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CHAPTER 1

The Rise and Fall of Motivation 2.0

“The first encyclopedia comes from Microsoft. As you know, Microsoft is already a large and profitable company. And with this year’s introduction of Windows 95, it’s about to become an era-defining colossus. Microsoft will fund this encyclopedia. It will pay professional writers and editors to craft articles on thousands of topics. Well-compensated managers will oversee the project to ensure it’s completed on budget and on time. Then Microsoft will sell the encyclopedia on CD-ROMs and later online.

“The second encyclopedia won’t come from a company. It will be created by tens of thousands of people who write and edit articles for fun. These hobbyists won’t need any special qualifications to participate. And nobody will be paid a dollar or a euro or a yen to write or edit articles. Participants will have to contribute their labor—sometimes twenty and thirty hours per week—for free. The encyclopedia itself, which will exist online, will also be free—no charge for anyone who wants to use it.

“Now,” you say to the economist, “think forward fifteen years. According to my crystal ball, in 2010, one of these encyclopedias will be the largest and most popular in the world and the other will be defunct. Which is which?”

On October 31, 2009, Microsoft pulled the plug on MSN Encarta, its disc and online encyclopedia, which had been on the market for sixteen years. Meanwhile, Wikipedia—that second model—ended up becoming the largest and most popular encyclopedia in the world. Just eight years after its inception, Wikipedia had more than 13 million articles in some 260 languages, including 3 million in English alone.1

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1 Harry F. Harlow, Margaret Kuenne Harlow, and Donald R. Meyer, “Learning Motivated by a Manipulation Drive,” Journal of Experimental Psychology 40 (1950): 231.

What happened? The conventional view of human motivation has a very hard time explaining this result.

THE TRIUMPH OF CARROTS AND STICKS

In our very early days—I mean very early days, say, fifty thousand years ago—the underlying assumption about human behavior was simple and true. We were trying to survive. From roaming the savannah to gather food to scrambling for the bushes when a saber-toothed tiger approached, that drive guided most of our behavior. Call this early operating system Motivation 1.0. It wasn’t especially elegant, nor was it much different from those of rhesus monkeys, giant apes, or many other animals. But it served us nicely. It worked well. Until it didn’t.

First circuit

As humans formed more complex societies, bumping up against strangers and needing to cooperate in order to get things done, an operating system based purely on the biological drive was inadequate. In fact, sometimes we needed ways to restrain this drive—to prevent me from swiping your dinner and you from stealing my spouse. And so in a feat of remarkable cultural engineering, we slowly replaced what we had with a version more compatible with how we’d begun working and living.

Second circuit

At the core of this new and improved operating system was a revised and more accurate assumption: Humans are more than the sum of our biological urges. That first drive still mattered—no doubt about that—but it didn’t fully account for who we are. We also had a second drive—to seek reward and avoid punishment more broadly. And it was from this insight that a new operating system—call it Motivation 2.0—arose. (Of course, other animals also respond to rewards and punishments, but only humans have proved able to channel this drive to develop everything from contract law to convenience stores.)

Harnessing this second drive has been essential to economic progress around the world, especially during the last two centuries. Consider the Industrial Revolution. Technological developments—steam engines, railroads, widespread electricity—played a crucial role in fostering the growth of industry. But so did less tangible innovations—in particular, the work of an American engineer named Frederick Winslow Taylor. In the early 1900s, Taylor, who believed businesses were being run in an inefficient, haphazard way, invented what he called “scientific management.” His invention was a form of “software” expertly crafted to run atop the Motivation 2.0 platform. And it was widely and quickly adopted.

Workers, this approach held, were like parts in a complicated machine. If they did the right work in the right way at the right time, the machine would function smoothly. And to ensure that happened, you simply rewarded the behavior you sought and punished the behavior you discouraged. People would respond rationally to these external forces—these extrinsic motivators—and both they and the system itself would flourish. We tend to think that coal and oil have powered economic development. But in some sense, the engine of commerce has been fueled equally by carrots and sticks.

The Motivation 2.0 operating system has endured for a very long time. Indeed, it is so deeply embedded in our lives that most of us scarcely recognize that it exists. For as long as any of us can remember, we’ve configured our organizations and constructed our lives around its bedrock assumption: The way to improve performance, increase productivity, and encourage excellence is to reward the good and punish the bad.

Despite its greater sophistication and higher aspirations, Motivation 2.0 still wasn’t exactly ennobling. It suggested that, in the end, human beings aren’t much different from horses—that the way to get us moving in the right direction is by dangling a crunchier carrot or wielding a sharper stick. But what this operating system lacked in enlightenment, it made up for in effectiveness. It worked well—extremely well. Until it didn’t.

As the twentieth century progressed, as economies grew still more complex, and as the people in them had to deploy new, more sophisticated skills, the Motivation 2.0 approach encountered some resistance. In the 1950s, Abraham Maslow, a former student of Harry Harlow’s at the University of Wisconsin, developed the field of humanistic psychology, which questioned the idea that human behavior was purely the ratlike seeking of positive stimuli and avoidance of negative stimuli. In 1960, MIT management professor Douglas McGregor imported some of Maslow’s ideas to the business world. McGregor challenged the presumption that humans are fundamentally inert—that absent external rewards and punishments, we wouldn’t do much. People have other, higher drives, he said. And these drives could benefit businesses if managers and business leaders respected them. Thanks in part to McGregor’s writing, companies evolved a bit. Dress codes relaxed, schedules became more flexible. Many organizations looked for ways to grant employees greater autonomy and to help them grow. These refinements repaired some weaknesses, but they amounted to a modest improvement rather than a thorough upgrade—Motivation 2.1.

And so this general approach remained intact—because it was, after all, easy to understand, simple to monitor, and straightforward to enforce. But in the first ten years of this century—a period of truly staggering underachievement in business, technology, and social progress—we’ve discovered that this sturdy, old operating system doesn’t work nearly as well. It crashes—often and unpredictably. It forces people to devise workarounds to bypass its flaws. Most of all, it is proving incompatible with many aspects of contemporary business. And if we examine those incompatibility problems closely, we’ll realize that modest updates—a patch here or there—will not solve the problem. What we need is a full-scale upgrade.

THREE INCOMPATIBILITY PROBLEMS

Motivation 2.0 still serves some purposes well. It’s just deeply unreliable. Sometimes it works; many times it doesn’t. And understanding its defects will help determine which parts to keep and which to discard as we fashion an upgrade. The glitches fall into three broad categories. Our current operating system has become far less compatible with, and at times downright antagonistic to: how we organize what we do; how we think about what we do; and how we do what we do.

How We Organize What We Do

Go back to that encyclopedic showdown between Microsoft and Wikipedia. The assumptions at the heart of Motivation 2.0 suggest that such a result shouldn’t even be possible. Wikipedia’s triumph seems to defy the laws of behavioral physics.

Now, if this all-volunteer, all-amateur encyclopedia were the only instance of its kind, we might dismiss it as an aberration, an exception that proves the rule. But it’s not. Instead, Wikipedia represents the most powerful new business model of the twenty-first century: open source.

Fire up your home computer, for example. When you visit the Web to check the weather forecast or order some sneakers, you might be using Firefox, a free open-source Web browser created almost exclusively by volunteers around the world. Unpaid laborers who give away their product? That couldn’t be sustainable. The incentives are all wrong. Yet Firefox now has more than 150 million users.

Or walk into the IT department of a large company anywhere in the world and ask for a tour. That company’s corporate computer servers could well run on Linux, software devised by an army of unpaid programmers and available for free. Linux now powers one in four corporate servers. Then ask an employee to explain how the company’s website works. Humming beneath the site is probably Apache, free open-source Web server software created and maintained by a far-flung global group of volunteers. Apache’s share of the corporate Web server market: 52 percent. In other words, companies that typically rely on external rewards to manage their employees run some of their most important systems with products created by nonemployees who don’t seem to need such rewards.

ultimately, open source depends on intrinsic motivation with the same ferocity that older business models rely on extrinsic motivation, as several scholars have shown. MIT management professor Karim Lakhani and Boston Consulting Group consultant Bob Wolf surveyed 684 open-source developers, mostly in North America and Europe, about why they participated in these projects. Lakhani and Wolf uncovered a range of motives, but they found “that enjoyment-based intrinsic motivation, namely how creative a person feels when working on the project, is the strongest and most pervasive driver.”2 A large majority of programmers, the researchers discovered, reported that they frequently reached the state of optimal challenge called “flow.” Likewise, three German economists who studied open-source projects around the world found that what drives participants is “a set of predominantly intrinsic motives”—in particular, “the fun … of mastering the challenge of a given software problem” and the “desire to give a gift to the programmer community.”3

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2 Ibid., 233-34.

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3 Harry F. Harlow, “Motivation as a Factor in the Acquisition of New Responses,” in Current Theory and Research on Motivation (Lincoln: University of Nebraska Press, 1953), 46.

Motivation 2.0 has little room for these sorts of impulses.

What’s more, open source is only one way people are restructuring what they do along new organizational lines and atop different motivational ground. Let’s move from software code to the legal code. The laws in most developed countries permit essentially two types of business organizations—profit and nonprofit. One makes money, the other does good. And the most prominent member of that first category is the publicly held corporation—owned by shareholders and run by managers who are overseen by a board of directors. The managers and directors bear one overriding responsibility: to maximize shareholder gain. Other types of business organizations steer by the same rules of the road. In the United States, for instance, partnerships, S corporations, C corporations, limited liability corporations, and other business configurations all aim toward a common end. The objective of those who run them—practically, legally, in some ways morally—is to maximize profit.

Let me give a rousing, heartfelt, and grateful cheer for these business forms and the farsighted countries that enable their citizens to create them. Without them, our lives would be infinitely less prosperous, less healthy, and less happy. But in the last few years, several people around the world have been changing the recipe and cooking up new varieties of business organizations.

For example, in April 2008, Vermont became the first U.S. state to allow a new type of business called the “low-profit limited liability corporation.” Dubbed an L3C, this entity is a corporation—but not as we typically think of it. As one report explained, an L3C “operate[s] like a for-profit business generating at least modest profits, but its primary aim [is] to offer significant social benefits.” Three other U.S. states have followed Vermont’s lead.4 An L3C in North Carolina, for instance, is buying abandoned furniture factories in the state, updating them with green technology, and leasing them back to beleaguered furniture manufacturers at a low rate. The venture hopes to make money, but its real purpose is to help revitalize a struggling region.

Meanwhile, Nobel Peace Prize winner Muhammad Yunus has begun creating what he calls “social businesses.” These are companies that raise capital, develop products, and sell them in an open market but do so in the service of a larger social mission—or as he puts it, “with the profit-maximization principle replaced by the social-benefit principle.” The Fourth Sector Network in the United States and Denmark is promoting “the for-benefit organization”—a hybrid that it says represents a new category of organization that is both economically self-sustaining and animated by a public purpose. One example: Mozilla, the entity that gave us Firefox, is organized as a “for-benefit” organization. And three U.S. entrepreneurs have invented the “B Corporation,” a designation that requires companies to amend their bylaws so that the incentives favor long-term value and social impact instead of short-term economic gain.5

Neither open-source production nor previously unimagined “not only for profit” businesses are yet the norm, of course. And they won’t consign the public corporation to the trash heap. But their emergence tells us something important about where we’re heading. “There’s a big movement out there that is not yet recognized as a movement,” a lawyer who specializes in for-benefit organizations told The New York Times.6 One reason could be that traditional businesses are profit maximizers, which square perfectly with Motivation 2.0. These new entities are purpose maximizers—which are unsuited to this older operating system because they flout its very principles.

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6 Stephanie Strom, “Businesses Try to Make Money and Save the World,” New York Times, May 6, 2007.

How We Think About What We Do

Then, about a decade later, came a curious turn of events that made me question much of what I’d worked hard, and taken on enormous debt, to learn. In 2002, the Nobel Foundation awarded its prize in economics to a guy who wasn’t even an economist. And they gave him the field’s highest honor largely for revealing that we weren’t always rational calculators of our economic self-interest and that the parties often didn’t bargain to a wealth-maximizing result. Daniel Kahneman, an American psychologist who won the Nobel Prize in economics that year for work he’d done with Israeli Amos Tversky, helped force a change in how we think about what we do. And one of the implications of this new way of thinking is that it calls into question many of the assumptions of Motivation 2.0.

Kahneman and others in the field of behavioral economics agreed with my professor that economics was the study of human economic behavior. They just believed that we’d placed too much emphasis on the economic and not enough on the human. That hyperrational calculator-brained person wasn’t real. He was a convenient fiction.

Play a game with me and I’ll try to illustrate the point. Suppose somebody gives me ten dollars and tells me to share it—some, all, or none—with you. If you accept my offer, we both get to keep the money. If you reject it, neither of us gets anything. If I offered you six dollars (keeping four for myself ), would you take it? Almost certainly. If I offered you five, you’d probably take that, too. But what if I offered you two dollars? Would you take it? In an experiment replicated around the world, most people rejected offers of two dollars and below.7 That makes no sense in terms of wealth maximization. If you take my offer of two dollars, you’re two dollars richer. If you reject it, you get nothing. Your cognitive calculator knows two is greater than zero—but because you’re a human being, your notions of fair play or your desire for revenge or your simple irritation overrides it.

In real life our behavior is far more complex than the textbook allows and often confounds the idea that we’re purely rational. We don’t save enough for retirement even though it’s to our clear economic advantage to do so. We hang on to bad investments longer than we should, because we feel far sharper pain from losing money than we do from gaining the exact same amount. Give us a choice of two television sets, we’ll pick one; toss in an irrelevant third choice, and we’ll pick the other. In short, we are irrational—and predictably so, says economist Dan Ariely, author of Predictably Irrational, a book that offers an entertaining and engaging overview of behavioral economics.

The trouble for our purposes is that Motivation 2.0 assumes we’re the same robotic wealth-maximizers I was taught we were a couple of decades ago. Indeed, the very premise of extrinsic incentives is that we’ll always respond rationally to them. But even most economists don’t believe that anymore. Sometimes these motivators work. Often they don’t. And many times, they inflict collateral damage. In short, the new way economists think about what we do is hard to reconcile with Motivation 2.0.

What’s more, if people do things for lunk-headed, backward-looking reasons, why wouldn’t we also do things for significance-seeking, self-actualizing reasons? If we’re predictably irrational—and we clearly are—why couldn’t we also be predictably transcendent?

If that seems far-fetched, consider some of our other bizarre behaviors. We leave lucrative jobs to take low-paying ones that provide a clearer sense of purpose. We work to master the clarinet on weekends although we have little hope of making a dime (Motivation 2.0) or acquiring a mate (Motivation 1.0) from doing so. We play with puzzles even when we don’t get a few raisins or dollars for solving them.

Some scholars are already widening the reach of behavioral economics to encompass these ideas. The most prominent is Bruno Frey, an economist at the University of Zurich. Like the behavioral economists, he has argued that we need to move beyond the idea of Homo Oeconomicus (Economic Man, that fictional wealth-maximizing robot). But his extension goes in a slightly different direction—to what he calls Homo Oeconomicus Maturus (or Mature Economic Man). This figure, he says, “is more ‘mature’ in the sense that he is endowed with a more refined motivational structure.” In other words, to fully understand human economic behavior, we have to come to terms with an idea at odds with Motivation 2.0. As Frey writes, “Intrinsic motivation is of great importance for all economic activities. It is inconceivable that people are motivated solely or even mainly by external incentives.”8

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8 Bruno S. Frey, Not Just for the Money: An Economic Theory of Personal Motivation (Brookfield, Vt.: Edward Elgar, 1997), 118-19, ix. See also Bruno S. Frey and Alois Stutzer, Happiness and Economics: How the Economy and Institutions Affect Well-Being (Princeton, N.J.: Princeton University Press, 2002).

How We Do What We Do

If you manage other people, take a quick glance over your shoulder. There’s a ghost hovering there. His name is Frederick Winslow Taylor—remember him from earlier in the chapter?—and he’s whispering in your ear. “Work,” Taylor is murmuring, “consists mainly of simple, not particularly interesting, tasks. The only way to get people to do them is to incentivize them properly and monitor them carefully.” In the early 1900s, Taylor had a point. Today, in much of the world, that’s less true. Yes, for some people work remains routine, unchallenging, and directed by others. But for a surprisingly large number of people, jobs have become more complex, more interesting, and more self-directed. And that type of work presents a direct challenge to the assumptions of Motivation 2.0.

Begin with complexity. Behavioral scientists often divide what we do on the job or learn in school into two categories: “algorithmic” and “heuristic.” An algorithmic task is one in which you follow a set of established instructions down a single pathway to one conclusion. That is, there’s an algorithm for solving it. A heuristic task is the opposite. Precisely because no algorithm exists for it, you have to experiment with possibilities and devise a novel solution. Working as a grocery checkout clerk is mostly algorithmic. You do pretty much the same thing over and over in a certain way. Creating an ad campaign is mostly heuristic. You have to come up with something new.

❗️ Woah! This is very relevant to the cicada solvers!

During the twentieth century, most work was algorithmic—and not just jobs where you turned the same screw the same way all day long. Even when we traded blue collars for white, the tasks we carried out were often routine. That is, we could reduce much of what we did—in accounting, law, computer programming, and other fields—to a script, a spec sheet, a formula, or a series of steps that produced a right answer. But today, in much of North America, Western Europe, Japan, South Korea, and Australia, routine white-collar work is disappearing. It’s racing offshore to wherever it can be done the cheapest. In India, Bulgaria, the Philippines, and other countries, lower-paid workers essentially run the algorithm, figure out the correct answer, and deliver it instantaneously from their computer to someone six thousand miles away.

But offshoring is just one pressure on rule-based, left-brain work. Just as oxen and then forklifts replaced simple physical labor, computers are replacing simple intellectual labor. So while outsourcing is just beginning to pick up speed, software can already perform many rule-based, professional functions better, more quickly, and more cheaply than we can. That means that your cousin the CPA, if he’s doing mostly routine work, faces competition not just from five-hundred-dollar-a-month accountants in Manila, but from tax preparation programs anyone can download for thirty dollars. The consulting firm McKinsey & Co. estimates that in the United States, only 30 percent of job growth now comes from algorithmic work, while 70 percent comes from heuristic work.9 A key reason: Routine work can be outsourced or automated; artistic, empathic, nonroutine work generally cannot.10

The implications for motivation are vast. Researchers such as Harvard Business School’s Teresa Amabile have found that external rewards and punishments—both carrots and sticks—can work nicely for algorithmic tasks. But they can be devastating for heuristic ones. Those sorts of challenges—solving novel problems or creating something the world didn’t know it was missing—depend heavily on Harlow’s third drive. Amabile calls it the intrinsic motivation principle of creativity, which holds, in part: “Intrinsic motivation is conducive to creativity; controlling extrinsic motivation is detrimental to creativity.”11 In other words, the central tenets of Motivation 2.0 may actually impair performance of the heuristic, right-brain work on which modern economies depend.

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10 Careful readers might remember that I wrote about this general topic in A Whole New Mind: Why Right-Brainers Will Rule the Future (New York: Riverhead Books, 2006). Look for it at your local library. It’s not bad.

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11 Teresa M. Amabile, Creativity in Context (Boulder, Colo.: Westview Press, 1996), 119. Amabile also says that, used properly and carefully, extrinsic motivators can be conducive to creativity—a point I’ll examine more in Chapter

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9 Bradford C. Johnson, James M. Manyika, and Lareina A. Yee, “The Next Revolution in Interaction,” McKinsey Quarterly 4 (2005): 25-26

Partly because work has become more creative and less routine, it has also become more enjoyable. That, too, scrambles Motivation 2.0’s assumptions. This operating system rests on the belief that work is not inherently enjoyable—which is precisely why we must coax people with external rewards and threaten them with outside punishment. One unexpected finding of the psychologist Mihaly Csikszentmihalyi, whom we’ll encounter in Chapter 5, is that people are much more likely to report having “optimal experiences” on the job than during leisure. But if work is inherently enjoyable for more and more people, then the external inducements at the heart of Motivation 2.0 become less necessary. Worse, as Deci began discovering forty years ago, adding certain kinds of extrinsic rewards on top of inherently interesting tasks can often dampen motivation and diminish performance.

Once again, certain bedrock notions suddenly seem less sturdy. Take the curious example of Vocation Vacations. This is a business in which people pay their hard-earned money … to work at another job. They use their vacation time to test-drive being a chef, running a bike shop, or operating an animal shelter. The emergence of this and similar ventures suggests that work, which economists have always considered a “disutility” (something we’d avoid unless we received a payment in return), is becoming a “utility” (something we’d pursue even in the absence of a tangible return).

Finally, because work is supposed to be dreary, Motivation 2.0 holds that people need to be carefully monitored so they don’t shirk. This idea, too, is becoming less relevant and, in many ways, less possible. Consider, for instance, that America alone now has more than 18 million of what the U.S. Census Bureau calls “non-employer businesses”—businesses without any paid employees. Since people in these businesses don’t have any underlings, they don’t have anybody to manage or motivate. But since they don’t have bosses themselves, there’s nobody to manage or motivate them. They have to be self-directed.

So do people who aren’t technically working for themselves. In the United States, 33.7 million people telecommute at least one day a month, and 14.7 million do so every day—placing a substantial portion of the workforce beyond the gaze of a manager, forcing them to direct their own work.12 And even if many organizations haven’t opted for measures like these, they’re generally becoming leaner and less hierarchical. In an effort to reduce costs, they trim the fatty middle. That means managers oversee larger numbers of people and therefore scrutinize each one less closely.

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12 Telework Trendlines 2009, data collected by the Dieringer Research Group, published by World atWork, February 2009.

As organizations flatten, companies need people who are self-motivated. That forces many organizations to become more like, er, Wikipedia. Nobody “manages” the Wikipedians. Nobody sits around trying to figure out how to “motivate” them. That’s why Wikipedia works. Routine, not-so-interesting jobs require direction; nonroutine, more interesting work depends on self-direction. One business leader, who didn’t want to be identified, said it plainly. When he conducts job interviews, he tells prospective employees: “If you need me to motivate you, I probably don’t want to hire you.”

TO RECAP, Motivation 2.0 suffers from three compatibility problems. It doesn’t mesh with the way many new business models are organizing what we do—because we’re intrinsically motivated purpose maximizers, not only extrinsically motivated profit maximizers. It doesn’t comport with the way that twenty-first-century economics thinks about what we do—because economists are finally realizing that we’re full-fledged human beings, not single-minded economic robots. And perhaps most important, it’s hard to reconcile with much of what we actually do at work—because for growing numbers of people, work is often creative, interesting, and self-directed rather than unrelentingly routine, boring, and other-directed. Taken together, these compatibility problems warn us that something’s gone awry in our motivational operating system.

But in order to figure out exactly what, and as an essential step in fashioning a new one, we need to take a look at the bugs themselves.

CHAPTER 2

Seven Reasons Carrots and Sticks (Often) Don’t Work …

An object in motion will stay in motion, and an object at rest will stay at rest, unless acted on by an outside force.

That’s Newton’s first law of motion. Like Newton’s other laws, this one is elegant and simple—which is part of its power. Even people like me, who bumbled though high school physics, can understand it and can use it to interpret the world.

Motivation 2.0 is similar. At its heart are two elegant and simple ideas:

Rewarding an activity will get you more of it. Punishing an activity will get you less of it.

And just as Newton’s principles can help us explain our physical environment or chart the path of a thrown ball, Motivation 2.0’s principles can help us comprehend our social surroundings and predict the trajectory of human behavior.

But Newtonian physics runs into problems at the subatomic level. Down there—in the land of hadrons, quarks, and Schrödinger’s cat—things get freaky. The cool rationality of Isaac Newton gives way to the bizarre unpredictability of Lewis Carroll. Motivation 2.0 is similar in this regard, too. When rewards and punishments encounter our third drive, something akin to behavioral quantum mechanics seems to take over and strange things begin to happen.

Of course, the starting point for any discussion of motivation in the workplace is a simple fact of life: People have to earn a living. Salary, contract payments, some benefits, a few perks are what I call “baseline rewards.” If someone’s baseline rewards aren’t adequate or equitable, her focus will be on the unfairness of her situation and the anxiety of her circumstance. You’ll get neither the predictability of extrinsic motivation nor the weirdness of intrinsic motivation. You’ll get very little motivation at all.

But once we’re past that threshold, carrots and sticks can achieve precisely the opposite of their intended aims. Mechanisms designed to increase motivation can dampen it. Tactics aimed at boosting creativity can reduce it. Programs to promote good deeds can make them disappear. Meanwhile, instead of restraining negative behavior, rewards and punishments can often set it loose—and give rise to cheating, addiction, and dangerously myopic thinking.

This is weird. And it doesn’t hold in all circumstances (about which more after this chapter). But as Edward Deci’s Soma puzzle experiment demonstrates, many practices whose effectiveness we take for granted produce counterintuitive results: They can give us less of what we want—and more of what we don’t want. These are the bugs in Motivation 2.0.

LESS OF WHAT WE WANT

One of the most enduring scenes in American literature offers an important lesson in human motivation. In Chapter 2 of Mark Twain’s The Adventures of Tom Sawyer, Tom faces the dreary task of whitewashing Aunt Polly’s 810-square-foot fence. He’s not exactly thrilled with the assignment. “Life to him seemed hollow, and existence but a burden,” Twain writes.

But just when Tom has nearly lost hope, “nothing less than a great, magnificent inspiration” bursts upon him. When his friend Ben ambles by and mocks Tom for his sorry lot, Tom acts confused. Slapping paint on a fence isn’t a grim chore, he says. It’s a fantastic privilege—a source of, ahem, intrinsic motivation. The job is so captivating that when Ben asks to try a few brushstrokes himself, Tom refuses. He doesn’t relent until Ben gives up his apple in exchange for the opportunity.

Soon more boys arrive, all of whom tumble into Tom’s trap and end up whitewashing the fence—several times over—on his behalf. From this episode, Twain extracts a key motivational principle, namely “that Work consists of whatever a body is OBLIGED to do, and that Play consists of whatever a body is not obliged to do.” He goes on to write:

There are wealthy gentlemen in England who drive four-horse passenger-coaches twenty or thirty miles on a daily line, in the summer, because the privilege costs them considerable money; but if they were offered wages for the service, that would turn it into work and then they would resign.1

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1 Mark Twain, The Adventures of Tom Sawyer (New York: Oxford University Press, 1998), 23.

In other words, rewards can perform a weird sort of behavioral alchemy: They can transform an interesting task into a drudge. They can turn play into work. And by diminishing intrinsic motivation, they can send performance, creativity, and even upstanding behavior toppling like dominoes. Let’s call this the Sawyer Effect.a A sampling of intriguing experiments around the world reveals the four realms where this effect kicks in—and shows yet again the mismatch between what science knows and what business does.

Intrinsic Motivation

Behavioral scientists like Deci began discovering the Sawyer Effect nearly forty years ago, although they didn’t use that term. Instead, they referred to the counterintuitive consequences of extrinsic incentives as “the hidden costs of rewards.” That, in fact, was the title of the first book on the subject—a 1978 research volume that was edited by psychologists Mark Lepper and David Greene.

One of Lepper and Greene’s early studies (which they carried out with a third colleague, Robert Nisbett) has become a classic in the field and among the most cited articles in the motivation literature. The three researchers watched a classroom of preschoolers for several days and identified the children who chose to spend their “free play” time drawing. Then they fashioned an experiment to test the effect of rewarding an activity these children clearly enjoyed.

The researchers divided the children into three groups. The first was the “expected-award” group. They showed each of these children a “Good Player” certificate—adorned with a blue ribbon and featuring the child’s name—and asked if the child wanted to draw in order to receive the award. The second group was the “unexpected-award” group. Researchers asked these children simply if they wanted to draw. If they decided to, when the session ended, the researchers handed each child one of the “Good Player” certificates. The third group was the “no-award” group. Researchers asked these children if they wanted to draw, but neither promised them a certificate at the beginning nor gave them one at the end.

Two weeks later, back in the classroom, teachers set out paper and markers during the preschool’s free play period while the researchers secretly observed the students. Children previously in the “unexpected-award” and “no-award” groups drew just as much, and with the same relish, as they had before the experiment. But children in the first group—the ones who’d expected and then received an award—showed much less interest and spent much less time drawing. 2 The Sawyer Effect had taken hold. Even two weeks later, those alluring prizes—so common in classrooms and cubicles—had turned play into work.

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2 Mark Lepper, David Greene, and Robert Nisbett, “Undermining Children’s Intrinsic Interest with Extrinsic Rewards: A Test of the ‘Overjustification’ Hypothesis,” Journal of Personality and Social Psychology 28, no. 1 (1973): 129-37.

To be clear, it wasn’t necessarily the rewards themselves that dampened the children’s interest. Remember: When children didn’t expect a reward, receiving one had little impact on their intrinsic motivation. Only contingent rewards—if you do this, then you’ll get that—had the negative effect. Why? “If-then” rewards require people to forfeit some of their autonomy. Like the gentlemen driving carriages for money instead of fun, they’re no longer fully controlling their lives. And that can spring a hole in the bottom of their motivational bucket, draining an activity of its enjoyment.

Lepper and Greene replicated these results in several subsequent experiments with children. As time went on, other researchers found similar results with adults. Over and over again, they discovered that extrinsic rewards—in particular, contingent, expected, “if-then” rewards—snuffed out the third drive.

These insights proved so controversial—after all, they called into question a standard practice of most companies and schools—that in 1999 Deci and two colleagues reanalyzed nearly three decades of studies on the subject to confirm the findings. “Careful consideration of reward effects reported in 128 experiments lead to the conclusion that tangible rewards tend to have a substantially negative effect on intrinsic motivation,” they determined. “When institutions—families, schools, businesses, and athletic teams, for example—focus on the short-term and opt for controlling people’s behavior,” they do considerable long-term damage.3

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3 Edward L. Deci, Richard M. Ryan, and Richard Koestner, “A Meta-Analytic Review of Experiments Examining the Effects of Extrinsic Rewards on Intrinsic Motivation,” Psychological Bulletin 125, no. 6 (1999): 659.

Try to encourage a kid to learn math by paying her for each work-book page she completes—and she’ll almost certainly become more diligent in the short term and lose interest in math in the long term. Take an industrial designer who loves his work and try to get him to do better by making his pay contingent on a hit product—and he’ll almost certainly work like a maniac in the short term, but become less interested in his job in the long term. As one leading behavioral science textbook puts it, “People use rewards expecting to gain the benefit of increasing another person’s motivation and behavior, but in so doing, they often incur the unintentional and hidden cost of undermining that person’s intrinsic motivation toward the activity.”4

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4 Jonmarshall Reeve, Understanding Motivation and Emotion, 4th ed. (Hoboken, N.J.: John Wiley & Sons, 2005), 143.

This is one of the most robust findings in social science—and also one of the most ignored. Despite the work of a few skilled and passionate popularizers—in particular, Alfie Kohn, whose prescient 1993 book, Punished by Rewards, lays out a devastating indictment of extrinsic incentives—we persist in trying to motivate people this way. Perhaps we’re scared to let go of Motivation 2.0, despite its obvious downsides. Perhaps we can’t get our minds around the peculiar quantum mechanics of intrinsic motivation.

Or perhaps there’s a better reason. Even if those controlling “if-then” rewards activate the Sawyer Effect and suffocate the third drive, maybe they actually get people to perform better. If that’s the case, perhaps they’re not so bad. So let’s ask: Do extrinsic rewards boost performance? Four economists went to India to find out.

High Performance

One of the difficulties of laboratory experiments that test the impact of extrinsic motivators like cash is the cost. If you’re going to pay people to perform, you have to pay them a meaningful amount. And in the United States or Europe, where standards of living are high, an individually meaningful amount multiplied by dozens of participants can rack up unsustainably large bills for behavioral scientists.

In part to circumvent this problem, a quartet of economists—including Dan Ariely, whom I mentioned in the last chapter—set up shop in Madurai, India, to gauge the effects of extrinsic incentives on performance. Because the cost of living in rural India is much lower than in North America, the researchers could offer large rewards without breaking their own banks.

They recruited eighty-seven participants and asked them to play several games—for example, tossing tennis balls at a target, unscrambling anagrams, recalling a string of digits—that required motor skills, creativity, or concentration. To test the power of incentives, the experimenters offered three types of rewards for reaching certain performance levels.

One-third of the participants could earn a small reward—4 rupees (at the time worth around 50 U.S. cents and equal to about a day’s pay in Madurai) for reaching their performance targets. One-third could earn a medium reward—40 rupees (about $5, or tw o w ee k s ’ p a y) . A n d o n e - t hi r d co u l d e a r na v ery l a r g ere w a r d —400 r u p ees (ab o u t$ 50, or nearly five months’ pay).

What happened? Did the size of the reward predict the quality of the performance?

Yes. But not in the way you might expect. As it turned out, the people offered the medium-sized bonus didn’t perform any better than those offered the small one. And those in the 400-rupee super-incentivized group? They fared worst of all. By nearly every measure, they lagged behind both the low-reward and medium-reward participants. Reporting the results for the Federal Reserve Bank of Boston, the researchers wrote, “In eight of the nine tasks we examined across the three experiments, higher incentives led to worse performance.”5

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5 Dan Ariely, Uri Gneezy, George Lowenstein, and Nina Mazar, “Large Stakes and Big Mistakes,” Federal Reserve Bank of Boston Working Paper No. 05-11, July 23, 2005 (emphasis added). You can also find a very short summary of this and some other research in Dan Ariely, “What’s the Value of a Big Bonus?” New York Times, November 20, 2008.

Let’s circle back to this conclusion for a moment. Four economists—two from MIT, one from Carnegie Mellon, and one from the University of Chicago—undertake research for the Federal Reserve System, one of the most powerful economic actors in the world. But instead of affirming a simple business principle—higher rewards lead to higher performance—they seem to refute it. And it’s not just American researchers reaching these counterintuitive conclusions. In 2009, scholars at the London School of Economics—alma mater of eleven Nobel laureates in economics—analyzed fifty-one studies of corporate pay-for-performance plans. These economists’ conclusion: “We find that financial incentives … can result in a negative impact on overall performance.”6 On both sides of the Atlantic, the gap between what science is learning and what business is doing is wide.

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6 “LSE: When Performance-Related Pay Backfires,” Financial, June 25, 2009.

“Many existing institutions provide very large incentives for exactly the type of tasks we used here,” Ariely and his colleagues wrote. “Our results challenge [that] assumption. Our experiment suggests … that one cannot assume that introducing or raising incentives always improves performance.” Indeed, in many instances, contingent incentives—that cornerstone of how businesses attempt to motivate employees—may be “a losing proposition.”

Of course, procrastinating writers notwithstanding, few of us spend our working hours flinging tennis balls or doing anagrams. How about the more creative tasks that are more akin to what we actually do on the job?

Creativity

For a quick test of problem-solving prowess, few exercises are more useful than the “candle problem.” Devised by psychologist Karl Duncker in the 1930s, the candle problem is used in a wide variety of experiments in behavioral science. Follow along and see how you do.

You sit at a table next to a wooden wall and the experimenter gives you the materials shown below: a candle, some tacks, and a book of matches.

The candle problem presented.

Your job is to attach the candle to the wall so that the wax doesn’t drip on the table. Think for a moment about how you’d solve the problem. Many people begin by trying to tack the candle to the wall. But that doesn’t work. Some light a match, melt the side of the candle, and try to adhere it to the wall. That doesn’t work either. But after five or ten minutes, most people stumble onto the solution, which you can see below.

The candle problem solved.

The key is to overcome what’s called “functional fixedness.” You look at the box and see only one function—as a container for the tacks. But by thinking afresh, you eventually see that the box can have another function—as a platform for the candle. To reprise language from the previous chapter, the solution isn’t algorithmic (following a set path) but heuristic (breaking from the path to discover a novel strategy).

What happens when you give people a conceptual challenge like this and offer them rewards for speedy solutions? Sam Glucksberg, a psychologist now at Princeton University, tested this a few decades ago by timing how quickly two groups of participants solved the candle problem. He told the first group that he was timing their work merely to establish norms for how long it typically took someone to complete this sort of puzzle. To the second group he offered incentives. If a participant’s time was among the fastest 25 percent of all the people being tested, that participant would receive $5. I f t h e p a r t i c i p an t ’ s t im e w a s t h e f a s t es t o f a ll, t h ere w a r d w o u l d b e$ 20. Adjusted for inflation, those are decent sums of money for a few minutes of effort—a nice motivator.

How much faster did the incentivized group come up with a solution? On average, it took them nearly three and a half minutes longer.7 Yes, three and a half minutes longer. (Whenever I’ve relayed these results to a group of businesspeople, the reaction is almost always a loud, pained, involuntary gasp.) In direct contravention to the core tenets of Motivation 2.0, an incentive designed to clarify thinking and sharpen creativity ended up clouding thinking and dulling creativity. Why? Rewards, by their very nature, narrow our focus. That’s helpful when there’s a clear path to a solution. They help us stare ahead and race faster. But “if-then” motivators are terrible for challenges like the candle problem. As this experiment shows, the rewards narrowed people’s focus and blinkered the wide view that might have allowed them to see new uses for old objects.

Something similar seems to occur for challenges that aren’t so much about cracking an existing problem but about iterating something new. Teresa Amabile, the Harvard Business School professor and one of the world’s leading researchers on creativity, has frequently tested the effects of contingent rewards on the creative process. In one study, she and two colleagues recruited twenty-three professional artists from the United States who had produced both commissioned and noncommissioned artwork. They asked the artists to randomly select ten commissioned works and ten noncommissioned works. Then Amabile and her team gave the works to a panel of accomplished artists and curators, who knew nothing about the study, and asked the experts to rate the pieces on creativity and technical skill.

“Our results were quite startling,” the researchers wrote. “The commissioned works were rated as significantly less creative than the non-commissioned works, yet they were not rated as different in technical quality. Moreover, the artists reported feeling significantly more constrained when doing commissioned works than when doing non-commissioned works.” One artist whom they interviewed describes the Sawyer Effect in action:

Not always, but a lot of the time, when you are doing a piece for someone else it becomes more “work” than joy. When I work for myself there is the pure joy of creating and I can work through the night and not even know it. On a commissioned piece you have to check yourself—be careful to do what the client wants.8

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8 Teresa M. Amabile, Elise Phillips, and Mary Ann Collins, “Person and Environment in Talent Development: The Case of Creativity,” in Talent Development: Proceedings from the 1993 Henry B. and Jocelyn Wallace National Research Symposium on Talent Development, edited by Nicholas Colangelo, Susan G. Assouline, and DeAnn L. Ambroson (Dayton: Ohio Psychology Press, 1993), 273-74.

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7 Sam Glucksberg, “The Influence of Strength of Drive on Functional Fixedness and Perceptual Recognition,” Journal of Experimental Psychology 63 (1962): 36-41. Glucksberg obtained similar results in his “Problem Solving: Response Competition Under the Influence of Drive,” Psychological Reports 15 (1964).

Another study of artists over a longer period shows that a concern for outside rewards might actually hinder eventual success. In the early 1960s, researchers surveyed sophomores and juniors at the School of the Art Institute of Chicago about their attitudes toward work and whether they were more intrinsically or extrinsically motivated. Using these data as a benchmark, another researcher followed up with these students in the early 1980s to see how their careers were progressing. Among the starkest findings, especially for men: “The less evidence of extrinsic motivation during art school, the more success in professional art both several years after graduation and nearly twenty years later.” Painters and sculptors who were intrinsically motivated, those for whom the joy of discovery and the challenge of creation were their own rewards, were able to weather the tough times—and the lack of remuneration and recognition—that inevitably accompany artistic careers. And that led to yet another paradox in the Alice in Wonderland world of the third drive. “Those artists who pursued their painting and sculpture more for the pleasure of the activity itself than for extrinsic rewards have produced art that has been socially recognized as superior,” the study said. “It is those who are least motivated to pursue extrinsic rewards who eventually receive them.” 9

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9 Jean Kathryn Carney, “Intrinsic Motivation and Artistic Success” (unpublished dissertation, 1986, University of Chicago); J. W. Getzels and Mihaly Csikszentmihalyi, The Creative Vision: A Longitudinal Study of Problem-Finding in Art (New York: Wiley, 1976).

This result is not true across all tasks, of course. Amabile and others have found that extrinsic rewards can be effective for algorithmic tasks—those that depend on following an existing formula to its logical conclusion. But for more right-brain undertakings—those that demand flexible problem-solving, inventiveness, or conceptual understanding—contingent rewards can be dangerous. Rewarded subjects often have a harder time seeing the periphery and crafting original solutions. This, too, is one of the sturdiest findings in social science—especially as Amabile and others have refined it over the years.10 For artists, scientists, inventors, schoolchildren, and the rest of us, intrinsic motivation—the drive do something because it is interesting, challenging, and absorbing—is essential for high levels of creativity. But the “if-then” motivators that are the staple of most businesses often stifle, rather than stir, creative thinking. As the economy moves toward more right-brain, conceptual work—as more of us deal with our own versions of the candle problem—this might be the most alarming gap between what science knows and what business does.

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10 Teresa M. Amabile, Creativity in Context (Boulder, Colo.: Westview Press, 1996), 119; James C. Kaufman and Robert J. Sternberg, eds., The International Handbook of Creativity (Cambridge, UK: Cambridge University Press, 2006), 18.

Good Behavior

Philosophers and medical professionals have long debated whether blood donors should be paid. Some claim that blood, like human tissue or organs, is special—that we shouldn’t be able to buy and sell it like a barrel of crude oil or a crate of ball bearings. Others argue that we should shelve our squeamishness, because paying for this substance will ensure an ample supply.

But in 1970, British sociologist Richard Titmuss, who had studied blood donation in the United Kingdom, offered a bolder speculation. Paying for blood wasn’t just immoral, he said. It was also inefficient.

I want to make this case for capitalism

If Britain decided to pay citizens to donate, that would actually reduce the country’s blood supply. It was an oddball notion, to be sure. Economists snickered. And Titmuss never tested the idea; it was merely a philosophical hunch.11

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11 Richard Titmuss, The Gift Relationship: From Human Blood to Social Policy, edited by Ann Oakley and John Ashton, expanded and updated edition (New York: New Press, 1997).

But a quarter-century later, two Swedish economists decided to see if Titmuss was right. In an intriguing field experiment, they visited a regional blood center in Gothenburg and found 153 women who were interested in giving blood. Then—as seems to be the custom among motivation researchers—they divided the women into three groups.12 Experimenters told those in the first group that blood donation was voluntary. These participants could give blood, but they wouldn’t receive a payment. The experimenters offered the second group a different arrangement. If these participants gave blood, they’d each receive 50 Swedish kronor (about $7). The third group received a variation on that second offer: a 50-kronor payment with an immediate option to donate the amount to a children’s cancer charity.

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12 Carl Mellström and Magnus Johannesson, “Crowding Out in Blood Donation: Was Titmuss Right?” Journal of the European Economic Association 6, no. 4 ( June 2008): 845-63.

Of the first group, 52 percent of the women decided to go ahead and donate blood. They were altruistic citizens apparently, willing to do a good deed for their fellow Swedes even in the absence of compensation.

And the second group? Motivation 2.0 would suggest that this group might be a bit more motivated to donate. They’d shown up, which indicated intrinsic motivation. Getting a few kronor on top might give that impulse a boost. But—as you might have guessed by now—that’s not what happened. In this group, only 30 percent of the women decided to give blood. Instead of increasing the number of blood donors, offering to pay people decreased the number by nearly half.

Meanwhile, the third group—which had the option of donating the fee directly to charity—responded much the same as the first group. Fifty-three percent became blood donors.b

Titmuss’s hunch might have been right, after all. Adding a monetary incentive didn’t lead to more of the desired behavior. It led to less. The reason: It tainted an altruistic act and “crowded out” the intrinsic desire to do something good.13 Doing good is what blood donation is all about. It provides what the American Red Cross brochures say is “a feeling that money can’t buy.” That’s why voluntary blood donations invariably increase during natural disasters and other calamities.14 But if governments were to pay people to help their neighbors during these crises, donations might decline.

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13 Other research has found that monetary incentives are especially counterproductive when the charitable act is public. See Dan Ariely, Anat Bracha, and Stephan Meier, “Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially,” Federal Reserve Bank of Boston Working Paper No. 07-9, August 2007.

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14 Bruno S. Frey, Not Just for the Money: An Economic Theory of Personal Motivation (Brookfield, Vt.: Edward Elgar, 1997), 84.

That said, in the Swedish example, the reward itself wasn’t inherently destructive. The immediate option to donate the 50-kronor payment rather than pocket it seemed to negate the effect. This, too, is extremely important. It’s not that all rewards at all times are bad. For instance, when the Italian government gave blood donors paid time off work, donations increased.15 The law removed an obstacle to altruism. So while a few advocates would have you believe in the basic evil of extrinsic incentives, that’s just not empirically true. What is true is that mixing rewards with inherently interesting, creative, or noble tasks—deploying them without understanding the peculiar science of motivation—is a very dangerous game. When used in these situations, “if-then” rewards usually do more harm than good. By neglecting the ingredients of genuine motivation—autonomy, mastery, and purpose—they limit what each of us can achieve.

MORE OF WHAT WE DON’T WANT

In the upside-down universe of the third drive, rewards can often produce less of the very things they’re trying to encourage. But that’s not the end of the story. When used improperly, extrinsic motivators can have another unintended collateral consequence: They can give us more of what we don’t want. Here, again, what business does hasn’t caught up with what science knows. And what science is revealing is that carrots and sticks can promote bad behavior, create addiction, and encourage short-term thinking at the expense of the long view.

Unethical Behavior

What could be more valuable than having a goal? From our earliest days, teachers, coaches, and parents advise us to set goals and to work mightily to achieve them—and with good reason. Goals work. The academic literature shows that by helping us tune out distractions, goals can get us to try harder, work longer, and achieve more.

But recently a group of scholars from the Harvard Business School, Northwestern University’s Kellogg School of Management, the University of Arizona’s Eller College of Management, and the University of Pennsylvania’s Wharton School questioned the efficacy of this broad prescription. “Rather than being offered as an ‘over-the-counter’ salve for boosting performance, goal setting should be prescribed selectively, presented with a warning label, and closely monitored,” they wrote.16 Goals that people set for themselves and that are devoted to attaining mastery are usually healthy. But goals imposed by others—sales targets, quarterly returns, standardized test scores, and so on—can sometimes have dangerous side effects.

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15 Nicola Lacetera and Mario Macias, “Motivating Altruism: A Field Study,” Institute for the Study of Labor Discussion Paper No. 3770, October 28, 2008.

Like all extrinsic motivators, goals narrow our focus. That’s one reason they can be effective; they concentrate the mind. But as we’ve seen, a narrowed focus exacts a cost. For complex or conceptual tasks, offering a reward can blinker the wide-ranging thinking necessary to come up with an innovative solution. Likewise, when an extrinsic goal is paramount—particularly a short-term, measurable one whose achievement delivers a big payoff—its presence can restrict our view of the broader dimensions of our behavior. As the cadre of business school professors write, “Substantial evidence demonstrates that in addition to motivating constructive effort, goal setting can induce unethical behavior.”

The examples are legion, the researchers note. Sears imposes a sales quota on its auto repair staff—and workers respond by overcharging customers and completing unnecessary repairs. Enron sets lofty revenue goals—and the race to meet them by any means possible catalyzes the company’s collapse. Ford is so intent on producing a certain car at a certain weight at a certain price by a certain date that it omits safety checks and unleashes the dangerous Ford Pinto.

The problem with making an extrinsic reward the only destination that matters is that some people will choose the quickest route there, even if it means taking the low road.

Indeed, most of the scandals and misbehavior that have seemed endemic to modern life involve shortcuts. Executives game their quarterly earnings so they can snag a performance bonus. Secondary school counselors doctor student transcripts so their seniors can get into college.17 Athletes inject themselves with steroids to post better numbers and trigger lucrative performance bonuses.

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16 Lisa D. Ordonez, Maurice E. Schweitzer, Adam D. Galinsky, and Max H. Braverman, “Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting,” Harvard Business School Working Paper No. 09-083, February 2009.

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17 Peter Applebome, “When Grades Are Fixed in College-Entrance Derby,” New York Times, March 7, 2009.

Contrast that approach with behavior sparked by intrinsic motivation. When the reward is the activity itself—deepening learning, delighting customers, doing one’s best—there are no shortcuts. The only route to the destination is the high road. In some sense, it’s impossible to act unethically because the person who’s disadvantaged isn’t a competitor but yourself.

Of course, all goals are not created equal. And—let me emphasize this point—goals and extrinsic rewards aren’t inherently corrupting. But goals are more toxic than Motivation 2.0 recognizes. In fact, the business school professors suggest they should come with their own warning label: Goals may cause systematic problems for organizations due to narrowed focus, unethical behavior, increased risk taking, decreased cooperation, and decreased intrinsic motivation. Use care when applying goals in your organization.

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18 Uri Gneezy and Aldo Rustichini, “A Fine Is a Price,” Journal of Legal Studies 29 ( January 2000).

If carrots-as-goals sometimes encourage unworthy behavior, then sticks-as-punishment should be able to halt it, right? Not so fast. The third drive is less mechanistic and more surprising than that, as two Israeli economists discovered at some day care centers.

In 2000, economists Uri Gneezy and Aldo Rustichini studied a group of child care facilities in Haifa, Israel, for twenty weeks.18 The centers opened at 7:30 A.M. and closed at 4:00 P.M. Parents had to retrieve their children by the closing time or a teacher would have to stay late.

During the first four weeks of the experiment, the economists recorded how many parents arrived late each week. Then, before the fifth week, with the permission of the day care centers, they posted the following sign:

ANNOUNCEMENT: FINE FOR COMING LATE

As you all know, the official closing time of the day care center is 1600 every day. Since some parents have been coming late, we (with the approval of the Authority for Private Day-Care Centers in Israel) have decided to impose a fine on parents who come late to pick up their children.

As of next Sunday a fine of NS 10c will be charged every time a child is collected after 1610. This fine will be calculated monthly, it is to be paid together with the regular monthly payment.

Sincerely,

The manager of the day-care center

The theory underlying the fine, said Gneezy and Rustichini, was straightforward: “When negative consequences are imposed on a behavior, they will produce a reduction of that particular response.” In other words, thwack the parents with a fine, and they’ll stop showing up late.

But that’s not what happened. “After the introduction of the fine we observed a steady increase in the number of parents coming late,” the economists wrote. “The rate finally settled, at a level that was higher, and almost twice as large as the initial one.”19 And in language reminiscent of Harry Harlow’s head scratching, they write that the existing literature didn’t account for such a result. Indeed, the “possibility of an increase in the behavior being punished was not even considered.”

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19 Gneezy and Rustichini, “A Fine Is a Price,” 3, 7 (emphasis added).

Up pops another bug in Motivation 2.0. One reason most parents showed up on time is that they had a relationship with the teachers—who, after all, were caring for their precious sons and daughters—and wanted to treat them fairly. Parents had an intrinsic desire to be scrupulous about punctuality. But the threat of a fine—like the promise of the kronor in the blood experiment—edged aside that third drive. The fine shifted the parents’ decision from a partly moral obligation (be fair to my kids’ teachers) to a pure transaction (I can buy extra time). There wasn’t room for both. The punishment didn’t promote good behavior; it crowded it out.

Addiction

If some scientists believe that “if-then” motivators and other extrinsic rewards resemble prescription drugs that carry potentially dangerous side effects, others believe they’re more like illegal drugs that foster a deeper and more pernicious dependency. According to these scholars, cash rewards and shiny trophies can provide a delicious jolt of pleasure at first, but the feeling soon dissipates—and to keep it alive, the recipient requires ever larger and more frequent doses.

The Russian economist Anton Suvorov has constructed an elaborate econometric model to demonstrate this effect, configured around what’s called “principal-agent theory.” Think of the principal as the motivator—the employer, the teacher, the parent. Think of the agent as the motivatee—the employee, the student, the child. A principal essentially tries to get the agent to do what the principal wants, while the agent balances his own interests with whatever the principal is offering. Using a blizzard of complicated equations that test a variety of scenarios between principal and agent, Suvorov has reached conclusions that make intuitive sense to any parent who’s tried to get her kids to empty the garbage.

By offering a reward, a principal signals to the agent that the task is undesirable. (If the task were desirable, the agent wouldn’t need a prod.) But that initial signal, and the reward that goes with it, forces the principal onto a path that’s difficult to leave. Offer too small a reward and the agent won’t comply. But offer a reward that’s enticing enough to get the agent to act the first time, and the principal “is doomed to give it again in the second.” There’s no going back. Pay your son to take out the trash—and you’ve pretty much guaranteed the kid will never do it again for free. What’s more, once the initial money buzz tapers off, you’ll likely have to increase the payment to continue compliance.

As Suvorov explains, “Rewards are addictive in that once offered, a contingent reward makes an agent expect it whenever a similar task is faced, which in turn compels the principal to use rewards over and over again.” And before long, the existing reward may no longer suffice. It will quickly feel less like a bonus and more like the status quo—which then forces the principal to offer larger rewards to achieve the same effect.20

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20 Anton Suvorov, “Addiction to Rewards,” presentation delivered at the European Winter Meeting of the Econometric Society, October 25, 2003. Mimeo (2003) available at http://www.cemfi.es/research/conferences/ewm/Anton/addict_new6.pdf.

This addictive pattern is not merely blackboard theory. Brian Knutson, then a neuroscientist at the National Institute on Alcohol Abuse and Alcoholism, demonstrated as much in an experiment using the brain scanning technique known as functional magnetic resonance imaging (fMRI). He placed healthy volunteers into a giant scanner to watch how their brains responded during a game that involved the prospect of either winning or losing money. When participants knew they had a chance to win cash, activation occurred in the part of the brain called the nucleus accumbens. That is, when the participants anticipated getting a reward (but not when they anticipated losing one), a burst of the brain chemical dopamine surged to this part of the brain. Knutson, who is now at Stanford University, has found similar results in subsequent studies where people anticipated rewards. What makes this response interesting for our purposes is that the same basic physiological process—this particular brain chemical surging to this particular part of the brain—is what happens in addiction. The mechanism of most addictive drugs is to send a fusillade of dopamine to the nucleus accumbens. The feeling delights, then dissipates, then demands another dose. In other words, if we watch how people’s brains respond, promising them monetary rewards and giving them cocaine, nicotine, or amphetamines look disturbingly similar.21 This could be one reason that paying people to stop smoking often works in the short run. It replaces one (dangerous) addiction with another (more benign) one.

Rewards’ addictive qualities can also distort decision-making. Knutson has found that activation in the nucleus accumbens seems to predict “both risky choices and risk-seeking mistakes.” Get people fired up with the prospect of rewards, and instead of making better decisions, as Motivation 2.0 hopes, they can actually make worse ones. As Knutson writes, “This may explain why casinos surround their guests with reward cues (e.g., inexpensive food, free liquor, surprise gifts, potential jackpot prizes)—anticipation of rewards activates the [nucleus accumbens], which may lead to an increase in the likelihood of individuals switching from risk-averse to risk-seeking behavior.”22

In short, while that dangled carrot isn’t all bad in all circumstances, in some instances it operates similar to a rock of crack cocaine and can induce behavior similar to that found around the craps table or roulette wheel—not exactly what we hope to achieve when we “motivate” our teammates and coworkers.

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21 Brian Knutson, Charles M. Adams, Grace W. Fong, and Daniel Hommer, “Anticipation of Increasing Monetary Reward Selectively Recruits Nucleus Accumbens,” Journal of Neuroscience 21 (2001).

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22 Camelia M. Kuhnen and Brian Knutson, “The Neural Basis of Financial Risk Taking,” Neuron 47 (September 2005): 768.

Short-Term Thinking

Think back to the candle problem again. The incentivized participants performed worse than their counterparts because they were so focused on the prize that they failed to glimpse a novel solution on the periphery. Rewards, we’ve seen, can limit the breadth of our thinking. But extrinsic motivators—especially tangible, “if-then” ones—can also reduce the depth of our thinking. They can focus our sights on only what’s immediately before us rather than what’s off in the distance.

Many times a concentrated focus makes sense. If your office building is on fire, you want to find an exit immediately rather than ponder how to rewrite the zoning regulations. But in less dramatic circumstances, fixating on an immediate reward can damage performance over time. Indeed, what our earlier examples—unethical actions and addictive behavior—have in common, perhaps more than anything else, is that they’re entirely short-term. Addicts want the quick fix regardless of the eventual harm. Cheaters want the quick win—regardless of the lasting consequences.

Yet even when the behavior doesn’t devolve into shortcuts or addiction, the near-term allure of rewards can be harmful in the long run. Consider publicly held companies. Many such companies have existed for decades and hope to exist for decades more. But much of what their executives and middle managers do each day is aimed single-mindedly at the corporation’s performance over the next three months. At these companies, quarterly earnings are an obsession. Executives devote substantial resources to making sure the earnings come out just right. And they spend considerable time and brain-power offering guidance to stock analysts so that the market knows what to expect and therefore responds favorably. This laser focus on a narrow, near-term slice of corporate performance is understandable. It’s a rational response to stock markets that reward or punish tiny blips in those numbers, which, in turn, affect executives’ compensation.

But companies pay a steep price for not extending their gaze beyond the next quarter. Several researchers have found that companies that spend the most time offering guidance on quarterly earnings deliver significantly lower long-term growth rates than companies that offer guidance less frequently. (One reason: The earnings-obsessed companies typically invest less in research and development.)23 They successfully achieve their short-term goals, but threaten the health of the company two or three years hence. As the scholars who warned about goals gone wild put it, “The very presence of goals may lead employees to focus myopically on short-term gains and to lose sight of the potential devastating long-term effects on the organization.”24

Perhaps nowhere is this clearer than in the economic calamity that gripped the world economy in 2008 and 2009. Each player in the system focused only on the short-term reward—the buyer who wanted a house, the mortgage broker who wanted a commission, the Wall Street trader who wanted new securities to sell, the politician who wanted a buoyant economy during reelection—and ignored the long-term effects of their actions on themselves or others. When the music stopped, the entire system nearly collapsed. This is the nature of economic bubbles: What seems to be irrational exuberance is ultimately a bad case of extrinsically motivated myopia.

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23 Mei Cheng, K. R. Subramanyam, and Yuan Zhang, “Earnings Guidance and Managerial Myopia,” SSRN Working Paper No. 854515, November 2005.

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24 Lisa D. Ordonez, Maurice E. Schweitzer, Adam D. Galinsky, and Max H. Braverman, “Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting,” Harvard Business School Working Paper No. 09-083, February 2009.

By contrast, the elements of genuine motivation that we’ll explore later, by their very nature, defy a short-term view. Take mastery. The objective itself is inherently long-term because complete mastery, in a sense, is unattainable. Even Roger Federer, for instance, will never fully “master” the game of tennis. But introducing an “if-then” reward to help develop mastery usually backfires. That’s why schoolchildren who are paid to solve problems typically choose easier problems and therefore learn less.25 The short-term prize crowds out the l ong-term learning.

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25 Roland Bénabou and Jean Tirole, “Intrinsic and Extrinsic Motivation,” Review of Economic Studies 70 (2003).

In environments where extrinsic rewards are most salient, many people work only to the point that triggers the reward—and no further. So if students get a prize for reading three books, many won’t pick up a fourth, let alone embark on a lifetime of reading—just as executives who hit their quarterly numbers often won’t boost earnings a penny more, let alone contemplate the long-term health of their company. Likewise, several studies show that paying people to exercise, stop smoking, or take their medicines produces terrific results at first—but the healthy behavior disappears once the incentives are removed. However, when contingent rewards aren’t involved, or when incentives are used with the proper deftness, performance improves and understanding deepens. Greatness and nearsightedness are incompatible. Meaningful achievement depends on lifting one’s sights and pushing toward the horizon.

CHAPTER 4 - Autonomy

CHAPTER 5 - Mastery

CHAPTER 6 - Purpose

CHAPTER 4

Autonomy

at its core management hasn’t changed much in a hundred years. Its central ethic remains control; its chief tools remain extrinsic motivators.

The idea of management (that is, management of people rather than management of, say, supply chains) is built on certain assumptions about the basic natures of those being managed. It presumes that to take action or move forward, we need a prod—that absent a reward or punishment, we’d remain happily and inertly in place. It also presumes that once people do get moving, they need direction—that without a firm and reliable guide, they’d wander.

When we enter the world, are we wired to be passive and inert? Or are we wired to be active and engaged?

I’m convinced it’s the latter—that our basic nature is to be curious and self-directed. And I say that not because I’m a dewy-eyed idealist, but because I’ve been around young children and because my wife and I have three kids of our own. Have you ever seen a six-month-old or a one-year-old who’s not curious and self-directed? I haven’t. That’s how we are out of the box. If, at age fourteen or forty-three, we’re passive and inert, that’s not because it’s our nature. It’s because something flipped our default setting.

That something could well be management—not merely how bosses treat us at work, but also how the broader ethos has leeched into schools, families, and many other aspects of our lives. Perhaps management isn’t responding to our supposedly natural state of passive inertia. Perhaps management is one of the forces that’s switching our default setting and producing that state.

Now, that’s not as insidious as it sounds. Submerging part of our nature in the name of economic survival can be a sensible move. My ancestors did it; so did yours. And there are times, even now, when we have no other choice.

But today economic accomplishment, not to mention personal fulfillment, more often swings on a different hinge. It depends not on keeping our nature submerged but on allowing it to surface. It requires resisting the temptation to control people—and instead doing everything we can to reawaken their deep-seated sense of autonomy. This innate capacity for self-direction is at the heart of Motivation 3.0 and Type I behavior.

The fundamentally autonomous quality of human nature is central to self-determination theory (SDT). As I explained in the previous chapter, Deci and Ryan cite autonomy as one of three basic human needs. And of the three, it’s the most important—the sun around which SDT’s planets orbit. In the 1980s, as they progressed in their work, Deci and Ryan moved away from categorizing behavior as either extrinsically motivated or intrinsically motivated to categorizing it as either controlled or autonomous. “Autonomous motivation involves behaving with a full sense of volition and choice,” they write, “whereas controlled motivation involves behaving with the experience of pressure and demand toward specific outcomes that comes from forces perceived to be external to the self.”1

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1 Edward L. Deci and Richard M. Ryan, “Facilitating Optimal Motivation and Psychological Well-Being Across Life’s Domains,” Canadian Psychology 49, no. 1 (February 2008): 14.

Researchers have found a link between autonomy and overall well-being not only in North America and Western Europe, but also in Russia, Turkey, and South Korea. Even in high-poverty non-Western locales like Bangladesh, social scientists have found that autonomy is something that people seek and that improves their lives.2

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2 Valery Chirkov, Richard M. Ryan, Youngmee Kim, and Ulas Kaplan, “Differentiating Autonomy from Individualism and Independence: A Self-Determination Theory Perspective on Internalization of Cultural Orientations and Well-Being,” Journal of Personality and Social Psychology 84 ( January 2003); Joe Devine, Laura Camfield, and Ian Gough, “Autonomy or Dependence—or Both?: Perspectives from Bangladesh,” Journal of Happiness Studies 9, no. 1 ( January 2008).

A sense of autonomy has a powerful effect on individual performance and attitude. According to a cluster of recent behavioral science studies, autonomous motivation promotes greater conceptual understanding, better grades, enhanced persistence at school and in sporting activities, higher productivity, less burnout, and greater levels of psychological well-being.3 Those effects carry over to the workplace. In 2004, Deci and Ryan, along with Paul Baard of Fordham University, carried out a study of workers at an American investment bank. The three researchers found greater job satisfaction among employees whose bosses offered “autonomy support.” These bosses saw issues from the employee’s point of view, gave meaningful feedback and information, provided ample choice over what to do and how to do it, and encouraged employees to take on new projects. The resulting enhancement in job satisfaction, in turn, led to higher performance on the job. What’s more, the benefits that autonomy confers on individuals extend to their organizations. For example, researchers at Cornell University studied 320 small businesses, half of which granted workers autonomy, the other half relying on top-down direction. The businesses that offered autonomy grew at four times the rate of the control-oriented firms and had one-third the turnover.4

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3 Deci and Ryan, “Facilitating Optimal Motivation and Psychological Well-Being Across Life’s Domains,” citing many other studies.

4 Paul P. Baard, Edward L. Deci, and Richard M. Ryan, “Intrinsic Need Satisfaction: A Motivational Basis of Performance and Well-Being in Two Work Settings,” Journal of Applied Social Psychology 34 (2004).

Most twenty-first-century notions of management presume that, in the end, people are pawns rather than players. British economist Francis Green, to cite just one example, points to the lack of individual discretion at work as the main explanation for declining productivity and job satisfaction in the UK.5 Management still revolves largely around supervision, “if-then” rewards, and other forms of control. That’s true even of the kinder, gentler Motivation 2.1 approach that whispers sweetly about things like “empowerment” and “flexibility.”

Indeed, just consider the very notion of “empowerment.” It presumes that the organization has the power and benevolently ladles some of it into the waiting bowls of grateful employees. But that’s not autonomy. That’s just a slightly more civilized form of control. Or take management’s embrace of “flex time.” Ressler and Thompson call it a “con game,” and they’re right. Flexibility simply widens the fences and occasionally opens the gates. It, too, is little more than control in sheep’s clothing. The words themselves reflect presumptions that run against both the texture of the times and the nature of the human condition. In short, management isn’t the solution; it’s the problem.

THE FOUR ESSENTIALS

Type I behavior emerges when people have autonomy over the four T’s: their task, their time, their technique, and their team.

Task

This practice has a sturdy tradition and a well-known modern expression. Its pioneer was the American company 3M. In the 1930s and 1940s, 3M’s president and chairman was William McKnight, a fellow who was as unassuming in his manner as he was visionary in his thinking. McKnight believed in a simple, and at the time, subversive, credo: “Hire good people, and leave them alone.” Well before it was fashionable for managers to flap on about “empowerment,” he made a more vigorous case for autonomy. “Those men and women to whom we delegate authority and responsibility, if they are good people, are going to want to do their jobs in their own way,” he wrote in 1948.7 McKnight even encouraged employees to engage in what he called “experimental doodling.”

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7 Quoted in Harvard Business Essentials: Managing Creativity and Innovation (Boston: Harvard Business School Press, 2003), 109.

With these unorthodox ideas percolating in his mind, this unlikely corporate heretic established a new policy: 3M’s technical staff could spend up to 15 percent of their time on projects of their choosing. The initiative felt so counter to the mores of Motivation 2.0, so seemingly illicit, that inside the company, it was known as the “bootlegging policy.” And yet it worked. These walled gardens of autonomy soon became fertile fields for a harvest of innovations—including Post-it notes. Scientist Art Fry came up with his idea for the ubiquitous stickie not in one of his regular assignments, but during his 15 percent time.

According to 3M’s former head of research and development, most of the inventions that the company relies on even today emerged from those periods of bootlegging and experimental doodling.8

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8 The observation comes from former 3M executive Bill Coyne, quoted in Ben Casnocha, “Success on the Side,” The American: The Journal of the American Enterprise Institute, April 2009. A nice account of 3M’s practices appears in James C. Collins and Jerry L. Porras, Built to Last: Successful Habits of Visionary Companies (New York: HarperBusiness, 2004).

The best-known company to embrace it is Google, which has long encouraged engineers to spend one day a week working on a side project. Some Googlers use their “20 percent time” to fix an existing product, but most use it to develop something entirely new. Of course, Google doesn’t sign away the intellectual property rights to what’s created during that 20 percent—which is wise. In a typical year, more than half of Google’s new offerings are birthed during this period of pure autonomy. For example, scientist Krishna Bharat, frustrated by how difficult it was to find news stories online, created Google News in his 20 percent time. The site now receives millions of visitors every day. Former Google engineer Paul Bucheit created Gmail, now one of the world’s most popular e-mail programs, as his 20 percent project. Many other Google products share similar creation stories—among them Orkut (Google’s social networking software), Google Talk (its instant message application), Google Sky (which allows astronomically inclined users to browse pictures of the universe), and Google Translate (its translation software for mobile devices). As Google engineer Alec Proudfoot, whose own 20 percent project aimed at boosting the efficiency of hybrid cars, put it in a television interview: “Just about all the good ideas here at Google have bubbled up from 20 percent time.”9

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9 Erin Hayes, “Google’s 20 Percent Factor,” ABC News, May 12, 2008.

Back at Atlassian, the experiment in 20 percent time seemed to work. In what turned out to be a yearlong trial, developers launched forty-eight new projects. So in 2009, Cannon-Brookes decided to make this dose of task autonomy a permanent feature of Atlassian work life. The decision didn’t sit well with everyone. By Cannon-Brookes’s back-of-the-blog calculations, seventy engineers, spending 20 percent of their time over just a six-month period, amounted to an investment of $1 million. The company’s chief financial officer was aghast. Some project managers—despite Atlassian’s forward-thinking ways, the company still uses the m-word—weren’t happy, because it meant ceding some of their control over employees. When a few wanted to track employees’ time to make sure they didn’t abuse the privilege, Cannon-Brookes said no. “That was too controlling. I wanted to back our engineers and take it on faith that they’ll do good things.” Besides, he says, “People are way more efficient about 20 percent time than regular work time. They say, ‘I’m not going to [expletive]ing do anything like read newsfeeds or do Facebook.’ ”

Time

at the heart of private legal practice is perhaps the most autonomy-crushing mechanism imaginable: the billable hour. Most lawyers—and nearly all lawyers in large, prestigious firms—must keep scrupulous track, often in six-minute increments, of their time. If they fail to bill enough hours, their jobs are in jeopardy. As a result, their focus inevitably veers from the output of their work (solving a client’s problem) to its input (piling up as many hours as possible). If the rewards come from time, then time is what firms will get. These sorts of high-stakes, measurable goals can drain intrinsic motivation, sap individual initiative, and even encourage unethical behavior. “If one is expected to bill more than two thousand hours per year,” former U.S. Supreme Court Chief Justice William Rehnquist once said, “there are bound to be temptations to exaggerate the hours actually put in.”13

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13 William H. Rehnquist, The Legal Profession Today, 62 Ind. L.J. 151, 153 (1987).

The billable hour is a relic of Motivation 2.0. It makes some sense for routine tasks—whether fitting doors onto the body of a Ford Taurus or adding up deductions on a simple tax form—because there’s a tight connection between how much time goes in and how much work comes out. And if your starting assumption is that workers’ default setting is to shirk, monitoring their time can keep them on their toes.

But the billable hour has little place in Motivation 3.0. For nonroutine tasks, including law, the link between how much time somebody spends and what that somebody produces is irregular and unpredictable.

If we begin from an alternative, and more accurate, presumption—that people want to do good work—then we ought to let them focus on the work itself rather than the time it takes them to do it.

If the billable hour has an antithesis, it’s the results-only work environment of the kind that Jeff Gunther has introduced at his companies. The first large company to go ROWE was Best Buy—not in its stores, but in its corporate offices. Like 3M’s 15 percent time, Best Buy’s ROWE experiment began as something of a rogue project launched by Ressler and Thompson, whom I mentioned earlier and who have since become ROWE gurus, taking their message of autonomy around the world. Best Buy’s headquarters in Richfield, Minnesota, are airy, modern, and replete with a concierge, cafés, and dry cleaner. But the company had a reputation for punishing hours and intrusive bosses—and it was paying the price in lost talent. Best Buy’s then CEO Brad Anderson quietly agreed to Ressler and Thompson’s weird proposal, because it encouraged “people to contribute rather than just show up and grind out their days.”15

Today, Best Buy’s headquarters has fewer people working a regular schedule than it has those working a ROWE un-schedule. And even though retail electronics is a brutally competitive industry, Best Buy has held its own both in the marketplace and in its quest for talent. Reporting on the company’s ROWE results in the Harvard Business Review, Tamara Erickson writes:

Salaried people put in as much time as it takes to do their work. Hourly employees in the program work a set number of hours to comply with federal labor regulations, but they get to choose when. Those employees report better relationships with family and friends, more company loyalty, and more focus and energy. Productivity has increased by 35%, and voluntary turnover is 320 basis points lower than in teams that have not made the change. Employees say they don’t know whether they work fewer hours—they’ve stopped counting.16

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16 Tamara J. Erickson, “Task, Not Time: Profile of a Gen Y Job,” Harvard Business Review (February 2008): 19.

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Technique

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Tony Hsieh, founder of the online shoe retailer Zappos.com (now part of Amazon.com), thought there was a better way to recruit, prepare, and challenge such employees. So new hires at Zappos go through a week of training. Then, at the end of those seven days, Hsieh makes them an offer. If they feel Zappos isn’t for them and want to leave, he’ll pay them $2,000—no hard feelings. Hsieh is hacking the Motivation 2.0 operating system like a brilliant and benevolent teenage computer whiz. He’s using an “if-then” reward not to motivate people to perform better, but to weed out those who aren’t fit for a Motivation 3.0-style workplace. The people who remain receive decent pay, and just as important, they have autonomy over technique. Zappos doesn’t monitor its customer service employees’ call times or require them to use scripts. The reps handle calls the way they want. Their job is to serve the customer well; how they do it is up to them.

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The results of this emphasis on autonomy over technique? Turnover at Zappos is minimal. And although it’s still young, Zappos consistently ranks as one of the best companies for customer service in the United States—ahead of better-known names like Cadillac, BMW, and Apple and roughly equal to ritzy brands like Jaguar and the Ritz-Carlton.17 Not bad for a shoe company based in the Nevada desert.

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17 Diane Brady and Jena McGregor, “Customer Service Champs,” BusinessWeek, March 2, 2009.

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What Zappos is doing is part of a small but growing move to restore some measure of individual freedom in jobs usually known for the lack of it. For instance, while many enterprises are offshoring work to low-cost providers overseas, some companies are reversing the trend by beginning what’s known as “homeshoring.” Instead of requiring customer service reps to report to a single large call center, they’re routing the calls to the employees’ homes. This cuts commuting time for staff, removes them from physical monitoring, and provides far greater autonomy over how they do their jobs.

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The American airline JetBlue was one of the first to try this approach. From its launch in 2000, JetBlue has relied on telephone customer service employees who work at home. And from its launch, JetBlue has earned customer service rankings far ahead of its competitors. Productivity and job satisfaction are generally higher in homeshoring than in conventional arrangements—in part because employees are more comfortable and less monitored at home. But it’s also because this autonomy-centered approach draws from a deeper pool of talent. Many homeshore employees are parents, students, retirees, and people with disabilities—those who want to work, but need to do it their own way. According to one report, between 70 and 80 percent of home-based customer service agents have college degrees—double the percentage among people working in traditional call centers. Ventures like Alpine Access, PHH Arval, and LiveOps, which run customer service departments for a range of companies, report that after adopting this method, their recruiting costs fall to almost zero. Prospective employees come to them. And now these home-based customer service reps are working for a number of U.S. companies—including 1-800-Flowers, J. Crew, Office Depot, even the Internal Revenue Service—handling customer inquiries the way they choose.18 As in any effective Motivation 3.0 workplace, it’s their call.

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18 Martha Frase-Blunt, “Call Centers Come Home,” HR Magazine 52 ( January 2007): 84; Ann Bednarz, “Call Centers Are Heading for Home,” Network World, January 30, 2006.

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Team

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You don’t get a say in choosing the people around you. They’re there when you arrive. Worse, one or two of them might not be so glad to see you. And getting rid of even just one of them is usually impossible.

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Taking a new job and holding most jobs are similar. Enterprising souls might be able to scratch out some autonomy over task, time, and technique—but autonomy over team is a taller order. That’s one reason people are drawn to entrepreneurship—the chance to build a team of their own. But even in more traditional settings, although far from typical yet, a few organizations are discovering the virtues of offering people some amount of freedom over those with whom they work.

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For example, at the organic grocery chain Whole Foods, the people who are nominally in charge of each department don’t do the hiring. That task falls to a department’s employees. After a job candidate has worked a thirty-day trial period on a team, the prospective teammates vote on whether to hire that person full-time. At W. L. Gore & Associates, the makers of the GORE-TEX fabric and another example of Motivation 3.0 in action, anybody who wants to rise in the ranks and lead a team must assemble people willing to work with her.19

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19 Paul Restuccia, “What Will Jobs of the Future Be? Creativity, Self-Direction Valued,” Boston Herald, February 12, 2007. Gary Hamel, The Future of Management (Boston: Harvard Business School Press, 2007).

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The ability to put together a pick-up basketball team of company talent is another attraction of 20 percent time. These initiatives usually slice across the organization chart, connecting people who share an interest, if not a department. As Google engineer Bharat Mediratta told The New York Times, “If your 20 percent idea is a new product, it’s usually pretty easy to just find a few like-minded people and start coding away.” And when pushing for a more systemic change in the organization, Mediratta says autonomy over team is even more important. Those efforts require what he calls a “grouplet”—a small, self-organized team that has almost no budget and even less authority, but that tries to change something within the company. For instance, Mediratta formed a testing grouplet to encourage engineers throughout the company to implement a more efficient way to test computer code. This informal band of coders, a team built autonomously without direction from the top, “slowly turned the organization on its axis.”20

Still, the desire for autonomy can often collide with other obligations. One surprise as Atlassian ran the numbers on its task autonomy experiment was that most employees came in substantially under the 20 percent figure. The main reason? They didn’t want to let down their current teammates by abandoning ongoing projects.

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20 Bharat Mediratta, as told to Julie Bick, “The Google Way: Give Engineers Room,” New York Times, October 21, 2007.

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Although autonomy over team is the least developed of the four T’s, the ever-escalating power of social networks and the rise of mobile apps now make this brand of autonomy easier to achieve—and in ways that reach beyond a single organization. The open-source projects I mentioned in Chapter 1, in which ad hoc teams self-assemble to build a new browser or create better server software, are a potent example. And once again, the science affirms the value of something traditional businesses have been slow to embrace. Ample research has shown that people working in self-organized teams are more satisfied than those working in inherited teams.21 Likewise, studies by Deci and others have shown that people high in intrinsic motivation are better coworkers.22 And that makes the possibilities on this front enormous. If you want to work with more Type I’s, the best strategy is to become one yourself. Autonomy, it turns out, can be contagious.

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21 See, for example, S. Parker, T. Wall, and P. Hackson, “That’s Not My Job: Developing Flexible Employee Work Orientations,” Academy of Management Journal 40 (1997): 899-929.

22 Marylene Gagné and Edward L. Deci, “Self-Determination Theory and Work Motivation,” Journal of Organizational Behavior 26 (2005): 331-62.

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Think for a moment about the great artists of the last hundred years and how they worked—people like Pablo Picasso, Georgia O’Keeffe, and Jackson Pollock. Unlike for the rest of us, Motivation 2.0 was never their operating system. Nobody told them: You must paint this sort of picture. You must begin painting precisely at eight-thirty A.M. You must paint with the people we select to work with you. And you must paint this way. The very idea is ludicrous.

Note: “they spoke not what men but what they thought” ~ Emerson

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However, encouraging autonomy doesn’t mean discouraging accountability. Whatever operating system is in place, people must be accountable for their work. But there are different ways to achieve this end, each built on different assumptions about who we are deep down. Motivation 2.0 assumed that if people had freedom, they would shirk—and that autonomy was a way to bypass accountability. Motivation 3.0 begins with a different assumption. It presumes that people want to be accountable—and that making sure they have control over their task, their time, their technique, and their team is a pathway to that destination.

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CHAPTER 5

Mastery

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FROM COMPLIANCE TO ENGAGEMENT

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The opposite of autonomy is control. And since they sit at different poles of the behavioral compass, they point us toward different destinations. Control leads to compliance; autonomy leads to engagement. And this distinction leads to the second element of Type I behavior: mastery—the desire to get better and better at something that matters.

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As I explained in Part One, Motivation 2.0’s goal was to encourage people to do particular things in particular ways—that is, to get them to comply. And for that objective, few motivators are more effective than a nice bunch of carrots and the threat of an occasional stick. This was rarely a promising route to self-actualization, of course. But as an economic strategy, it had a certain logic. For routine tasks, the sort of work that defined most of the twentieth century, gaining compliance usually worked just fine.

But that was then. For the definitional tasks of the twenty-first century, such a strategy falls short, often woefully short. Solving complex problems requires an inquiring mind and the willingness to experiment one’s way to a fresh solution. Where Motivation 2.0 sought compliance, Motivation 3.0 seeks engagement. Only engagement can produce mastery. And the pursuit of mastery, an important but often dormant part of our third drive, has become essential in making one’s way in today’s economy.

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Unfortunately, despite sweet-smelling words like “empowerment” that waft through corporate corridors, the modern workplace’s most notable feature may be its lack of engagement and its disregard for mastery. Gallup’s extensive research on the subject shows that in the United States, more than 50 percent of employees are not engaged at work—and nearly 20 percent are actively disengaged. The cost of all this disengagement: about $300 billion a year in lost productivity—a sum larger than the GDP of Portugal, Singapore, or Israel.1 Yet in comparative terms, the United States looks like a veritable haven of Type I behavior at work. According to the consulting firm McKinsey & Co., in some countries as little as 2 to 3 percent of the workforce is highly engaged in their work.2

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1 Jack Zenger, Joe Folkman, and Scott Edinger, “How Extraordinary Leaders Double Profits,” Chief Learning Officer, July 2009.

2 Rik Kirkland, ed., What Matters? Ten Questions That Will Shape Our Future (McKinsey Management Institute, 2009), 80.

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Equally important, engagement as a route to mastery is a powerful force in our personal lives. While complying can be an effective strategy for physical survival, it’s a lousy one for personal fulfillment. Living a satisfying life requires more than simply meeting the demands of those in control. Yet in our offices and our classrooms we have way too much compliance and way too little engagement. The former might get you through the day, but only the latter will get you through the night.

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Csikszentmihalyi resisted rafting down the main currents of his field. As he told me one spring morning not long ago, he wanted to explore “the positive, innovative, creative approach to life instead of the remedial, pathological view that Sigmund Freud had or the mechanistic work” of B. F. Skinner and others who reduced behavior to simple stimulus and response. He began by writing about creativity. Creativity took him into the study of play. And his exploration of play unlocked an insight about the human experience that would make him famous.

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In the midst of play, many people enjoyed what Csikszentmihalyi called “autotelic experiences”—from the Greek auto (self ) and telos (goal or purpose). In an autotelic experience, the goal is self-fulfilling; the activity is its own reward. Painters he observed during his Ph.D. research, Csikszentmihalyi said, were so enthralled in what they were doing that they seemed to be in a trance. For them, time passed quickly and self-consciousness dissolved. He sought out other people who gravitated to these sorts of pursuits—rock climbers, soccer players, swimmers, spelunkers—and interviewed them to discover what made an activity autotelic. It was frustrating. “When people try to recall how it felt to climb a mountain or play a great musical piece,” Csikszentmihalyi later wrote, “their stories are usually quite stereotyped and uninsightful.”3 He needed a way to probe people’s experiences in the moment. And in the mid-1970s, a bold new technology—one that any twelve-year-old now would find laughingly retrograde—came to the rescue: the electronic pager.

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3 Mihalyi Csikszentmihalyi, Beyond Boredom and Anxiety: Experiencing Flow in Work and Play, 25th anniversary edition (San Francisco: Jossey-Bass, 2000), xix.

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Csikszentmihalyi, who by then was teaching at the University of Chicago and running his own psychology lab, clipped on a pager and asked his graduate students to beep him randomly several times each day. Whenever the pager sounded, he recorded what he was doing and how he was feeling. “It was so much fun,” he recalled in his office at the Claremont Graduate University in southern California, where he now teaches. “You got such a detailed picture of how people lived.” On the basis of this test run, he developed a methodology called the Experience Sampling Method. Csikszentmihalyi would page people eight times a day at random intervals and ask them to write in a booklet their answers to several short questions about what they were doing, who they were with, and how they’d describe their state of mind. Put the findings together for seven days and you had a flip book, a mini-movie, of someone’s week. Assemble the individual findings and you had an entire library of human experiences.

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From these results, Csikszentmihalyi began to peel back the layers of those autotelic experiences. Perhaps equally significant, he replaced that wonky Greek-derived adjective with a word he found people using to describe these optimal moments: flow. The highest, most satisfying experiences in people’s lives were when they were in flow. And this previously unacknowledged mental state, which seemed so inscrutable and transcendent, was actually fairly easy to unpack. In flow, goals are clear. You have to reach the top of the mountain, hit the ball across the net, or mold the clay just right. Feedback is immediate. The mountaintop gets closer or farther, the ball sails in or out of bounds, the pot you’re throwing comes out smooth or uneven.

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Most important, in flow, the relationship between what a person had to do and what he could do was perfect. The challenge wasn’t too easy. Nor was it too difficult. It was a notch or two beyond his current abilities, which stretched the body and mind in a way that made the effort itself the most delicious reward. That balance produced a degree of focus and satisfaction that easily surpassed other, more quotidian, experiences. In flow, people lived so deeply in the moment, and felt so utterly in control, that their sense of time, place, and even self melted away. They were autonomous, of course. But more than that, they were engaged. They were, as the poet W. H. Auden wrote, “forgetting themselves in a function.”

Maybe this state of mind was what that ten-year-old boy was seeking as that train rolled through Europe. Maybe reaching flow, not for a single moment but as an ethic for living—maintaining that beautiful “eye-on-the-object look” to achieve mastery as a cook, a surgeon, or a clerk—was the answer. Maybe this was the way to live.

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GOLDILOCKS ON A CARGO SHIP

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Motivation 2.0 has little room for a concept like flow. The Type X operating system doesn’t oppose people taking on optimal challenges on the job, but it suggests that such moments are happy accidents rather than necessary conditions for people to do great work.

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But ever so slowly the ground might be shifting. As the data on worker disengagement earlier in the chapter reveal, the costs—in both human satisfaction and organizational health—are high when a workplace is a no-flow zone. That’s why a few enterprises are trying to do things differently. As Fast Company magazine has noted, a number of companies, including Microsoft, Patagonia, and Toyota, have realized that creating flow-friendly environments that help people move toward mastery can increase productivity and satisfaction at work.4

For example, Stefan Falk, a vice president at Ericsson, the Swedish telecommunications concern, used the principles of flow to smooth a merger of the company’s business units. He persuaded managers to configure work assignments so that employees had clear objectives and a way to get quick feedback. And instead of meeting with their charges for once-a-year performance reviews, managers sat down with employees one-on-one six times a year, often for as long as ninety minutes, to discuss their level of engagement and path toward mastery. The flow-centered strategy worked well enough that Ericsson began using it in offices around the world. After that, Falk moved to Green Cargo, an enormous logistics and shipping company in Sweden. There, he developed a method of training managers in how flow worked. Then he required them to meet with staff once a month to get a sense of whether people were overwhelmed or underwhelmed with their work—and to adjust assignments to help them find flow. After two years of managerial revamping, state-owned Green Cargo became profitable for the first time in 125 years—and executives cite its newfound flowcentricity as a key reason.5

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5 This account comes from both an interview with Csikszentmihalyi, March 3, 2009, and from March, “The Art of Work.”

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In addition, a study of 11,000 industrial scientists and engineers working at companies in the United States found that the desire for intellectual challenge—that is, the urge to master something new and engaging—was the best predictor of productivity. Scientists motivated by this intrinsic desire filed significantly more patents than those whose main motivation was money, even controlling for the amount of effort each group expended.6 (That is, the extrinsically motivated group worked as long and as hard as their more Type I colleagues. They just accomplished less—perhaps because they spent less of their work time in flow.)

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6 Henry Sauerman and Wesley Cohen, “What Makes Them Tick? Employee Motives and Firm Innovation,” NBER Working Paper No. 14443, October 2008.

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Green Cargo, thatgamecompany, and the companies employing the patent-cranking scientists typically use two tactics that their less savvy competitors do not. First, they provide employees with what I call “Goldilocks tasks”—challenges that are not too hot and not too cold, neither overly difficult nor overly simple. One source of frustration in the workplace is the frequent mismatch between what people must do and what people can do. When what they must do exceeds their capabilities, the result is anxiety. When what they must do falls short of their capabilities, the result is boredom. (Indeed, Csikszentmihalyi titled his first book on autotelic experiences Beyond Boredom and Anxiety.) But when the match is just right, the results can be glorious. This is the essence of flow. Goldilocks tasks offer us the powerful experience of inhabiting the zone, of living on the knife’s edge between order and disorder, of—as painter Fritz Scholder once described it—“walking the tightrope between accident and discipline.”

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The second tactic that smart organizations use to increase their flow-friendliness and their employees’ opportunities for mastery is to trigger the positive side of the Sawyer Effect. Recall from Chapter 2 that extrinsic rewards can turn play into work. But it’s also possible to run the current in the other direction—and turn work into play. Some tasks at work don’t automatically provide surges of flow, yet still need to get done. So the shrewdest enterprises afford employees the freedom to sculpt their jobs in ways that bring a little bit of flow to otherwise mundane duties. Amy Wrzesniewski and Jane Dutton, two business school professors, have studied this phenomenon among hospital cleaners, nurses, and hairdressers. They found, for instance, that some members of the cleaning staff at hospitals, instead of doing the minimum the job required, took on new tasks—from chatting with patients to helping make nurses’ jobs go more smoothly. Adding these more absorbing challenges increased these cleaners’ satisfaction and boosted their own views of their skills. By reframing aspects of their duties, they helped make work more playful and more fully their own. “Even in low-autonomy jobs,” Wrzesniewski and Dutton write, “employees can create new domains for mastery.”7

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7 Amy Wrzesniewski and Jane E. Dutton, “Crafting a Job: Revisioning Employees as Active Crafters of Their Work,” Academy of Management Review 26 (2001): 181.

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THE THREE LAWS OF MASTERY

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Flow is essential to mastery. But flow doesn’t guarantee mastery—because the two concepts operate on different horizons of time. One happens in a moment; the other unfolds over months, years, sometimes decades. You and I each might reach flow tomorrow morning—but neither one of us will achieve mastery overnight.

So how can we enlist flow in the quest for something that goes deeper and endures longer? What can we do to move toward mastery, one of the key elements of Type I behavior, in our organizations and our lives? A few behavioral scientists have offered some initial answers to those questions, and their findings suggest that mastery abides by three, somewhat peculiar, laws.

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Mastery Is a Mindset

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As with so many things in life, the pursuit of mastery is all in our head. At least that’s what Carol Dweck has discovered.

Dweck, a psychology professor at Stanford University, has been studying motivation and achievement in children and young adults for nearly forty years, amassing a body of rigorous empirical research that has made her a superstar in contemporary behavioral science. Dweck’s signature insight is that what people believe shapes what people achieve. Our beliefs about ourselves and the nature of our abilities—what she calls our “self-theories”—determine how we interpret our experiences and can set the boundaries on what we accomplish. Although her research looks mostly at notions of “intelligence,” her findings apply with equal force to most human capabilities. And they yield the first law of mastery: Mastery is a mindset.

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According to Dweck, people can hold two different views of their own intelligence. Those who have an “entity theory” believe that intelligence is just that—an entity. It exists within us, in a finite supply that we cannot increase. Those who subscribe to an “incremental theory” take a different view. They believe that while intelligence may vary slightly from person to person, it is ultimately something that, with effort, we can increase. To analogize to physical qualities, incremental theorists consider intelligence as something like strength. (Want to get stronger and more muscular? Start pumping iron.) Entity theorists view it as something more like height. (Want to get taller? You’re out of luck.)f If you believe intelligence is a fixed quantity, then every educational and professional encounter becomes a measure of how much you have. If you believe intelligence is something you can increase, then the same encounters become opportunities for growth. In one view, intelligence is something you demonstrate; in the other, it’s something you develop.

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The two self-theories lead down two very different paths—one that heads toward mastery and one that doesn’t. For instance, consider goals. Dweck says they come in two varieties—performance goals and learning goals. Getting an A in French class is a performance goal. Being able to speak French is a learning goal. “Both goals are entirely normal and pretty much universal,” Dweck says, “and both can fuel achievement.”8 But only one leads to mastery. In several studies, Dweck found that giving children a performance goal (say, getting a high mark on a test) was effective for relatively straightforward problems but often inhibited children’s ability to apply the concepts to new situations. For example, in one study, Dweck and a colleague asked junior high students to learn a set of scientific principles, giving half of the students a performance goal and half a learning goal. After both groups demonstrated they had grasped the material, researchers asked the students to apply their knowledge to a new set of problems, related but not identical to what they’d just studied. Students with learning goals scored significantly higher on these novel challenges. They also worked longer and tried more solutions. As Dweck writes, “With a learning goal, students don’t have to feel that they’re already good at something in order to hang in and keep trying. After all, their goal is to learn, not to prove they’re smart.”9

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8 Carol S. Dweck, Self-Theories: Their Role in Motivation, Personality, and Development (Philadelphia: Psychology Press, 1999), 17.

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9 Ibid.

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Indeed, the two self-theories take very different views of effort. To incremental theorists, exertion is positive. Since incremental theorists believe that ability is malleable, they see working harder as a way to get better. By contrast, says Dweck, “the entity theory … is a system that requires a diet of easy successes.” In this schema, if you have to work hard, it means you’re not very good. People therefore choose easy targets that, when hit, affirm their existing abilities but do little to expand them. In a sense, entity theorists want to look like masters without expending the effort to attain mastery.

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Finally, the two types of thinking trigger contrasting responses to adversity—one that Dweck calls “helpless,” the other, “mastery-oriented.” In a study of American fifth- and sixth-graders, Dweck gave students eight conceptual problems they could solve, followed by four they could not (because the questions were too advanced for children that age).

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Students who subscribed to the idea that brain-power is fixed gave up quickly on the tough problems and blamed their (lack of ) intelligence for their difficulties.

Note: much like people diagnosed with ADHD treat self-control

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Students with a more expansive mindset kept working in spite of the difficulty and deployed far more inventive strategies to find a solution. What did these students blame for their inability to conquer the toughest problems? “The answer, which surprised us, was that they didn’t blame anything,” Dweck says. The young people recognized that setbacks were inevitable on the road to mastery and that they could even be guideposts for the journey.

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Dweck’s insights map nicely to the behavioral distinctions underlying Motivation 2.0 and Motivation 3.0. Type X behavior often holds an entity theory of intelligence, prefers performance goals to learning goals, and disdains effort as a sign of weakness. Type I behavior has an incremental theory of intelligence, prizes learning goals over performance goals, and welcomes effort as a way to improve at something that matters. Begin with one mindset, and mastery is impossible. Begin with the other, and it can be inevitable.

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Mastery Is a Pain

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Each summer, about twelve hundred young American men and women arrive at the United States Military Academy at West Point to begin four years of study and to take their place in the fabled “long gray line.” But before any of them sees a classroom, they go through seven weeks of Cadet Basic Training—otherwise known as “Beast Barracks.” By the time the summer ends, one in twenty of these talented, dedicated young adults has dropped out. A group of scholars—two from West Point, another from the University of Pennsylvania, and a fourth from the University of Michigan—wanted to understand why some students continued on the road toward military mastery and others got off at the first exit.

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Was it physical strength and athleticism? Intellect? Leadership ability? Well-roundedness?

None of the above. The best predictor of success, the researchers found, was the prospective cadets’ ratings on a noncognitive, non-physical trait known as “grit”—defined as “perseverance and passion for long-term goals.”10 The experience of these army officers-in-training confirms the second law of mastery: Mastery is a pain.

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10 Angela L. Duckworth, Christopher Peterson, Michael D. Matthews, and Dennis R. Kelly, “Grit: Perseverance and Passion for Long-Term Goals,” Journal of Personality and Social Psychology 92 ( January 2007): 1087.

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As wonderful as flow is, the path to mastery—becoming ever better at something you care about—is not lined with daisies and spanned by a rainbow. If it were, more of us would make the trip. Mastery hurts. Sometimes—many times—it’s not much fun. That is one lesson of the work of psychologist Anders Ericsson, whose groundbreaking research on expert performance has provided a new theory of what fosters mastery. As he puts it, “Many characteristics once believed to reflect innate talent are actually the results of intense practice for a minimum of 10 years.”11 Mastery—of sports, music, business—requires effort (difficult, painful, excruciating, all-consuming effort) over a long time (not a week or a month, but a decade).12 Sociologist Daniel Chambliss has referred to this as “the mundanity of excellence.” Like Ericsson, Chambliss found—in a three-year study of Olympic swimmers—that those who did the best typically spent the most time and effort on the mundane activities that readied them for races.13 It’s the same reason that, in another study, the West Point grit researchers found that grittiness—rather than IQ or standardized test scores—is the most accurate predictor of college grades. As they explained, “Whereas the importance of working harder is easily apprehended, the importance of working longer without switching objectives may be less perceptible … in every field, grit may be as essential as talent to high accomplishment.”14

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11 K. Anders Ericsson, Ralf T. Krampe, and Clemens Tesch Romer, “The Role of Deliberate Practice in the Acquisition of Expert Performance,” Psychological Review 100 (December 1992): 363.

12 For two excellent popular accounts of some of this research, see Geoff Colvin, Talented Is Overrated: What Really Separates World-Class Performers from Everybody Else (New York: Portfolio, 2008), and Malcolm Gladwell, Outliers: The Story of Success (New York: Little, Brown, 2008). Both books are recommended in the Type I Toolkit.

13 Daniel F. Chambliss, “The Mundanity of Excellence: An Ethnographic Report on Stratification and Olympic Swimmers,” Sociological Theory 7 (1989).

14 Duckworth et al., “Grit.”

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Flow enters the picture here in two ways. If people are conscious of what puts them in flow, they’ll have a clearer idea of what they should devote the time and dedication to master. And those moments of flow in the course of pursuing excellence can help people through the rough parts. But in the end, mastery often involves working and working and showing little improvement, perhaps with a few moments of flow pulling you along, then making a little progress, and then working and working on that new, slightly higher plateau again. It’s grueling, to be sure. But that’s not the problem; that’s the solution.

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As Carol Dweck says, “Effort is one of the things that gives meaning to life. Effort means you care about something, that something is important to you and you are willing to work for it. It would be an impoverished existence if you were not willing to value things and commit yourself to working toward them.”15

Another doctor, one who lacks a Ph.D. but has a plaque in the Basketball Hall of Fame in Springfield, Massachusetts, put it similarly. “Being a professional,” Julius Erving once said, “is doing the things you love to do, on the days you don’t feel like doing them.”16

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15 Dweck, Self-Theories, 41.

16 Clyde Haberman, “David Halberstam, 73, Reporter and Author, Dies,” New York Times, April 24, 2007.

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Mastery Is an Asymptote

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To understand the final law of mastery, you need to know a little algebra and a little art history.

From algebra, you might remember the concept of an asymptote. If not, maybe you’ll recognize it below. An asymptote (in this case, a horizontal asymptote) is a straight line that a curve approaches but never quite reaches.

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the ultimate synthesis of a design was never revealed in a flash; rather he approached it with infinite precautions, stalking it, as it were, now from one point of view, now from another… . For him the synthesis was an asymptote toward which he was for ever approaching without ever quite reaching it.17

This is the nature of mastery: Mastery is an asymptote.

You can approach it. You can home in on it. You can get really, really, really close to it. But like Cézanne, you can never touch it. Mastery is impossible to realize fully.

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The mastery asymptote is a source of frustration. Why reach for something you can never fully attain? But it’s also a source of allure. Why not reach for it? The joy is in the pursuit more than the realization. In the end, mastery attracts precisely because mastery eludes.

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THE OXYGEN OF THE SOUL

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In the early 1970s, Csikszentmihalyi conducted an experiment in which he asked people to record all the things they did in their lives that were “noninstrumental”—that is, small activities they undertook not out of obligation or to achieve a particular objective, but because they enjoyed them. Then he issued the following set of instructions:

Beginning [morning of target date], when you wake up and until 9:00 PM, we would like you to act in a normal way, doing all the things you have to do, but not doing anything that is “play” or “noninstrumental.”

In other words, he and his research team directed participants to scrub their lives of flow. People who liked aspects of their work had to avoid situations that might trigger enjoyment. People who relished demanding physical exercise had to remain sedentary. One woman enjoyed washing dishes because it gave her something constructive to do, along with time to fantasize free of guilt, but could wash dishes only when absolutely necessary.

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The results were almost immediate. Even at the end of the first day, participants “noticed an increased sluggishness about their behavior.” They began complaining of headaches. Most reported difficulty concentrating, with “thoughts [that] wander round in circles without getting anywhere.” Some felt sleepy, while others were too agitated to sleep. As Csikszentmihalyi wrote, “After just two days of deprivation … the general deterioration in mood was so advanced that prolonging the experiment would have been unadvisable.”18

Two days. Forty-eight hours without flow plunged people into a state eerily similar to a serious psychiatric disorder. The experiment suggests that flow, the deep sense of engagement that Motivation 3.0 calls for, isn’t a nicety. It’s a necessity. We need it to survive. It is the oxygen of the soul.

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18 This study is explained in detail in Chapters 10 and 11 of Csikszentmihalyi’s Beyond Boredom and Anxiety, which is the source of all quotations here.

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And one of Csikszentmihalyi’s more surprising findings is that people are much more likely to reach that flow state at work than in leisure. Work can often have the structure of other autotelic experiences: clear goals, immediate feedback, challenges well matched to our abilities. And when it does, we don’t just enjoy it more, we do it better. That’s why it’s so odd that organizations tolerate work environments that deprive large numbers of people of these experiences. By offering a few more Goldilocks tasks, by looking for ways to unleash the positive side of the Sawyer Effect, organizations can help their own cause and enrich people’s lives.

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Csikszentmihalyi grasped this essential reality more than thirty years ago, when he wrote, “There is no reason to believe any longer that only irrelevant ‘play’ can be enjoyed, while the serious business of life must be borne as a burdensome cross. Once we realize that the boundaries between work and play are artificial, we can take matters in hand and begin the difficult task of making life more livable.”19

But if we’re looking for guidance on how to do this right—on how to make mastery an ethic for living—our best role models are probably not sitting around a boardroom table or working in the office down the hall.

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19 Csikszentmihalyi, Beyond Boredom and Anxiety, 190.

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Over lunch, Csikszentmihalyi and I talked about children. A little kid’s life bursts with autotelic experiences. Children careen from one flow moment to another, animated by a sense of joy, equipped with a mindset of possibility, and working with the dedication of a West Point cadet. They use their brains and their bodies to probe and draw feedback from the environment in an endless pursuit of mastery.

Then—at some point in their lives—they don’t. What happens?

“You start to get ashamed that what you’re doing is childish,” Csikszentmihalyi explained.

What a mistake. Perhaps you and I—and all the other adults in charge of things—are the ones who are immature. It goes back to Csikszentmihalyi’s experience on the train, wondering how grown-ups could have gotten things so wrong. Our circumstances may be less dire, but the observation is no less acute. Left to their own devices, Csikszentmihalyi says, children seek out flow with the inevitability of a natural law. So should we all.

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CHAPTER 6

Purpose

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THE PURPOSE MOTIVE

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The first two legs of the Type I tripod, autonomy and mastery, are essential. But for proper balance we need a third leg—purpose, which provides a context for its two mates. Autonomous people working toward mastery perform at very high levels. But those who do so in the service of some greater objective can achieve even more. The most deeply motivated people—not to mention those who are most productive and satisfied—hitch their desires to a cause larger than themselves.

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Motivation 2.0, however, doesn’t recognize purpose as a motivator. The Type X operating system doesn’t banish the concept, but it relegates it to the status of ornament—a nice accessory if you want it, so long as it doesn’t get in the way of the important stuff. Yet by taking this view, Motivation 2.0 neglects a crucial part of who we are. From the moment that human beings first stared into the sky, contemplated their place in the universe, and tried to create something that bettered the world and outlasted their lives, we have been purpose seekers. “Purpose provides activation energy for living,” psychologist Mihaly Csikszentmihalyi told me in an interview. “I think that evolution has had a hand in selecting people who had a sense of doing something beyond themselves.”

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Motivation 3.0 seeks to reclaim this aspect of the human condition.

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“As an emotional catalyst, wealth maximization lacks the power to fully mobilize human energies,” says strategy guru (and boomer) Gary Hamel.3 Those staggering levels of worker disengagement I described in the previous chapter have a companion trend that companies are only starting to recognize: an equally sharp rise in volunteerism, especially in the United States. These diverging lines—compensated engagement going down, uncompensated effort going up—suggest that volunteer work is nourishing people in ways that paid work simply is not.

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3 Gary Hamel, “Moon Shots for Management,” Harvard Business Review, February 2009): p. 91.

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We’re learning that the profit motive, potent though it is, can be an insufficient impetus for both individuals and organizations. An equally powerful source of energy, one we’ve often neglected or dismissed as unrealistic, is what we might call the “purpose motive.” This is the final big distinction between the two operating systems. Motivation 2.0 centered on profit maximization. Motivation 3.0 doesn’t reject profits, but it places equal emphasis on purpose maximization. We see the first stirrings of this new purpose motive in three realms of organizational life—goals, words, and policies.

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Goals

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Generation Y, the millennials, or the echo boomers. These young adults, who have recently begun entering the workforce themselves, are shifting the center of gravity in organizations by their very presence. As the writer Sylvia Hewlett has found in her research, the two bookend generations “are redefining success [and] are willing to accept a radically ‘remixed’ set of rewards.” Neither generation rates money as the most important form of compensation. Instead they choose a range of nonmonetary factors—from “a great team” to “the ability to give back to society through work.”4 And if they can’t find that satisfying package of rewards in an existing organization, they’ll create a venture of their own.

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4 Sylvia Hewlett, “The ‘Me’ Generation Gives Way to the ‘We’ Generation,” Financial Times, June 19, 2009.

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Take the case of American Gen Y-er Blake Mycoskie and TOMS Shoes, the company he launched in 2006. TOMS doesn’t fit snugly into the traditional business boxes. It offers hip, canvas, flat-soled shoes. But every time TOMS sells a pair of shoes to you, me, or your next-door neighbor, it gives away another pair of new shoes to a child in a developing country. Is TOMS a charity that finances its operation with shoe sales? Or is it a business that sacrifices its earnings in order to do good? It’s neither—and it’s both. The answer is so confusing, in fact, that TOMS Shoes had to address the question directly on its website, just below information on how to return a pair that’s too big. TOMS, the site explains, is “a for-profit company with giving at its core.”

Got it? No? Okay, try this: The company’s “business model transforms our customers into benefactors.” Better? Maybe. Weirder? Certainly. Ventures like TOMS blur, perhaps even shatter, the existing categories. Their goals, and the way companies reach them, are so incompatible to Motivation 2.0 that if TOMS had to rely on this twentieth-century operating system, the whole endeavor would seize up and crash in the entrepreneurial equivalent of a blue screen of death.

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Motivation 3.0, by contrast, is expressly built for purpose maximization. In fact, the rise of purpose maximizers is one reason we need the new operating system in the first place. As I explained in Chapter 1, operations like TOMS are on the vanguard of a broader rethinking of how people organize what they do. “For benefit” organizations, B corporations, and low-profit limited-liability corporations all recast the goals of the traditional business enterprise. And all are becoming more prevalent as a new breed of businessperson seeks purpose with the fervor that traditional economic theory says entrepreneurs seek profit. Even cooperatives—an older business model with motives other than profit maximization—are moving from the shaggy edge to the clean-cut center. According to writer Marjorie Kelly, in the last three decades, worldwide membership in co-ops has doubled to 800 million people. In the United States alone, more people belong to a co-op than own shares in the stock market. And the idea is spreading. In Colombia, Kelly notes, “SaludCoop provides health-care services to a quarter of the population. In Spain, the Mondragón Corporación Cooperativa is the nation’s seventh largest industrial concern.”5

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5 Marjorie Kelly, “Not Just for Profit,” strategy+business 54 (Spring 2009): 5.

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These “not only for profit” enterprises are a far cry from the “socially responsible” businesses that have been all the rage for the last fifteen years but have rarely delivered on their promise. The aims of these Motivation 3.0 companies are not to chase profit while trying to stay ethical and law-abiding. Their goal is to pursue purpose—and to use profit as the catalyst rather than the objective.

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Words

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Policies

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Say you take people who are motivated to behave nicely, then give them a fairly weak set of ethical standards to meet. Now, instead of asking them to “do it because it’s the right thing to do,” you’ve essentially given them an alternate set of standards—do this so you can check off all these boxes.

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making sure that all the boxes are checked off to show that what it did is OK (and so it won’t get sued). Before, its workers had an intrinsic motivation to do the right thing, but now they have an extrinsic motivation to make sure that the company doesn’t get sued or fined.10

In other words, people might meet the minimal ethical standards to avoid punishment,

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but the guidelines have done nothing to inject purpose into the corporate bloodstream. The better approach could be to enlist the power of autonomy in the service of purpose maximization. Two intriguing examples demonstrate what I mean.

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First, many psychologists and economists have found that the correlation between money and happiness is weak—that past a certain (and quite modest) level, a larger pile of cash doesn’t bring people a higher level of satisfaction. But a few social scientists have begun adding a bit more nuance to this observation. According to Lara Aknin and Elizabeth Dunn, sociologists at the University of British Columbia, and Michael Norton, a psychologist at the Harvard Business School, how people spend their money may be at least as important as how much money they earn. In particular, spending money on other people (buying flowers for your spouse rather than an MP3 player for yourself ) or on a cause (donating to a religious institution rather than going for an expensive haircut) can actually increase our subjective well-being.11

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11 Elizabeth W. Dunn, Lara B. Ankin, and Michael I. Norton, “Spending Money on Others Promotes Happiness,” Science 21 (March 2008).

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In fact, Dunn and Norton propose turning their findings on what they call “pro-social” spending into corporate policy. According to The Boston Globe, they believe that “companies can improve their employees’ emotional well-being by shifting some of their budget for charitable giving so that individual employees are given sums to donate, leaving them happier even as the charities of their choice benefit.”12 In other words, handing individual employees control over how the organization gives back to the community might do more to improve their overall satisfaction than one more “if-then” financial incentive.

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12 Drake Bennett, “Happiness: A Buyer’s Guide,” Boston Globe, August 23, 2009.

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Another study offers a second possible purpose-centered policy prescription. Physicians in high-profile settings like the Mayo Clinic face pressures and demands that can often lead to burnout. But field research at the prestigious medical facility found that letting doctors spend one day a week on the aspect of their job that was most meaningful to them—whether patient care, research, or community service—could reduce the physical and emotional exhaustion that accompanies their work. Doctors who participated in this trial policy had half the burnout rate of those who did not.13 Think of it as “20 percent time” with a purpose.

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13 Tait Shanafelt et al., “Career Fit and Burnout Among Academic Faculty,” Archives of Internal Medicine 169, no. 10 (May 2009): 990-95.

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THE GOOD LIFE

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Each year about thirteen hundred seniors graduate from the University of Rochester and begin their journey into what many of their parents and professors like to call the real world. Edward Deci, Richard Ryan, and their colleague Christopher Niemiec decided to ask a sample of these soon-to-be graduates about their life goals—and then to follow up with them early in their careers to see how they were doing. While much social science research is done with student volunteers, scientists rarely track students after they’ve packed up their diplomas and exited the campus gates. And these researchers wanted to study the post-college time frame because it represents a “critical development period that marks people’s transitions to their adult identities and lives.”14

Some of the U of R students had what Deci, Ryan, and Niemiec label “extrinsic aspirations”—for instance, to become wealthy or to achieve fame—what we might call “profit goals.” Others had “intrinsic aspirations”—to help others improve their lives, to learn, and to grow—or what we might think of as “purpose goals.” After these students had been out in the real word for between one and two years, the researchers tracked them down to see how they were faring.

The people who’d had purpose goals and felt they were attaining them reported higher levels of satisfaction and subjective well-being than when they were in college, and quite low levels of anxiety and depression. That’s probably no surprise. They’d set a personally meaningful goal and felt they were reaching it. In that situation, most of us would likely feel pretty good, too.

But the results for people with profit goals were more complicated. Those who said they were attaining their goals—accumulating wealth, winning acclaim—reported levels of satisfaction, self-esteem, and positive affect no higher than when they were students. In other words, they’d reached their goals, but it didn’t make them any happier. What’s more, graduates with profit goals showed increases in anxiety, depression, and other negative indicators—again, even though they were attaining their goals.

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14 Christopher P. Niemiec, Richard M. Ryan, and Edward L. Deci, “The Path Taken: Consequences of Attaining Intrinsic and Extrinsic Aspirations,” Journal of Research in Personality 43 (2009): 291-306.

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“These findings are rather striking,” the researchers write, “as they suggest that attainment of a particular set of goals [in this case, profit goals] has no impact on well-being and actually contributes to i ll-being.”15

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15 Ibid.

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When I discussed these results with Deci and Ryan, they were especially emphatic about their significance—because the findings suggest that even when we do get what we want, it’s not always what we need. “People who are very high in extrinsic goals for wealth are more likely to attain that wealth, but they’re still unhappy,” Ryan told me.

Or as Deci put it, “The typical notion is this: You value something. You attain it. Then you’re better off as a function of it. But what we find is that there are certain things that if you value and if you attain them, you’re worse off as a result of it, not better off.”

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Failing to understand this conundrum—that satisfaction depends not merely on having goals, but on having the right goals—can lead sensible people down self-destructive paths. If people chase profit goals, reach those goals, and still don’t feel any better about their lives, one response is to increase the size and scope of the goals—to seek more money or greater outside validation. And that can “drive them down a road of further unhappiness thinking it’s the road to happiness,” Ryan said.

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“One of the reasons for anxiety and depression in the high attainers is that they’re not having good relationships. They’re busy making money and attending to themselves and that means that there’s less room in their lives for love and attention and caring and empathy and the things that truly count,” Ryan added.

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