The Cobra Effect

“Culture eats strategy for breakfast.” – attributed to Peter Drucker

A 2021 Freakonomics podcast by Stephen Dubner quotes Vikas Mehrotra, a finance professor at the University of Alberta on the “Cobra Effect”, a term popularized by the German economist Horst Siebert. The “Cobra Effect” refers to a story about an attempt to curb the cobra population in India under British rule. The plan was to give a bounty for every dead Cobra, as evidenced by production of its skin, thereby reducing the population as people killed them. Unfortunately, there was an unintended consequence. Enterprising residents created cobra farms and bred cobras for their skins, which they used to collect bounty payments. Once it became clear what was happening, the bounty scheme was terminated and then, of course, the cobra farms had no value and so the snakes were released. The net effect of the bounty was to significantly increase the cobra population in Delhi. The residents who bred the snakes were more interested in the incentive payments than they were in achieving the objectives of the program. Whenever this is the case, a program is doomed to failure.

The moral of the story is that you need to create an environment where everybody believes in the mission and, as a direct result, they truly want to make it happen. Generally, people want to understand why things are being done. When innovating, if you have a clear idea of where and how you are providing customer and stakeholder value and can clearly elucidate this, it will go a long way to persuading people to come along with you. If you try to achieve anything through a team, you need to make absolutely sure that they are aligned with your values, goals and objectives. It needs to be ingrained in the collective will and desire of the team and it’s hard to compensate for any lack of belief or understanding by offering incentives.

This story, and what it teaches us, underpins one of what I believe are seven key unwritten rules for a successful innovation culture. There must be a clear understanding of why things are being done, which in turn leads to your team trusting that they are being asked to do the right things for the right reasons.

I like to call those unwritten rules principles for a successful innovation culture. To make an innovation culture work you must behave in the right way. Everything you say and do must underline those principles. If you don’t personally believe in the principles you are promoting, your words and actions will betray you and you will fail to create the culture you need to succeed.

Want to Know More?

As mentioned above, there is a set of seven principles for a successful innovation culture:

  • acceptance of failure, tolerance, and forgiveness of failure
  • accountability
  • focus on customer and stakeholder needs
  • clear understanding of why things are being done
  • allowing decisions to be based on intuition
  • maintaining an environment where everybody has a voice
  • judging people on what they do rather than whether they happen to be present or not.

And the key element that ties these rules together is trust:

  • you trust people to succeed, even if (when) they might fail
  • your customers and stakeholders trust you to act in their best interests
  • your team trusts that they are being asked to do the right things for the right reasons
  • you trust people to keep their promises
  • you trust people to do the right thing and you don’t micromanage them.

The second volume of my book: Strategy and Innovation for a Changing World – Part 2: Sustainability Through Velocity is now available. These principles are individually introduced and described in more detail in Chapter 5: “Putting the Right Team Together. I hope you find them useful!

References and Further Reading

Dubner, S. (2012, October 11). The Cobra Effect. https://freakonomics.com/podcast/the-cobra-effect-a-new-freakonomics-radio-podcast/ 

© 2023 J M Clegg Ltd

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