Savvy Avi

Performance based bonuses (PBB) is an effective management tool but quite often it causes unintentional effects. PBB are supposed to improve productivity by compensating employees according to their contribution to productivity. However organizations are complex systems and it is impossible to measure an employee’s contribution accurately. Companies are forced to use performance models that are a simplification of reality. As a result, employees are focused on maximizing performance under the model which not completely aligned with the benefit of the company. In banking, for example, the bonus models underemphasized risk, causing a worldwide catastrophe. Leaving the financial crisis aside, there are other common pitfalls. It is simple to construct performance-based contribution for sales representatives. The more they sell the more they earn – simple. It is much harder to construct a model for back-end functions, say an IS developer. This is where it gets messy. Measurement by schedul...

As engineers, many of us at some point contemplate founding a start up. For most, it is nothing more than a thought and for a sound reason – we know the start up success rate. However, if you are anything like me a dormant entrepreneurial seed lingers in the back of your brain. Product Design and Development, a foundation course in MIT’s System Design and Development program, encourages experiments in that direction. The course reviews the product development process starting with deriving user needs and on to designing a concept and prototype. Interesting guest lecturers come to speak to class such as industrial designer Matt Kressy who talked about rapid prototyping and Yoav Shapira a startup VP who talked about agile development. Class teaching is followed by a semester long project to come up with a new product. Each group receives $800 to create a prototype. At the end of the course there is a competition and the winners receive a small budget to continue with the product devel...