Skin in the game

What is ‘Skin in the game’? It means that you have personal consequences for risk you create. It’s being held to account for the execution of a contract you’ve created. It’s being responsible for the delivery of something you’ve sold. It’s having less in your bank account for poor execution.

Hammurabi’s code

I’ve recently read Nassim Nicholas Taleb’s excellent book “Skin in the game” and he points out the oldest known law, the Hammurabi's code, which states that if a building an architect designs collapses and kills the owner, the architect will be put to death. If the building collapses and also kills the first born son, the architect’s first born son will also be put to death. It’s harsh but the core message is very important, you can’t walk away from the risk you create for others.

Not having skin in the game creates significant problems. Those in project based work have all been on the unfortunate receiving end of a project that has been sold and contracted by someone who is hunting a sales target and has no accountability with delivery. The result is a program that is impossible to manage and could go wrong, and if it does, the sales professional does not need to pay back their bonus or have consequences. The project team work tirelessly, after hours, and the original sales and solution team are nowhere to be seen. This is an a-symmetry.

Who takes the 2am call?

I recently observed this played out another way when we had two groups on one project, both responsible for different technologies. The one group were high performing (‘A team’) and the other wasn’t (‘B team), which led to the A team often learning the B team platform and doing their work.

After once again raising that the B team has issues, it dawned on me that there was no incentive for them to rectify it. If there was hard work to be done, it will be done by the A team. If there is a problem at 2am with a system, the client will feel far more comfortable raising it with the A team even if it’s a B team problem.

The way that I fixed this was making the B team executive the first phone call of any issues, and to double check all work of their work. The root cause was very quickly fixed when the executive now personally had skin in the game through receiving direct phone calls when issues came up at 2am. I pointed out “your team does not have skin in the game, if they don’t deliver, it’s the A team that fixes it”.

Own the risk you create, it creates meaning

So, think of how you can create your own skin in the game, and also if the right people have the right involvement in your project. Is it legal and sales that are approving a contract and not the project manager? Who actually has skin in the game in that process? Can you create your own skin in the game through incentives for prompt delivery, or consequences for not?

It’s a great thought and I highly recommend reading Nassim Nicholas Taleb’s work on this matter.