In reading a recent article on the possibility of other life forms in outer space I was amazed at how an interesting principle they referenced could be applied to our thinking about Sales Compensation design.
In outer space, the Goldilocks zone is where life is possible – too far away from the sun and it’s too cold to support life, too close and it’s too hot, but at a certain distance from the sun there is a sweet spot where the temperatures are ‘just right’ to support life.
We all know the Grimm brothers fairytale of Goldilocks; A small family of bears (mother bear, father bear & baby bear) cook up a meal of Porridge, it was too hot so they went for awalk to let the porridge cool down. While they were out, a small girl Goldilocks who was lost in the woods decided to ‘shelter in place’ at a cottage she stumbled across during her wanderings. While there she see’s the porridge on the table and samples them, one is too hot, the second is too cold, but the third was ‘just right’. She got sleepy and tried the beds; one was too hard, the second too soft, the third ‘just right’.
The Goldilocks principle builds off this tale; between two extreme’s there is usually a point that is ‘just right’. This principle is gold when making decisions in sales compensation with the bottom line being that often, the middle matters.
Some examples of the Goldilocks principle that we see in our everyday lives;
|
Sample Parameters/Dimensions |
Extreme |
Goldilocks Zone |
Extreme |
|
Temperature |
Too cold |
Just right |
Too hot |
|
Difficulty |
Easy |
Ambitious |
Impossible |
|
Uncertainty |
Safety |
Opportunity |
Risk |
|
Philosophy |
Order |
Meaning |
Chaos |
What we see is that the best solutions to problems often occur when you discover the correct balance point between two possible extremes.
Let’s apply this principle to a few elements of Sales compensation plans:
|
Sample Parameters/Dimensions |
Extreme |
Goldilocks Zone |
Extreme |
|
Quota Design |
Too low |
Motivation |
Too high |
|
Comments |
Sales will come to think of incentive payouts as an entitlement. |
Ambitious yet achievable |
Sales will think of the plan as impossible and sales effort will be defused. |
|
Payout time Period |
Too Frequent |
Optimal |
Not frequent enough |
|
Comments |
Payout amounts too small to be thought of as meaningful |
Payouts are substantial enough to be meaningful but reps still see the linkage between actions and reward |
Big checks but no connection between action and reward, separated by too much time. |
Defining the Goldilocks zone of any parameter of your current situation, the goal is to find the right balance, you want to get it ‘just right’.
But how do I go about getting it ‘just right’? I’m afraid there may be no magic ‘right’ answer for you, but by paying attention to a couple key concepts should help you find your correct balance. Here are a few tips;
- Beware of utopian thinking as it can distort context and undermine properly identifying your goldilocks zone leading to a poor decision and a choice that may not strike the balance you are seeking. Utopian thinkers usually find themselves at one of the extreme’s.
- Understand the context of the situation and bringing a broad perspective to the decision. What are the circumstances that impact the situation? Who is affected by this decision and what is most important to them? How does a decision align with the overall goal?
- There is no right or wrong, there is an optimal solution given the situation.
In sales compensation plan design finding the correct balance is often where you find success. Getting it right requires understanding perspective & context and optimizing the balance between extremes – since everyones situation is different there is often no cookie cutter 'correct' answer just an optimal solution that hopefully everyone can buy into. The buy-in is often what you’re after and identifying the Goldilocks zone is one way to gain that buy-in.
Good Luck !
