Incentives matter. Constructing incentives we are conscious of and respond to, which are in line with what we want in the long term is hard. The ideals of a Communist/Socialist society with people being treated fairly clashed with getting the economic incentives and power incentives right. Although a fan, I spoke about four of the big challenges facing Capitalism in 'Hard & Soft'. I think getting things right boils down to understanding and creating the right incentives and feedback loops.
One of the challenges is the gap between effective feedback and meaningful feedback. A friend of mine is one of the best Dads I know. He also happens to be a teacher and his kid goes to the school he teaches at. He told me a story of how one his colleagues told him that the little guy had been cheeky. At the first possible opportunity, Dad went directly to Cheeky Chops and got him to apologise. Event. Feedback. Learning. Cheeky Chops is actually one of the best behaved and happy kids I know. On another occasion, teachers approached Dad about a delayed punishment for an offence from a few days before. Rightly in my view, he was less inclined to act. Changing behaviour is difficult as distance grows. This is the same with learning a skill. In 'Instant Feedback and Fat Tails', I spoke of the success of helping Japanese speakers learn the difference between English Ls and Rs through instant feedback.
This issue rears its head in investing with the problem of stale data. When you make the decision to buy a business, you don't know whether it was a good decision for years. There is also so much noise (things outside your control) that any one decision is close to meaningless. It is your ability to regularly make good decisions that matters. Even then, noise may swamp you. A great investor will still have long periods of under performance. If a 5-10 year period happens to be in the start of your career, you likely won't get a second 5-10 year period. Reverse the luck, and you will get given lots of money to manage just before your period of misfortune starts. Lucky for you. Not so lucky for your clients. The challenge for those deciding who the good investors are is that they want enough data to be meaningful, but as soon as there is enough, it may no longer be meaningful because the situation has changed. 5 years is a really long time for a person. It is only starting to get helpful in terms of figuring out whether decisions were good. By that time though there is already a disconnect with the original behaviour.
All this results in incentives tending to align with quantitative, tangible things that give short term feedback. Time is often the easiest choice. That makes being busy the signal we use to see who is working hard. The problem when you start pricing time is you are undervaluing the priceless. The real answer may be in making more time to step back. By creating space in our days, reflection and opportunity to connect the dots may be the only way to connect the meaning gained over time with the effectiveness of instant feedback.