I amplified volume for fifteen years, then acted surprised.
In 2021 I stopped running the business.
I handed it to the leadership team and stepped back. They ran it. Once a month they reported to me. The numbers, what was going right, what was going wrong. And anything they wanted to ask me.
The second or third of those meetings was in March. Maybe April.
I looked at our numbers cold that morning. From outside.
For fifteen years I had read them from the inside. When you are that close you do not see the numbers. You see what you are hoping they will say next month.
Then somebody asked me to walk them through it.
“How do you read the dashboard of the business?”
It is the best question anyone asked me that year.
To answer it I had to go back to the fundamentals, and say them out loud, slowly, in order.
Overall revenue was fine. Overall margin was not.
So we put the countries side by side, then the sales people side by side. That is when the drift became impossible to miss.
Totals hide more than they show. We had stayed at the top level for years, because the top level looked good, and going one layer down meant finding things we would then have to do something about.
You can only solve a problem you are willing to have.
Someone asked how we fix it.
I answered without thinking.
That is the rewarding system first. Coaching and supporting the sales people second. And the second never works without the first.
I did not work that out in the room. It came out whole, because it had been sitting in me for years.
They thought they were asking me for advice. They were holding up a mirror.
Here is what it showed.
We set our sales plan in 2006, the year we started. Top line only. Sell more, earn more. No product mix in it. No margin in it. Nothing about the work that builds next year.
Starting there was not stupid. We needed scale to exist at all. Ours is not a project business. Support, an experience centre, stock, finance, our own fulfilment, none of it works without volume underneath it.
And we were still trying to earn the right to carry the brands we wanted. A vendor does not ask what you earn, or how you got there. They ask what you moved.
So we paid for volume, because volume was what we needed.
We changed it in 2021.
The mistake was never 2006. The mistake was 2016.
Two reasons it sat that long, and only one is worth your time.
Almost everybody in our trade pays this way, and still does. That is the easy one.
The real one is Theory of Constraints. Find the bottleneck. Fix the bottleneck. Leave alone what is not the bottleneck.
Sales was growing. So sales was not the bottleneck. So sales never came up for inspection.
Here is what that framework does not tell you.
A part of your business can leak without slowing you down.
I was measuring whether sales was holding us back. I never measured what it was pulling us toward.
The comparison told me. The people doing well sold systems. Their mix was better, so their margin was better. Their customers were partners.
The people not doing well added accounts and took orders.
And I had paid for that. Every month since 2006.
You reward the behaviour you want to see amplified. I amplified volume for fifteen years, then acted surprised.
We rebuilt it in three moves.
First we paid for revenue, which is where we had always been.
Then we paid for product mix.
Then we paid for the categories we had decided mattered, and for the activities that build the year after next. That is what we run on now.
The first rebuild had a hole in it. It was linear, and the year had a hard edge. So our best people started holding deals into January, to give themselves a head start on the next twelve months.
They were not cheating. They read it correctly. A linear plan with a hard year end pays you to move December into January, so they moved December into January.
I wrote that one. The leadership team fixed it in 2024, without me. They told me once it was done.
That is the part of this story I am proudest of.
The activity bonus came from the same place. Performance pay buys what you deliver. Activity pay buys what you will deliver in two years. Introducing a new brand properly. Doing the event. The work with no invoice attached to it for a long time.
Most of us pay for the first one only. Then we wonder why nothing is getting built.
Two groups pushed back. Both had a point.
The people who had been rewarded for taking orders saw it straight away. They would have to sell differently, close to starting over.
There is an easy version of this story where I find out who was underperforming. That is not what happened.
Fifteen years of paying for volume produced people who were excellent at volume. That is not a fault in them. That is the plan working exactly as it was written.
Then we changed the plan and asked them to be good at something else.
A reward system does not only steer behaviour. Leave it running long enough and it shapes people.
The second group were the ones winning under the new plan. Once they saw the system could change, they wanted a hand in changing it, toward whatever they happened to sell well.
That is the cost nobody warns you about. Fix your incentives and you create lobbyists.
Where we landed is simple. The system holds. The focus moves.
And here is the part I was slowest to understand.
I aimed all of it at sales, because sales is where the number lands. But nobody moves a customer from transactional to repeat on their own.
The engineer who designs the system decides whether there is ever a second room.
The person who picks up the phone when something has gone wrong decides whether there is a second year.
And the one taking a routine stock order already has the partner on the line. Nobody is better placed to say, while they are there, that we now do something they have not seen yet.
Sales opens the door. Everybody else decides whether it stays open.
The effect was never a moment. Gross margin moved up about a point a year, and kept going. Not from this alone. Alongside faster brand introductions, and partners who stayed with us, and worked with us on more.
Small parts pulling the same way.
That is what an incentive does. It does not hand you an event. It hands you a direction.
And it does not push you. It pulls. All day, every day, whether anyone is watching or not. It sits between the thing you want in three years and the call somebody decides to make this morning.
Like a tide. Nobody feels it. Everybody moves.
Show me the incentive and I will show you the outcome.
I had been quoting Munger for years. It took a room full of people asking me to explain my own dashboard before I pointed it at the one thing that was entirely mine to set. What we paid people for.
So here is the question, and it is not only for the people who write these systems.
Are you being paid for what you are actually being asked to do?
And if you are the one who decides what people get paid for: does it amplify the behaviour you want to see more of?
Your team could answer that today. Could you?
w. 🌊
Make My Mess My Message is a book written in public, one Friday at a time. This issue first appeared on LinkedIn. Every issue lives here.