“Show me the incentive and I'll show you the outcome.”
- Charlie Munger
Incentives Drive Product Behavior
by Nick Turley on August 9, 2025
This quote captures a fundamental truth about human behavior and organizational outcomes that has profound implications for product development.
Core Meaning
- Behavior follows incentives: People and organizations will naturally act in ways that align with what's being rewarded
- Root cause analysis: When examining why something happens, look first at what's being incentivized
- Predictive power: You can forecast behavior by understanding what incentives are in place
- Systems thinking: Outcomes are shaped more by the system of incentives than by individual intentions
Why This Matters In Product
- Product behavior reflects incentives: How a product functions ultimately aligns with its business model and incentive structure
- User experience integrity: Products optimized for engagement metrics vs. user outcomes create fundamentally different experiences
- Team alignment: What you measure and reward within your team determines what gets prioritized
- Ethical considerations: Incentives that don't align with user wellbeing can lead to harmful product decisions
How To Apply
This principle helps product leaders:
- Audit your metrics: Examine what your dashboards and OKRs are truly incentivizing
- Business model alignment: Ensure your monetization approach rewards solving user problems, not exploiting them
- Team structure: Design roles, recognition and promotion criteria that reward desired outcomes
- Feature prioritization: Question whether roadmap decisions serve user needs or internal incentives
- Ethical guardrails: Create counterbalancing incentives when short-term business goals might harm users
The quote reminds us that product outcomes are determined less by intentions and more by what's actually being rewarded. Changing outcomes requires changing incentives, not just changing goals.