are bad and some are good.  Not k knowing which is which they offer a price lower than the value of the good products but a bit more than the value of the poor products.  In effect they are hedging their bets.  The seller in contrast – knows which one is bad or good and therefore if they are selling the bad product they jump at the chance to earn a premium, the sellers of good products won’t discount so they don’t sell.  Ultimately, the only thing left in the market being sold is the poorer products.  I’ve seen this happen as upstart incentive companies with lower levels of service sell at such a low rate that the higher priced (and typically higher service) guys can’t compete.  Ultimately, all that is available is lower quality programs and resources (ore a least a big number of them) which in turn continue to force prices and quality down.

Principal-Agent Problem

Another problem that is very evident in the incentive industry because of the asymmetry of information is called the principal-agent problem. 

The principal-agent problem arises because there is a conflict between the goals and objectives of the "principal" and those of the "agent.”  In this case the principal is the client buying the program and wanting a specific business outcome.  The agent is the seller of incentive services.  They are in most cases selling an award or a process.  They make money by selling a specific set of solutions – not by achieving the business outcome the client wants.

This is probably the biggest problem in the industry today – the buyer wants results the buyer wants to sell product.  And the seller knows more about the exchange.  Not good for the buyer.

Enter Transparent Incentives

So to help bring the level of knowledge up closer to a balance I’ve created Transparent Incentives.  The goal is have a collaboratively built, maintained and updated site that has as much TRUE information on incentives and the industry as possible.  

This is a no spin zone.  No “selling propositions” – just the facts.  No subjective qualifiers and bogus claims.  This is about putting the truth in a place accessible to both buyers and sellers.  

Bringing Symmetry to The Incentive World

The real value of the site won’t be fully realized until we have a bunch of folks adding information and asking questions.  

So… 

If you are a client – register and ask some questions.

If you are a seller of incentives – register and provide some input. 

If you are an academic – register and add research on what really motivates.

If you’re in an adjacent industry (compensation, communications, etc.) – register and keep us all clean and honest!

At the end of the day all I want is a good, honest, no spin information that allows clients to buy what they need at a reasonable price and within an exchange that isn’t off balance.

Wadda ya think – tilting at windmills?