The Cobra Effect In Our World

January 24, 2019 Business , OTHER

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By

Siddhartha Rastogi

 

 

Sometime in the 18th Century, when the British were ruling India, a unique phenomenon was witnessed. The British, who continued to control India through Delhi post Mughals, believed that the city was infested by cobras. To curb the cobra population they launched a scheme whereby those who brought dead snake skins would be paid handsome sums of money. The plan worked and lots of people made a bounty by bringing these dead snake skins.

 

Six months later, neither the snake population reduced, nor the people bringing dead snake skins lessened. An Indian working for the British realized that people in Delhi and neighboring areas had started breeding snakes to make the bounty. The British abolished the scheme.

 

Frustrated and angry the people of Delhi, who didn’t know what to do with the snakes, released them (a larger population of snakes) in by-lanes of the city.

 

 

Whether it’s Life, or Investments or Profession or work, the human reaction is to solve the immediate problem in hand taking a short term quick fix solution. More often than not, the resolution is not thought from the 2nd or 3rd degree consequences.

 

 

This is true for humans, organisations, institutions, governments or countries

 

In 2008, a Mexico city grappling with air pollution allowed on certain weekdays car numbers ending with certain digits. For example, on Mondays during the daytime, car plates ending with 5 and 6 were not allowed to ply on the city roads. Similarly for Tuesdays, Wednesdays, so on and so forth.

 

The city administration imposed severe penalties on forging number plates which acted as a deterrent. Initially people tried managing this by using more public transportation, which was overcrowded anyway. Left with little choice, most people bought a second or third car with different number plates which were cheaper in cost as they were old, more polluting and less energy efficient.

 

 

The Cobra Effect has its fangs open in the Corporate World as well

 

For Corporate India, appraisal time is a couple of months away in April. For most MNCs and global companies, employees are being appraised and evaluated as to their performance for the past year. Every manager in the world wishes to have obedient and efficient team members.

 

Team members who are self-motivated and know their larger purpose of life will continue to deliver and progress well, irrespective of the feedback or appraisal outcome.

 

For ones who have been performing average as compared to their potential or rather should I say where managers believe the performance has been average, the feedback and appraisal is targeted to make the person count things which have not been done by him during the year or have been done poorly as compared to their peers.

 

Post the appraisal, the person walks out of the meeting, completely dejected and demotivated. Next month, the individual works relentlessly to find another opportunity with just a little more salary (optical hike). If he/she gets one, the person moves on, pushing the firm or organisation to start the process of hiring, training, educating and delivery again. If the person stays back, he starts finding his area of interest beyond work, which in mid-life is fitness, in early life is friends, and in late corporate life is travelling or starting his/her new venture.

 

The entire process of appraisal has just receded the enthusiasm, energy, motivation and joy of working and growing, exactly opposite to what the appraisal was meant for.

 

 

This phenomenon holds good in the way businesses are run

 

In financial services, brokers are incentivised on brokerage or commissions they generate. Most clients are made to believe by brokers that constant churning and trading of portfolios can get them good returns.

 

The irony is, neither the client, nor the broker knows in which direction the market will head the next minute or next day, both tending to pretend that their predictions will come true. The free market is determined by forces beyond one’s imagination and is hence impossible to predict consistently with perfection.

 

Despite this truth the broker keeps enticing clients with short term calls, as the broker’s payout is linked to brokerage generated. In the process the client loses money or ends up making insignificant returns. The client then exits the firm completely and ensures in a formal or informal gathering that he spells his or her angst against the broking outfit thereby creating bad publicity for the firm. It’s also a known fact that it takes anything from 5 times to 25 times the cost, depending on the industry, to get a new client rather than service existing clients or deepen the relationship.

 

However broking firms incentivize their employees so that revenue and profitability can grow for the firm, in turn the outcome being exactly the opposite.

 

 

Hence Siddhartha Rastogi says, “Whether it’s Life, or Profession, set your goal and keep working every day, every week with Patience and the Outcome will be Favorable.” 

 

 

 

 

Siddhartha Rastogi

Siddhartha Rastogi

Siddhartha was born to a learned middle class educated family in Semi Urban India. His father was an extremely honest man who because of his honesty had to pay the price in corporate world. Mother is a determined woman who ensured that children are being well taken care off. After a few years of birth, doctors called Siddhartha, a slow child having flat foot. He would fall more than he could walk. Determined mother ensured all therapies for her son to come out strong to fight the world. Siddhartha joined swimming when he was in 6th standard. Seeing other children of his class, he jumped in 10 feet deep pool and learnt swimming on his own, the very same day.

From that day there was no looking back. He topped his city in 12th and went to score highest in his B school exams. During his profession as banker, he became youngest branch manager of a MNC bank managing their biggest wealth branch in the country. There he found love of his life and got married. His love of his life emerged in the form of his daughter who completely changed him for good.

Siddhartha Rastogi is Director for a boutique Investment bank in India.

Siddhartha is a forward looking thinker & writer who has written a book on decision making. 8 Simple steps to effective decision making.

He writes on various social and current issues via his blog and can also be found on twitter.

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