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The Law of Unintended Consequences

It is interesting how companies and governments often fall into the trap of the law of unintended consequences. The basic idea of the law is that we try and set rules to create one set of outcomes but people (and sales people are really good at this) think of ingenious ways to use the rule to create benefit and unintended consequences for themselves.

The concept of unintended consequences is one of the building blocks of economics. Adam Smith’s “invisible hand,” the most famous metaphor in social science, is an example of a positive unintended consequence. Smith maintained that each individual, seeking only his own gain, “is led by an invisible hand to promote an end which was no part of his intention,” that end being the public interest. It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

An excellent example of this law and how sales people can manipulate results occurred in the great golf cart boom of 2009. An American government subsidy designed to promote the purchase of electric vehicles (cars) for the sake of energy conservation was exploited by clever golf cart salesmen who recognized that their products fit under the government’s definition of an electric car. The salesmen began to give away “free” golf carts to consumers, with the entire bill being passed along to the government.

From my own experience the sales commission plan is an obvious candidate for this law. When I worked at a large IT company, the sales people quickly worked out that the new commission plan, focused on selling more application licences, would pay large amounts of money for simply resigning customers on their current software licences. It took management about two months to catch up – happy days!

Let me know if you have any examples from your sales experience of the law of unintended consequences.
This entry was written by John, posted on August 4, 2010 at 3:06 pm, filed under Sales Management, Sales Process and tagged , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.

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