Brad's Books and Organizations

Books

Books

Organizations

Organizations

Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

« swipe left for tags/categories

swipe right to go back »

Lessons From Phelps and Bolt

Comments (37)

Jason and I were talking about some of the running events in the Olympics as we walked in to the office together this morning.  After chatting about the marathon, he asked if I’d seen the Bolt 100 meter final.  I did – and it was an amazing performance – but I was perplexed why Bolt coasted the last 20 meters and "only" did 9.69 when he most likely could have broken 9.60.  Now – 9.69 is a world record, but 9.60 (or even the symbolic 9.59) would be mindblowing.

Jason suggested that it might be marketing.  Whoever is "advising" Bolt said "just win and break the world record by a little.  Then the endorsements will flow.  Then you can keep breaking the world record and steadily upping the stakes."  Cynical, but it rang true.

This just in – Bolt won the 200 meter and set a world record – 19.30.  This time he ran hard through the finish.

Now – I think both Bolt and Phelps are incredible athletes.  Amazing.  Mindblowing.  But I was really baffled to see Bolt pull up short.  It made no sense to me, especially when compared to the incredible effort by Phelps across all of his races. 

This made me think of sales people or teams that beat their number in a quarter and then bank something for the next quarter.  I’ve never ever liked this practice, especially in private companies.  I much prefer the Phelps approach – where you give it your all through the very end and bring in as much as you can, take a deep breath, and start all over again – than the Bolt approach (at least in the 100) of when you know you have it nailed, you coast to the finish.

  • Heather Duey

    I can't speak from the sales perspective, but from an athletic perspective, it's not worth doing (at any level) if you're not going to do it the best you possibly can, all the way till the finish. Surely sales/startups/whatever can be measured the same way – the thrill is in doing the best you can, right? And if you're doing well (winning), shouldn't that just inspire you to better yourself each time (and maybe coast on an occasional training day)?

  • Josh P.

    If memory serves, the old Soviet pole vaulter Sergei Bubka used to break the pole vault record in tiny increments . . . I think he was given a bonus for every time he broke a world record — so its all about the incentives that are in place. Put metrics and a system and people will try to game it to their advantage.

    • Nancy C

      You hit the nail on the head. Sergei Bubka's behavior was driven my compensation, perhaps he broke records in tiny increments because his bonus drove that behavior.

      This applies to sales people as well. In the high tech / start up industry, a sales persons compensation may be as much as 50% at risk. If their number is hit early in the quarter and next quarter has a larger number, they may hold back on pulling in orders that need a bit of extra effort.

      For those that don't live by the laws of at risk compensation, this could be deemed as not delivering for the team. But for those with such a significant portion of at risk income, compensation drives behavior.

      If a comp plan carries accelerators for blowing out the number or protects from a monster increase to next quarter's quota if those final orders are pulled in, most sales professionals I know will take push for the business. After all, it is a competitive profession and we all like to be #1, for ourselves and for our team.

      • http://www.feld.com Brad Feld

        Nancy – nice addition to the thread. The best sales organizations are ones that have meaningful accelerators associated with over performance in a time period (monthly, quarterly, annually). Creating a real incentive to smash your goals (and paying for it) helps solve this problem.

  • http://me.dium.com/search tobisa

    ha. i think Bolt could afford to enjoy his dominance in the 100. he gets 20m of “big i am” glory after years and years and years of slog to get there. Remember, to get that good, he's probably had to train as hard as Phelps- and be the salesman who smashes the target – 7 days a week since he was in his early teens. His final 20m was the “bender” that your salesman might go on after smashing the target again, for the 20th time in a row. And, after a night of celebration, he came back to do it all again – in the 200. Champ! Now, to be clear, i waaaay prefer the Phelps focus on giving it 100% every time. But you could argue that Bolt's margin over his competitors is way bigger than Phelps' and so he has more scope to play to the crowd. (Bolt's .5s daylight over a 10s 100m race is the equivalent of Phelps destroying the field by 12s in a 400m IM swim – he actually won by “only” 2.5 seconds).

    • http://www.feld.com Brad Feld

      I don't understand why he'd waste it on the last 20m when he gets to take as many victory laps as he wants. The whole world was loving him from 101m on – why would he use the last 20m to celebrate early?

      • http://www.derekscruggs.com Derek Scruggs

        I can't answer for Bolt, but if you watched the preliminary heats you saw he essentially did the same thing without the celebrating. With 30-40 m left he would look around, see that he had the lead, then take it easy the rest of the way. Maybe he's just so used to dominating the field from the start that he doesn't have to push to the end.

  • http://www.respondingtoopportunity.com josh

    I was also surprised at Bolt not running hard. As some of the athletic pundits are saying, I think it was grandstanding and an act of poor sportsmanship. I think he is an incredible athlete, but he has poor manners. On the flip side, he was very respecting of his competitors and the Olympics as a whole during his televised interview (surprisingly).

    As a former sales rep for a $20B+ company, I think the act of just making your number and not “killing it” is more a creature of poor company culture, practices, and expectations at the executive level of the company.

    For instance, at my previous employer, 20% was added to whatever number you brought in the previous year as the quota for the following year. Not making the quota caused extreme ridicule and a very high risk of job termination. So, reps simply do what the company incentivizes, beat their quota by a few dollars and sit out until the next year. Why? Because if they beat the previous year it becomes harder by an order of magnitude to beat your quota the next.

    Alternatively, reps kill their number thereby “burning” out their territory for the following year and all the while knowing they will just leave the company at the end of the year.

    Either way the company loses.

    How might a company take care of this problem? Pay their people so well they don't want to leave. Understand the changing nature of their business. Stock options. A pay structure that encourages people to work hard throughout the year. (QOL) Quality of life benefits…whether it be company car or extravagant vacations, etc

  • DMC

    So how do you encourage a salesperson to push all the time? Quarterly quotas seem to be counter productive. Is it as simple as a straight commission?

    • http://www.respondingtoopportunity.com josh

      Like all things, situation would dictate.

      What we are really talking about is motivation. The executives must figure out the most effective way to motivate sales people.

      Hint: Most sales people are in sales to make money. Normally, it is not a philanthropic effort.

    • http://www.feld.com Brad Feld

      The most effective approach I've seen is a combination of (a) having financial rewards associated with overperformance (e.g. “accelerators) and (b) having a clear track record of NOT incrementally increasing quota only in cases of overperformance. (b) is especially important per Josh's example above. If you have a rolling quota increase every year and/or every time you beat quota, you create a culture that encourages sandbagging and/or just making the number.

  • Brad Stewart

    Your gold medal doesn't get any bigger depending on your margin of victory. ;)

    But seriously, I think a lot of it came from being young and just letting his emotions get the better of him. Easy to understand considering he laid down one of the most dominating performances in all of sports history as well as redefining what a sprinter has to/can look like.

  • Eric Willis

    How often do swimmers pull a hamstring or get injured in a race? You can't really compare Phelps to Bolt or any short distance sprinter…completely different dynamic altogether. The likelihood of injury is MUCH higher in track and field. Bolt has only begun to run the 100m recently. His specialty is the 200m. Why risk injury to expand the WR when you can conserve energy for the next race? It was a good strategic move and he'll expand in his record later. He's only 21 and not even in his prime yet. There is also bonus money at stake…there are other races that pay up to 1 million dollar if you break the record in their event. You guys are taking a myopic view here.

    • http://www.feld.com Brad Feld

      Isn't the risk of injury greater when you grandstand at the end of a race? I'm not a sprinter, but it seems like keeping your standard tempo all the way through the end of the race, slowing down, and then celebrating is much safer than starting to celebrate with 20m to go. I watched the video a couple of times – his form changed radically while he was still going at this incredibly high speed. That seems way more risky than letting the last 1 or 2 seconds go by with no change.

      • Brad Stewart

        When a sprinter slows down the first first thing they do is shut down the knee drive and start coasting. That is what he was doing and it just looks odd since everyone else does it after they cross the line while the camera angles are changing.

  • JB

    Having been involved in several startups that relied upon a direct sales force, I can say that it's like running with a flagpole, which gets longer every quarter, and therefore increasingly difficult to balance and lean forward at exactly the correct angle to match the speed. This is especially painful once you are public. Remember, the next quarter comes…well, next quarter, where performance is once again required.

    I have in the past, supported the banking of some revenue since I wanted to manage the length of the pole and the pace of the race; because in business, there is no “finish line.” Maybe Bolt sees it similarly; a series of milestones versus finish lines.

  • Phil Sugar

    Good lesson but simple reason….makes a bonus for every record he breaks. To blow it away is STUPID. So I give him credit…..given his situation he's not stupid.

    It is so hard, just so hard to use money to motivate people.

    I'm not smart enough to have figured this out.

    Just hire sales people on a base.

    You can only recruit non sales people or those that suck.

    Once you get the non sales people up to speed they're gone.

  • Mike

    I don't think sales and breaking the WR are comparable. The goal of sales is to help the company make as much money as possible, so sandbagging it to spread it across quarters is counterproductive to the corporate goals for the sake of the individual. Bolt was pretty clear about his goal – to win. He's already the world record holder, he didn't come here to break the WR, just to win. And he's a young guy having fun. As a fan we want to see him smash every record, but from his perspective, he loves running, he's having fun, and he's winning…does he need to live up to our expectations? What is the cost of him NOT getting the wr? I think the media and us fans might lose sleep over it, but he's sleeping pretty darn well at night with his gold medal with the confidence that he's not screwing anybody over. But a sales guy who plays a numbers game is in fact doing that at the expense of the greater good.

    We all love to see someone go balls to the wall like Phelps did, but I think we tend to impose our own desires and goals on athletes that we may not hold ourselves to. Afterall, I doubt any of us were actually even close to pushing ourselves as hard as he has at 21 years of age, so let's cut him a little slack and just enjoy the moment like he has been, and let him “settle” for gold only and not the world record, shall we?

    • http://www.feld.com Brad Feld

      Well – he got the world record in the 100m! I'll take it at face value that when Bolt said he didn't care about the world record, he didn't. But that doesn't foot with the reality of (a) “being the fastest man alive” and (b) the fact that it looks like he'll keep upping the world record. In addition, if you watch his performance in the 200m, where he set a world record, crushed the field, and kept focused and at top speed through the finish line, you know he was going for the world record in addition to just winning. Key line from the announcer – “Imagine what he could have done at 100m if he had kept going all the way”

      Now – Bolt is amazing. Amazing! I look forward to watching him continue to dominate 100m / 200m for a long time to come.

  • http://westcoastgrid.blogspot.com Dan Ciruli

    Remember — Bolt wasn't racing the clock. People make a big deal out of the clock, but more than anything he was a 21-year-old guy racing 7 other guys. When he realized that he had no competition, he started to celebrate.

    His exuberance started 15m before the finish line because that's when he realized it was over.

    I don't think he was consciously thinking “I'd better slow down so I can beat this record later.” I don't think he knew his time at all, and I certainly don't think he had time to take into account his time, his competitors locations on the track, the best possible race that he could run, and factor all of this into an equation that said, “I'll make more money if I slow down a tick.” Mind you, he'd have to do all of this in well under a second (probably more like a tenth or two).

    Nope: he's a happy kid. He was winning a gold medal. It may have been a tad tacky, but I loved watching his exuberance.

    • http://www.feld.com Brad Feld

      Yeah, but as I mentioned in my comment to Mike, watch his race in the 200m and then watch his race in the 100m. Totally different behaviors.

      • http://geothought.blogspot.com Peter Batty

        But this could be explained by (a) the fact that he got so much criticism for what he did in the 100m and so decided to act differently in the 200m and (b) he knew that the 200m world record was such a stretch that he had to go all out. I am in the camp that thinks he was just a little over-exuberant in the 100m and that it's nice to see someone enjoying themselves. I also think that the theory that he was intentionally just breaking the record by a small amount is pretty ridiculous – he's good but I don't think he can control his time to within a couple of hundredths of a second. The example people cite of Sergei Bubka in the pole vault is completely different, as there you can set the bar height to be a centimeter above the old record so it's much easier to consciously break the world record multiple times by small increments.

  • http://www.qolfe.com Giulio

    euhm…that practice in sales has very much to do with how bonuses are handled. As long as you don't give a bonus to a sales guy if he has not reached his quarterly target by,say, $100 short, regardless of the fact that last quarter he overachieved by a $10000 he will be naturally motivated to keep something for the next quarter and get two bonuses instead of just one.
    To be more precise it is the sales manager that building the incentive scheme lead to that dysfunctional behavior. This behavior can be just avoided building the right incentive structure, motivating the sales guy to give his all through the quarter end e.g. avoiding cut-off in sales targets.

    • Phil Sugar

      I agree the analogy is perfect, but I still don' t know how to handle.

      Here is a perfect example. Measuring inputs is always hard hence things like: “its not activity is accomplishment” etc, etc, so what do you care if your best salesperson plays golf all day but somehow sells more than everybody combined at night, same for a programmer playing some game all day but getting it all done at night.

      However the problem is you while have a very hard time measuring input measuring output is theoretically” easy for a sales person. How much sales. Now of course this isn't exactly true because how satisfied is the customer, did you get the best price, how is your brand viewed, territory, binary nature of sales, etc, etc.

      But in theory if you had somebody that could sell twice as much as your next best person, not only would you want to pay them commission. Wait since each salesperson has a fixed cost you wouldn't only want to pay them commission you'd want to ratchet the commission. If they could sell three times double the commission. And the games begin.

      Since its a standard practice to pay like this just like Bolt, the best salespeople would be STUPID not to exploit this…..and since you are the best usually you are not stupid.

      In a sad twist of fate measuring the output is hard for a programmer (how many bugs, how elegant code, etc, etc) especially if you don't have technical management.

  • http://www.ckstevenson.blogspot.com ckstevenson

    Ever heard of the term “SPOILER ALERT”??? Grumble grumble. Could I have even watched it live on the East Coast? Not sure.

    • http://www.feld.com Brad Feld

      Oops. Sorry.

  • http://www.craigmische.com Craig Mische

    The best blog post I have read today.

  • Bruce

    Just for fun, you can race Bolt – http://www.pumarunning.com/#EN/running/content/si

  • giulio

    In almost every job it DOES matter not only the number you make but also HOW you make that number e.g. behavior, customer satisfaction, team collaboration, you name it.

    What you need to create an incentive system aligned with company objectives is a sound Balanced Scorecard where all these elements are clearly quantified and their weight on final money is crystal clear. Obviously some metrics will be more easily quantifiable and other will be a little more tricky but that's what managers stand for, together with tools like One-On-One and performance reviews to let everybody know where they stand versus company expectations.

    Bonus at quarterly quota achievement is the dumbest way to incentive the sales number and I am surprised there are still companies working that way. People on the field must be motivated to give their maximum without burning their territory hence a two slopes commission scheme (e.g. 5% commission up to 80% of quota and 10% commission from 80% to 130%) should easily motivate them not to hold back sales that earn them higher commissions.
    I'ts just a matter of system and metrics and people management.

  • fuzzy

    It might just be as simple as he was saving himself for the next heat.

    • http://www.feld.com Brad Feld

      Maybe, but since this was the final AND he had a 24 hour warm down, I don't think this is what was going on.

  • http://www.gothamtechminute.blogspot.com Ryan

    Totally agree with your assessment. I think bolt was even surprised at how well he was doing, and ended up doing. This teaches us an important principal, never doubt yourself, an always expect to win. In fact, let's just not expect to win by a little bit, but smoke the competition. Believe in it, visualize it, and keep your head down, and it may just come true.

    Love this blog. I'd suggest reviewing this is you guys liked this conversation… http://www.readtheanswer.com/index.php?RTA=web2

    Ps. I hope bolt joins the Chargers.

  • Chris

    I find it very interesting that so many people are giving this guy grief about the 100M. The guy has done something (winning the 100M and the 200M) that hasn't been done since 1984. Not only did he win, but he demolished two world records in the process under a tremendous amount of pressure. If you don't think that level of pressure is confining and overwhelming look at his countryman's (former world record holder) Usaffa Powell's performance in two Olympic games. Not to mention the talent pool in track and field is much greater (for socioeconomic reasons; e.g. pool time and travel is expensive) than in swimming.

  • Chris

    For the record I'm not taking anything away from Phelps he is a phenomenal athlete; one of the greatest athletes of all time, but let's give the guy some credit, he is 21 and having the time of his life at the Olympics. If you can't have fun doing what you love; what's the point? This young man made the fastest men in the world look like they were standing still, i'll overlook a little chest tap. If you listened to him speak after the race he was very gracious and humble, not to mention he has the repsect of all of his peers.

    If I was the owner of the company and my sales guy gave me a performance of that magnitude i'd give the guy a raise not question his motives.

  • http://www.feld.com Brad Feld

    via an email comment: “I won't gratuitously ascribe cynical motives to Bolt's “coasting” because I don't know him at all. However, your comments about sales people & teams ring too true (and there is no need to try to interpret motive: most sales people are more than happy to admit “prospect banking”). In many cases the root of the problem lies not with the individual but with the compensation and incentive plan. “Balls out” performance in Q1 may result in a great bonus for that quarter but put you at risk of missing quota and losing your job in Q2. Too many comp plans are based only on what gets shipped and do not take proper account of the real value of adding new prospects to the pipeline, the quality of the sale (i.e., what stays shipped and is not a next quarter return), and team and overall company performance. You guys have done an outstanding job on your term sheet series and I would love to see you tackle the sales and marketing process (particularly in light of your marketing sucks comments). What is working in different contexts to reward individuals and teams equitably. What systems are not creating perverse incentives? Are we now in a world where, as Al Reis says, advertising is in decline and PR is the new king? “

  • http://www.feld.com Brad Feld

    And now for some humor just to lighten things up a little.

    http://www.break.com/index/usain-bolt-slow-motion

  • http://blog.leedrake.com Lee Drake

    I think you answered your own question really. Bolt knew he was going to need every bit of energy he had and “run hard” for the 200m later on. If he squandered all of his energy “blowing away” the world record in the 100, he might not have had enough left for the 200. He knew he had an energy budget for his entire Olympic effort and carefully managed it to allow him to win both races. Sounds smart to me.

  • http://intensedebate.com/people/heather_duey heather_duey

    I can't speak from the sales perspective, but from an athletic perspective, it's not worth doing (at any level) if you're not going to do it the best you possibly can, all the way till the finish. Surely sales/startups/whatever can be measured the same way – the thrill is in doing the best you can, right? And if you're doing well (winning), shouldn't that just inspire you to better yourself each time (and maybe coast on an occasional training day)?

  • Brad Stewart

    Your gold medal doesn't get any bigger depending on your margin of victory. ;)

    But seriously, I think a lot of it came from being young and just letting his emotions get the better of him. Easy to understand considering he laid down one of the most dominating performances in all of sports history as well as redefining what a sprinter has to/can look like.

  • http://intensedebate.com/people/jpmorgan jpmorgan

    I was also surprised at Bolt not running hard. As some of the athletic pundits are saying, I think it was grandstanding and an act of poor sportsmanship. I think he is an incredible athlete, but he has poor manners. On the flip side, he was very respecting of his competitors and the Olympics as a whole during his televised interview (surprisingly).

    As a former sales rep for a $20B+ company, I think the act of just making your number and not "killing it" is more a creature of poor company culture, practices, and expectations at the executive level of the company.

    For instance, at my previous employer, 20% was added to whatever number you brought in the previous year as the quota for the following year. Not making the quota caused extreme ridicule and a very high risk of job termination. So, reps simply do what the company incentivizes, beat their quota by a few dollars and sit out until the next year. Why? Because if they beat the previous year it becomes harder by an order of magnitude to beat your quota the next.

    Alternatively, reps kill their number thereby "burning" out their territory for the following year and all the while knowing they will just leave the company at the end of the year.

    Either way the company loses.

    How might a company take care of this problem? Pay their people so well they don't want to leave. Understand the changing nature of their business. Stock options. A pay structure that encourages people to work hard throughout the year. (QOL) Quality of life benefits…whether it be company car or extravagant vacations, etc

  • Josh P.

    If memory serves, the old Soviet pole vaulter Sergei Bubka used to break the pole vault record in tiny increments . . . I think he was given a bonus for every time he broke a world record — so its all about the incentives that are in place. Put metrics and a system and people will try to game it to their advantage.

  • Eric Willis

    How often do swimmers pull a hamstring or get injured in a race? You can't really compare Phelps to Bolt or any short distance sprinter…completely different dynamic altogether. The likelihood of injury is MUCH higher in track and field. Bolt has only begun to run the 100m recently. His specialty is the 200m. Why risk injury to expand the WR when you can conserve energy for the next race? It was a good strategic move and he'll expand in his record later. He's only 21 and not even in his prime yet. There is also bonus money at stake…there are other races that pay up to 1 million dollar if you break the record in their event. You guys are taking a myopic view here.

  • tobisa

    ha. i think Bolt could afford to enjoy his dominance in the 100. he gets 20m of "big i am" glory after years and years and years of slog to get there. Remember, to get that good, he's probably had to train as hard as Phelps- and be the salesman who smashes the target – 7 days a week since he was in his early teens. His final 20m was the "bender" that your salesman might go on after smashing the target again, for the 20th time in a row. And, after a night of celebration, he came back to do it all again – in the 200. Champ! Now, to be clear, i waaaay prefer the Phelps focus on giving it 100% every time. But you could argue that Bolt's margin over his competitors is way bigger than Phelps' and so he has more scope to play to the crowd. (Bolt's .5s daylight over a 10s 100m race is the equivalent of Phelps destroying the field by 12s in a 400m IM swim – he actually won by "only" 2.5 seconds).

  • http://intensedebate.com/people/jpmorgan jpmorgan

    Like all things, situation would dictate.

    What we are really talking about is motivation. The executives must figure out the most effective way to motivate sales people.

    Hint: Most sales people are in sales to make money. Normally, it is not a philanthropic effort.

  • DMC

    So how do you encourage a salesperson to push all the time? Quarterly quotas seem to be counter productive. Is it as simple as a straight commission?

  • JB

    Having been involved in several startups that relied upon a direct sales force, I can say that it's like running with a flagpole, which gets longer every quarter, and therefore increasingly difficult to balance and lean forward at exactly the correct angle to match the speed. This is especially painful once you are public. Remember, the next quarter comes…well, next quarter, where performance is once again required.

    I have in the past, supported the banking of some revenue since I wanted to manage the length of the pole and the pace of the race; because in business, there is no "finish line." Maybe Bolt sees it similarly; a series of milestones versus finish lines.

  • Phil Sugar

    Good lesson but simple reason….makes a bonus for every record he breaks. To blow it away is STUPID. So I give him credit…..given his situation he's not stupid.

    It is so hard, just so hard to use money to motivate people.

    I'm not smart enough to have figured this out.

    Just hire sales people on a base.

    You can only recruit non sales people or those that suck.

    Once you get the non sales people up to speed they're gone.

  • Mike

    I don't think sales and breaking the WR are comparable. The goal of sales is to help the company make as much money as possible, so sandbagging it to spread it across quarters is counterproductive to the corporate goals for the sake of the individual. Bolt was pretty clear about his goal – to win. He's already the world record holder, he didn't come here to break the WR, just to win. And he's a young guy having fun. As a fan we want to see him smash every record, but from his perspective, he loves running, he's having fun, and he's winning…does he need to live up to our expectations? What is the cost of him NOT getting the wr? I think the media and us fans might lose sleep over it, but he's sleeping pretty darn well at night with his gold medal with the confidence that he's not screwing anybody over. But a sales guy who plays a numbers game is in fact doing that at the expense of the greater good.

    We all love to see someone go balls to the wall like Phelps did, but I think we tend to impose our own desires and goals on athletes that we may not hold ourselves to. Afterall, I doubt any of us were actually even close to pushing ourselves as hard as he has at 21 years of age, so let's cut him a little slack and just enjoy the moment like he has been, and let him "settle" for gold only and not the world record, shall we?

  • Dan Ciruli

    Remember — Bolt wasn't racing the clock. People make a big deal out of the clock, but more than anything he was a 21-year-old guy racing 7 other guys. When he realized that he had no competition, he started to celebrate.

    His exuberance started 15m before the finish line because that's when he realized it was over.

    I don't think he was consciously thinking "I'd better slow down so I can beat this record later." I don't think he knew his time at all, and I certainly don't think he had time to take into account his time, his competitors locations on the track, the best possible race that he could run, and factor all of this into an equation that said, "I'll make more money if I slow down a tick." Mind you, he'd have to do all of this in well under a second (probably more like a tenth or two).

    Nope: he's a happy kid. He was winning a gold medal. It may have been a tad tacky, but I loved watching his exuberance.

  • http://intensedebate.com/people/Giulio Giulio

    euhm…that practice in sales has very much to do with how bonuses are handled. As long as you don't give a bonus to a sales guy if he has not reached his quarterly target by,say, $100 short, regardless of the fact that last quarter he overachieved by a $10000 he will be naturally motivated to keep something for the next quarter and get two bonuses instead of just one.
    To be more precise it is the sales manager that building the incentive scheme lead to that dysfunctional behavior. This behavior can be just avoided building the right incentive structure, motivating the sales guy to give his all through the quarter end e.g. avoiding cut-off in sales targets.

  • ckstevenson

    Ever heard of the term "SPOILER ALERT"??? Grumble grumble. Could I have even watched it live on the East Coast? Not sure.

  • http://intensedebate.com/people/bruce2096 bruce2096

    Just for fun, you can race Bolt – http://www.pumarunning.com/#EN/running/content/si

  • Nancy C

    You hit the nail on the head. Sergei Bubka's behavior was driven my compensation, perhaps he broke records in tiny increments because his bonus drove that behavior.

    This applies to sales people as well. In the high tech / start up industry, a sales persons compensation may be as much as 50% at risk. If their number is hit early in the quarter and next quarter has a larger number, they may hold back on pulling in orders that need a bit of extra effort.

    For those that don't live by the laws of at risk compensation, this could be deemed as not delivering for the team. But for those with such a significant portion of at risk income, compensation drives behavior.

    If a comp plan carries accelerators for blowing out the number or protects from a monster increase to next quarter's quota if those final orders are pulled in, most sales professionals I know will take push for the business. After all, it is a competitive profession and we all like to be #1, for ourselves and for our team.

  • giulio

    In almost every job it DOES matter not only the number you make but also HOW you make that number e.g. behavior, customer satisfaction, team collaboration, you name it.

    What you need to create an incentive system aligned with company objectives is a sound Balanced Scorecard where all these elements are clearly quantified and their weight on final money is crystal clear. Obviously some metrics will be more easily quantifiable and other will be a little more tricky but that's what managers stand for, together with tools like One-On-One and performance reviews to let everybody know where they stand versus company expectations.

    Bonus at quarterly quota achievement is the dumbest way to incentive the sales number and I am surprised there are still companies working that way. People on the field must be motivated to give their maximum without burning their territory hence a two slopes commission scheme (e.g. 5% commission up to 80% of quota and 10% commission from 80% to 130%) should easily motivate them not to hold back sales that earn them higher commissions.
    I'ts just a matter of system and metrics and people management.

  • Phil Sugar

    I agree the analogy is perfect, but I still don' t know how to handle.

    Here is a perfect example. Measuring inputs is always hard hence things like: "its not activity is accomplishment" etc, etc, so what do you care if your best salesperson plays golf all day but somehow sells more than everybody combined at night, same for a programmer playing some game all day but getting it all done at night.

    However the problem is you while have a very hard time measuring input measuring output is theoretically" easy for a sales person. How much sales. Now of course this isn't exactly true because how satisfied is the customer, did you get the best price, how is your brand viewed, territory, binary nature of sales, etc, etc.

    But in theory if you had somebody that could sell twice as much as your next best person, not only would you want to pay them commission. Wait since each salesperson has a fixed cost you wouldn't only want to pay them commission you'd want to ratchet the commission. If they could sell three times double the commission. And the games begin.

    Since its a standard practice to pay like this just like Bolt, the best salespeople would be STUPID not to exploit this…..and since you are the best usually you are not stupid.

    In a sad twist of fate measuring the output is hard for a programmer (how many bugs, how elegant code, etc, etc) especially if you don't have technical management.

  • Ryan

    Totally agree with your assessment. I think bolt was even surprised at how well he was doing, and ended up doing. This teaches us an important principal, never doubt yourself, an always expect to win. In fact, let's just not expect to win by a little bit, but smoke the competition. Believe in it, visualize it, and keep your head down, and it may just come true.

    Love this blog. I'd suggest reviewing this is you guys liked this conversation… http://www.readtheanswer.com/index.php?RTA=web2

    Ps. I hope bolt joins the Chargers.

  • http://intensedebate.com/people/bfeld bfeld

    Nancy – nice addition to the thread. The best sales organizations are ones that have meaningful accelerators associated with over performance in a time period (monthly, quarterly, annually). Creating a real incentive to smash your goals (and paying for it) helps solve this problem.

  • fuzzy

    It might just be as simple as he was saving himself for the next heat.

  • http://intensedebate.com/people/bfeld bfeld

    Isn't the risk of injury greater when you grandstand at the end of a race? I'm not a sprinter, but it seems like keeping your standard tempo all the way through the end of the race, slowing down, and then celebrating is much safer than starting to celebrate with 20m to go. I watched the video a couple of times – his form changed radically while he was still going at this incredibly high speed. That seems way more risky than letting the last 1 or 2 seconds go by with no change.

  • http://intensedebate.com/people/bfeld bfeld

    Well – he got the world record in the 100m! I'll take it at face value that when Bolt said he didn't care about the world record, he didn't. But that doesn't foot with the reality of (a) "being the fastest man alive" and (b) the fact that it looks like he'll keep upping the world record. In addition, if you watch his performance in the 200m, where he set a world record, crushed the field, and kept focused and at top speed through the finish line, you know he was going for the world record in addition to just winning. Key line from the announcer – "Imagine what he could have done at 100m if he had kept going all the way"

    Now – Bolt is amazing. Amazing! I look forward to watching him continue to dominate 100m / 200m for a long time to come.

  • http://intensedebate.com/people/bfeld bfeld

    I don't understand why he'd waste it on the last 20m when he gets to take as many victory laps as he wants. The whole world was loving him from 101m on – why would he use the last 20m to celebrate early?

  • http://intensedebate.com/people/bfeld bfeld

    Yeah, but as I mentioned in my comment to Mike, watch his race in the 200m and then watch his race in the 100m. Totally different behaviors.

  • Peter Batty

    But this could be explained by (a) the fact that he got so much criticism for what he did in the 100m and so decided to act differently in the 200m and (b) he knew that the 200m world record was such a stretch that he had to go all out. I am in the camp that thinks he was just a little over-exuberant in the 100m and that it's nice to see someone enjoying themselves. I also think that the theory that he was intentionally just breaking the record by a small amount is pretty ridiculous – he's good but I don't think he can control his time to within a couple of hundredths of a second. The example people cite of Sergei Bubka in the pole vault is completely different, as there you can set the bar height to be a centimeter above the old record so it's much easier to consciously break the world record multiple times by small increments.

  • http://intensedebate.com/people/craig24 craig24

    The best blog post I have read today.

  • http://intensedebate.com/people/bfeld bfeld

    The most effective approach I've seen is a combination of (a) having financial rewards associated with overperformance (e.g. "accelerators) and (b) having a clear track record of NOT incrementally increasing quota only in cases of overperformance. (b) is especially important per Josh's example above. If you have a rolling quota increase every year and/or every time you beat quota, you create a culture that encourages sandbagging and/or just making the number.

  • http://intensedebate.com/people/bfeld bfeld

    Oops. Sorry.

  • Brad Stewart

    When a sprinter slows down the first first thing they do is shut down the knee drive and start coasting. That is what he was doing and it just looks odd since everyone else does it after they cross the line while the camera angles are changing.

  • http://intensedebate.com/people/bfeld bfeld

    Maybe, but since this was the final AND he had a 24 hour warm down, I don't think this is what was going on.

  • http://intensedebate.com/people/derek_scrug1878 derek_scrug1878

    I can't answer for Bolt, but if you watched the preliminary heats you saw he essentially did the same thing without the celebrating. With 30-40 m left he would look around, see that he had the lead, then take it easy the rest of the way. Maybe he's just so used to dominating the field from the start that he doesn't have to push to the end.

  • Chris

    For the record I'm not taking anything away from Phelps he is a phenomenal athlete; one of the greatest athletes of all time, but let's give the guy some credit, he is 21 and having the time of his life at the Olympics. If you can't have fun doing what you love; what's the point? This young man made the fastest men in the world look like they were standing still, i'll overlook a little chest tap. If you listened to him speak after the race he was very gracious and humble, not to mention he has the repsect of all of his peers.

    If I was the owner of the company and my sales guy gave me a performance of that magnitude i'd give the guy a raise not question his motives.

  • http://intensedebate.com/people/bfeld bfeld

    And now for some humor just to lighten things up a little.

    http://www.break.com/index/usain-bolt-slow-motion

  • http://intensedebate.com/people/bfeld bfeld

    via an email comment: "I won't gratuitously ascribe cynical motives to Bolt's "coasting" because I don't know him at all. However, your comments about sales people & teams ring too true (and there is no need to try to interpret motive: most sales people are more than happy to admit "prospect banking"). In many cases the root of the problem lies not with the individual but with the compensation and incentive plan. "Balls out" performance in Q1 may result in a great bonus for that quarter but put you at risk of missing quota and losing your job in Q2. Too many comp plans are based only on what gets shipped and do not take proper account of the real value of adding new prospects to the pipeline, the quality of the sale (i.e., what stays shipped and is not a next quarter return), and team and overall company performance. You guys have done an outstanding job on your term sheet series and I would love to see you tackle the sales and marketing process (particularly in light of your marketing sucks comments). What is working in different contexts to reward individuals and teams equitably. What systems are not creating perverse incentives? Are we now in a world where, as Al Reis says, advertising is in decline and PR is the new king? "

  • Chris

    I find it very interesting that so many people are giving this guy grief about the 100M. The guy has done something (winning the 100M and the 200M) that hasn't been done since 1984. Not only did he win, but he demolished two world records in the process under a tremendous amount of pressure. If you don't think that level of pressure is confining and overwhelming look at his countryman's (former world record holder) Usaffa Powell's performance in two Olympic games. Not to mention the talent pool in track and field is much greater (for socioeconomic reasons; e.g. pool time and travel is expensive) than in swimming.

  • Lee Drake

    I think you answered your own question really. Bolt knew he was going to need every bit of energy he had and "run hard" for the 200m later on. If he squandered all of his energy "blowing away" the world record in the 100, he might not have had enough left for the 200. He knew he had an energy budget for his entire Olympic effort and carefully managed it to allow him to win both races. Sounds smart to me.

Build something great with me