DeLong and the short of it.

Sometimes, even those labouring under the yoke of the dismal science of Economics can have an interesting sense of humour.

Motivation

A lot of interesting stuff is being said about motivation these days. We have moved beyond the old socialist "rewards-are-irrelevant" thinking as well as the equally old capitalist "rewards-are-all-there-is" thinking on motivation. You can't expect people to turn up for work and put in more than their fair share of effort without reward, but neither does the simple carrot-and-stick philosophy work for too long.

Before I spew my wisdom on this, a couple of modern viewpoints on motivation would be worth looking at:

Author Dan Pink thinks financial incentives of the traditional kind do more harm than good on tasks involving creativity and cognition. He believes people are better driven by intrinsic motivation - the need for autonomy, mastery, and purpose.




Dan Ariely, the High Prophet of behavioural economics and predictable irrationality has done some work that studies the effect of incentives, and has come up with some similar answers.



Ariely's experiment indicates that at very high potential payoffs, average performance actually goes down.

Big banker bonuses anyone?

It's hard to think of those million-dollar banker bonuses actually leading to loss-aversion stress, but perhaps with their million dollar trophy girlfriends and million dollar mortgages and Manhattan lifestyles, it's not too
hard to imagine once you try.

So, high potential payoffs in the short term can be a real stressor, especially with human loss aversion thrown in and this has a provably negative impact on performance.

Does that mean that the traditional system of incentives needs to be discarded? Perhaps not fully. The point of rewards is to be just big enough to be noticed, and big enough to remove the incentive to deliberately underperform. Too little and too much seem to be equally bad here. Sizing the available reward just right would help. Goldilocks rather than Goldman Sachs, perhaps?

Rewards in kind, like paid vacations, can be better than "cold hard" cash, so at least part of the success reward could be in kind. This also removes the temptation to spend the reward before it's actually earned which lands people in loss-aversion-stress territory. In addition to sizing rewards, provide them in kind.

Traditional reward mechanisms must be supplemented, perhaps even supplanted by intrinsic motivation at the higher levels - where obscene bonuses have been the norm so far.

And how does one encourage intrinsic motivation to develop? One way is to create an organizational culture that emphasizes intrinsic motivation. For want of a better framework, let's adopt Dan Pink's - the three pillars of intrinsic motivation being autonomy, mastery, and purpose.


It's much harder than it seems - having seen organizations fall into the trap of control, hyper-standardization, and narrow-slicing of tasks, all in the name of efficiency, often the worst enemy of effectiveness. A system that lets people attain intrinsic motivation even at the cost of apparent inefficiencies is going to  deliver better results in the long term.

Even at the cost of seeming inefficiency, it will pay to drive teams to be self-directed, loosely controlled, less than perfectly standardized, and populated by people who identify with what the organization believes, not just what it does. 

Rule-driven bureaucracies as mistake-avoidance mechanisms are an obvious no-no. Systems that emphasize severe negative consequences for mistakes end up doing two things - raising stress levels, which we have seen is bad, as well as focusing energy on the avoidance of mistakes rather than positive results. Mistakes are the price that needs to be paid for allowing people to be autonomous, and also to gain mastery.  The temptation to avoid mistakes at all costs is the worst enemy of mastery.

In practice, any attempt to foster a culture of autonomy, mastery and purpose and hence intrinsic motivation will usually result in a battle against short-sighted efficiency and standardization imperatives. That battle, from experience, is likely to be harsh and difficult to fight.

Having won that battle and having established a culture that fosters intrinsic motivation, populating the organization with people of the right kind isn't trivial either. Both hiring and developing the right people in the organization need thought and organizational attention. People who really like doing stuff, though rare, can be invaluable. It would be difficult to hire people like that for money alone, though the positive monetary impact of their presence to the bottom line is indeed huge. Getting them excited would mean guaranteeing them a free run with few limits, and providing them a substantially, but not insurmountably, challenging problem to solve. Doing what it takes to get and keep them requires a good degree of organizational flexibility.

All this is something for entrepreneurs to look out for, and use as a competitive advantage. It does seem that it's easier to do at the start of an organization's life, and becomes increasingly difficult as it grows, unless it becomes part of the organization's "DNA", and it is willing to tolerate seemingly inefficient practices with a deeper purpose.

That having been said, here a note of caution is called for.


The applicability of these toy experiments to reality must not be accepted too uncritically. The Pepsi Challenge must live as a perennial reminder that quick experiments often give dramatically wrong results where humans are involved.


Research in this domain continues, and must be watched closely.

Snoop Dogg

Tip o' the Mad Hat to rapper Snoop Dogg.

It takes quite a bit to stagger the Mad Hatter these days, and this did. Trying to rent the whole country of Lichtenstein? Why didn't I think of that first?

Thank You BJP

Dear BJP, Thanks for calling a Bharat Bandh today on the most pressing and vital issue the country faces - petrol prices.

Lesser parties might have succumbed to the temptation of protesting against out-of-control food prices for the last year or so, but you chose to wait. Patiently.

When police and paramilitary forces regularly botch up anti-Maoist operations, and the Home Minister seems to be either out-of-control or dis-empowered, you resisted the temptation to protest.

When Manmohan Singh violated his pledge not to talk to our crypto-Jihadi neighbours until they'd punished the perpetrators of 26/11, it took all the strength at your disposal to do what you did. Nothing.

Finally, you had an issue worth your trouble. Petrol prices went up. You were moved to action. Lesser mortals may object that if you really cared about petrol prices, your government in Karnataka could reduce state taxes on petrol, which incidentally are among the highest in India.

You are made of sterner stuff than those who would listen to such trivialities. We are truly blessed to have a party like you be the primary opposition.

A tip o' the mad hat to you sirs.

People don't buy What You Do, they buy Why You Do It

Simon Sinek wants to communicate something rather simple, but powerful. The "what" and the "how" of what you do is interesting, but unappealing to most people. To really connect with people, you need to communicate the "why" - why you do things, what is you fundamental belief that drives you to do things.

People don't buy What You Do, they buy Why You Do It.

Successful examples of "why" communication that he cites are Apple, Martin Luther King and the like.

I'd add Obama to the list, since his "Hope" and "Yes, We Can" were powerful "belief" connections with people.

I'd also cite Apple as a limited counterexample. Apple-skeptics like the Hatter have a strong "belief" antipathy to Apple's closed model. Google gets a strong "belief" connection going with their "open" approach to Android, which helps them transcend their technical deficiencies and limited app store in the short term.

There is a theory of diffusion of innovation that divides people into

• Innovators (2.5%)
• Early Adopters (13.5%)
• Early Majority (34%)
• Late Majority (34%)
• Laggards (the rest)

For your idea to succeed, you need to go beyond the early adopters, and make inroads into the Early Majority. For that, you need to build "why" or a "belief" communication channels with them.

People don't buy What You Do, they buy Why You Do It.

So when you build an organization, focus on the "why". Rally people around a common belief or a common longing that they get to work towards through the organization.

When you go out to find customers, try to connect with them at a deep "why" and "belief" level. What strong beliefs do you have that underly your philosophy that would connect with your potential customers? Use that to define your statement of your existence to them.

In the words of the French author Antoine de Saint Exupéry:

"If you want to build a ship, don't drum up the men to gather wood, divide the work and give orders. Instead, teach them to yearn for the vast and endless sea."

An organization that yearns for the vast and endless sea will build a great ship.