Incentives Drive Everything | Yusuf Aytas

In early modern France, the monarchy kept running into the same problem. Wars were expensive, revenue was not steady, and every obvious solution came with a political price. New taxes were politically explosive. Borrowing was finite. So the crown found an interesting idea to fund its endeavors. It sold offices, judicial positions, and administrative posts.

People with money, mostly nobles, bought them. The crown got cash upfront. The buyer got status, income, and often a path to keep the office inside the family through mechanisms like the paulette.

In the short term, it worked. The treasury gained funding without raising taxes. Over time, office creation became a fiscal lever. When funds were needed, new posts were minted and sold. Administrative layers expanded, courts multiplied, and the number of officials grew.

This is the story of the tech world over the last two decades. Companies hired more and grew more until they reached the ceiling. If you already have everyone using your app, what comes next? Maybe more features, but everything has a limit. Then what happened? During Covid-19, companies hired surplus workers, only to lay them off later.

Long-term resilience is hard to measure. Expansion is easy to see. Once visibility becomes success, behavior bends toward visibility.

If I create the outage…<br>and then fix the outage… am I a hero or an entrepreneur?

Value Is Invisible, Proxies Are Visible

When leadership cannot directly observe value, they pay for signals. That is not malice. It is an information problem. The tragedy is what happens next. Signals do not stay signals. They become targets. And once a signal becomes a target, the fastest career path becomes manufacturing the signal.

Why Value Is Invisible

From the outside, a resilient system and a fragile one can look identical. So leadership does what any principal does under information asymmetry.

You can’t tell resilience from a screenshot.

A simple architecture and an over-engineered one can both work until they don’t.

Most real value is counterfactual. The outage that never happened, the page that never fired.

The best incident is the one you never hear about, which means it never becomes proof.

The most important work often looks like subtraction, and subtraction has no demo.

The principal wants outcomes, revenue, growth, reliability. But they cannot directly observe the thing that caused the outcome. They see a shipping cadence. They see who tagged in to the office. They see headcount. They see artifacts.

Proxies Are Visible Because They are Legible

When value is hard to verify, the organization rewards legibility. Velocity. OKRs. Story points. These begin as instruments and end as scoreboards. Once a scoreboard is tied to promotions, Goodhart’s law takes over. People stop optimizing the system and start optimizing the measurement of the system.

The Principal Agent Trap

This is a classic principal agent problem with brutal information asymmetry. The principal cannot reliably tell if:

a team of 50 is necessary scale, or

a team of 50 is empire building delivering the work of 5.

So the principal uses what they can see.

For engineers, it becomes velocity, big projects, and heroic moments.

For managers, it becomes a span of control and org size.

And once promotions and compensation correlate with those proxies, the rational strategy is to optimize them.

When the Proxy Becomes the Target

As we set wrong incentives, our target becomes the proxy. So, gaming begins. In my career, I’ve seen more than once, someone built a complex and fragile system to make something great again. As a result, incidents started to happen. They saved the day. From upper management, it looked like someone delivered. Then, when it comes to operations, they hold the line. In reality, they solved the incidents they caused.

A few Archetypes

Once you understand the proxy game, you also get to understand typical archetypes. These aren’t personality flaws. They are strategies inside incentive systems.

The Empire Builder optimizes for headcount as a primary metric of power. These guys never have resources for anything. You ask for one thing. They invent 10 more things to support what you asked. Hence, they need more people.

The Optician optimizes for dashboards and optics. These guys are always green. I always wonder why nobody asks how come they are always green. You are either very slow or not taking any risks if there’s no red.

The Promotion Hunter builds initiatives that generate artifacts, then leaves before the mess matures. These guys get the promo and immediately move to another org or company. Someone then has to babysit the mess they created.

The Magpie selects shiny technology based on its external market price, usually hype rather than its internal utility; they’ll add Kafka or Redis not because the architecture demands it, but because their resume does.

The Efficient Martyr does the boring...