An Example of Incentives Harming Customers
In an earlier post's comments, Luke pointed out the importance of having the RIGHT incentives. As Peter Sholtes writes, people are amazingly good at meeting objectives, at the expense of the overall system (or customers).
The link gives the example of an un-named Asian low-cost airline. They now sell blankets to passengers. Airline management, wanting to maximize revenue, gives incentives and QUOTAS to flight attendants.
So, what happens? The flight attendants have the pilots blast the AC so they can hit their blanket quotas and goals.
There's an example of an organization that has completely lost sight of the customer. Don't let the same thing happen in your business.