TL;DR: The carrot and stick approach runs counter to what science suggests best motivates cognitive and creative work. New technologies allow for innovation at an organisational level to leverage intrinsic motivation and facilitate coordination among amorphous groups.

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Traditionally, the carrot and the stick is the motivator of choice for organisations.  It is commonly accepted that incentives based on performance will lead to greater motivation and effort, which therefore results in improved performance.  But does the science of motivation support this premise?

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In 2009, a report titled “Large Stakes and Big Mistakes” was published by Dan Ariely of Duke University, Uri Gneezy of the Rady School of Management, George Loewenstein of Carnegie Mellon University and Nina Mazar of the Rotman School of Management.  They conducted a set of experiments in which subjects worked on different tasks and received performance contingent payments that varied in amount from small to very large.  Their conclusion (emphasis is mine):

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“As long as the task involved only mechanical skill, bonuses worked as they would be expected: the higher the pay, the better the performance.  But once the task called for even rudimentary cognitive skill, a larger reward led to poorer performance.”

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This does not compute.  Surely if you provide greater monetary incentives for a task the motivation should increase along with the performance? Is this study an outlier?

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It turns out there are many studies and experiments that reinforce these findings.  One such study published by the London School of Economics and Political Science analysed 51 separate experimental studies of financial incentives in employment relation concluding, “We find that financial incentives may indeed reduce intrinsic motivation and diminish ethical or other reasons for complying with workplace social norms such as fairness.  As a consequence, the provision of incentives can result in a negative impact on overall performance.”  Another study in 1997 examined daily habits of New York City cab drivers and found that, “… cabdrivers … set a loose daily income target and quit working once they reach that target” suggesting that once the drivers achieved their daily earnings target, their motivation to continue work drops.

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Policies concerning talent and people (most policies, really) should be based on science not stagnant societal and economical culture.  Extrinsic motivation will only carry an organisation and a person so far.  Intrinsic motivation is of much greater importance when it comes to cognitive challenges and few organisations are built to cater to these needs.

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New tools and technologies are coming online everyday that allow communities to innovate at an organisational level.  Of particular interest to me is the potential for blockchain technology to enable amorphous groups to coordinate around shared interests and passions, allowing for new ecosystems of innovation based largely on intrinsic motivation.

What is intrinsic motivation? Studies indicate that, once finances are no longer a concern, there are three primary factors that lead to increased performance:

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Autonomy.  The desire to be self directed.  “Management is good for compliance, but if you want engagement autonomy is better.” - Daniel Pink

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Mastery.  The want to improve yourself.  Individuals strive to better themselves through skill development.  An appropriate challenge is an incredible motivator, individuals willfully devote weeks, months and years to master a skill that is of interest to them.

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Purpose.  Beyond economics, a purpose and meaning provide deeper and more durable wellbeing.  Sadly, only 25% of Americans indicated a clear sense of purpose and understanding of what makes their lives meaningful.

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Studies suggest purpose plays an important role in leading a healthy life.  We need to move past the ideology of carrots and sticks, embrace emerging technologies and reimagine how we work together, how we can collaborate and how we can innovate on a global scale.

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At rLoop, we believe in harnessing the power of intrinsic motivation to drive innovation.  By fostering a community where autonomy, mastery and purpose thrive, we are not just creating groundbreaking technology, we are building an ecosystem that empowers individuals to collaborate, learn and grow.  Together, we can shape the future of decentralised innovation and solve global challenges. 

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