In a recent LinkedIn post, Surabhi Shenoy dives into a common pitfall for business founders: mistaking design problems for execution issues. Shenoy argues that when seemingly irrational behaviors emerge within a company, the root cause often lies not with individuals but with the underlying incentive structures.
Shenoy begins by outlining typical scenarios that lead founders to frustration. She notes:
“Sales keep discounting. Delivery keeps complaining about bad-fit clients. Customer success team keeps fighting churn.”
According to Shenoy, founders frequently interpret these persistent issues as failures in individual performance or team execution. However, she posits that a deeper, systemic cause is at play.
The Power of Incentives in Shaping Behavior
The core of Shenoy’s argument centers on the principle that “behaviour follows incentives.” She elaborates on how specific rewards can inadvertently drive undesirable outcomes.
“If sales is rewarded for closing, discounts will rise. If delivery is measured on speed, quality will slip. If managers are rewarded for team size, headcount will expand.”
Shenoy emphasizes that businesses, by their very nature, create systems that reinforce the behaviors they are designed to reward. This can lead to a cycle where problematic actions become normalized because they align with the established incentive framework.
The Disconnect Between Perception and Reality
Shenoy observes that while many founders understand the concept of incentives, they often struggle to apply this understanding honestly to their own organizations. Instead of examining the system, they tend to resort to what she describes as superficial fixes.
“They try to fix behaviour with culture talks, tighter supervision, or more pressure,” Shenoy writes. She warns that these methods are often ineffective if the fundamental incentive structure remains unchanged. As she puts it, drawing on a widely accepted principle:
“Show me the incentive, and I’ll show you the outcome.”
A Framework for Solving Business Puzzles
To navigate these challenges, Shenoy proposes a powerful diagnostic question for founders to ask when faced with seemingly irrational business behaviors. She advocates for shifting the focus from the individual to the system’s design.
“So when something in the business feels irrational, ask: What behaviour is the system rewarding right now?” Shenoy challenges. She concludes that this simple yet profound question has the potential to unlock solutions for a wide array of persistent business problems that are often misattributed to poor execution.
Shenoy, who shares insights on growth, leadership, and decision-making through her newsletter, encourages founders to adopt this analytical approach to foster clearer thinking and improve strategic choices.
📝 About This Content
This article is based on insights shared by Surabhi Shenoy on LinkedIn.
📅 Originally posted on March 23, 2026 | View original post on LinkedIn →