Lecture Notes: Rethinking Business Motivation

Introduction

• Speaker's confession about attending law school, not practicing law, and feeling unprepared.
• Intent to make a case for rethinking business practices through evidence.

The Candle Problem

• Created by psychologist Karl Duncker in 1945.
• Experiment setup:
  • Participants given a candle, thumbtacks, and matches.
  • Task: Attach candle to the wall without wax dripping on the table.
• Common solutions:
  • People attempt to thumbtack candle directly or melt candle and adhere it.
  • Successful solution involves using the box as a platform.

Experiment by Sam Glucksberg

• Participants divided into two groups:
  • Control group timed for norms.
  • Incentivized group offered rewards ($5 for top 25%, $20 for fastest).
• Results:
  • Incentivized group took 3.5 minutes longer to solve the problem.
  • Counterintuitive as rewards should enhance performance.

Key Findings

• Contingent motivators (if-then rewards) often do not enhance performance and can impair creativity.
• Mismatch between scientific understanding of motivation and business practices.
• Research indicates that extrinsic rewards harm performance in cognitive tasks.

Additional Evidence

• Dan Ariely's study with MIT students:
  • Higher incentives led to poorer performance in tasks requiring cognitive skills.
• LSE study on pay-for-performance plans found negative impact on overall performance.

The New Approach to Motivation

• Need for a new business operating system focused on intrinsic motivation.
• Key elements of intrinsic motivation:
  • Autonomy: Desire to direct our own lives.
  • Mastery: Urge to improve at something that matters.
  • Purpose: Yearning to serve something larger than ourselves.

Examples of Intrinsic Motivation

• Atlassian: Engineers given 24-hour autonomy to work on any project of their choice.
• Google: Employees can spend 20% of their time on personal projects.
• ROWE (Results Only Work Environment): No fixed schedules; employees must simply complete their work.

Case Example: Wikipedia vs. Encarta

• Encarta: Paid professionals, structured oversight.
• Wikipedia: Collaborative model, no financial incentives.
• Result: Wikipedia outperformed Encarta due to intrinsic motivation.

Conclusion

• Summary of mismatches between science and business practices.
• Science shows that intrinsic motivation is key to high performance.
• Call to action: Rethink motivation strategies in the 21st century to enhance business performance and creativity.
• Final thought: Changing the approach to motivation may lead to significant change in business and possibly the world.