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3.2.1 Moving from Extrinsic to Intrinsic Motivation (Part 1)

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3.2.1 Moving from Extrinsic to Intrinsic Motivation (Part 1)

Welcome to Week 3 of 'Managing the Company of the Future'. We're almost at the halfway point of the course in terms of content now. This week, we'll learn about traditional and alternative forms of motivation and objective-setting and we'll find out how you can experiment with some of these new ideas in your own company.

The aim of the course is to provide you with a comprehensive framework for understanding both the traditional principles of management inside companies today as well as the alternative principles that are becoming increasingly important. It provides both theoretical and practical perspectives on the nature of management in today’s organisations.

Skills You'll Learn

Management Theory, Strategic Management, Leadership, Management

Taught By

Julian Birkinshaw
Professor of Strategy & Entrepreneurship

Transcript

[MUSIC]

In this segment,

we're going to talk about moving from extrinsic to intrinsic motivation.

In other words, we're going to be looking at the types of activities companies

engage in, in order to take a shift towards the,

sort of the right-hand side in terms of my, my overall framework.

Before we get into a couple of specific examples, here's a kind of a,

a puzzle, which you're going to ponder and, and discuss through the course room.

When studies are being done, looking at the drivers of both high

individual performance and indeed high organizational performance.

They show unambiguously that intrinsic motivation, and what I'm

calling the personal and social drive as a motivation, are higher performing

models than the classic model based on extrinsic motivation, pay for performance.

However, even though that is true, the vast majority of

companies continue to build their entire performance review system,

their entire bonus system, around extrinsic drivers.

Basically focusing on finding a way of giving people money in order

to link that up to the behaviors that they want.

So, the question is, why is that the case?

Why do we see such a gap between what the theory says on the one hand and

what the practice looks like on the other?

So clearly I'm not going to answer that question for

you right now we'll provide the answer later on in the course room.

But it's certainly something which is worth spending a bit of time on.

I mean, I've been hinting at the answer throughout.

So, this is not a big surprise, but I think it is worth kicking it around in a,

in a live discussion.

Let me give you two examples of companies that have

explicitly attempted to move to the, to the right side.

To the, towards, tapping much more into intrinsic drivers of motivation.

One is an American software company called TopCoder.

Many of you will not have heard of TopCoder.

It is it's a mid-sized company and

it's deliberately built on a very unusual set of principles.

Founded by a chap called Jack Hughes.

He had the bright idea that he didn't actually have to employ developers.

He didn't have to put people on his payroll,

as software developers because of a thousands of people around the world

who are happy to develop software essentially for

free, when they work in these so called open source software movements like Linux.

So he said to himself,

what is it that motivates people to join one of these software communities?

Well, they're clearly not doing it for the money.

What they're doing it for is the need for belonging.

Perhaps to be part of a community.

And particularly for the need for what we can call recognition.

They want, because most of them actually are, you know, typically young males.

They're very competitive.

Lots of testosterone.

They like to compete.

They like to joust.

They like to win.

A lot of them are gamers.

And what he figured out was that he could tap into that desire for recognition and

for victory by creating a series of tournaments, for developing software.

So rather than the traditional model which is where you have an army of

software developers and you break down the, the, the programming job into

a bunch of components, and you get people to develop the pieces of it.

He said to himself, what we need to do instead is to

break the software challenge into components, but then to put each of

those components out on a website as a miniature tournament or a competition.

And he would create these tournaments, where perhaps it would over the next week

or two, he would say, we want teams of people to compete to create

the perfect code, the best code possible to solve this particular challenge.

And we will give a prize to the team that comes up with the best code.

And so, obviously, they would then feverishly compete with one another and

they would end up having a winner announced and

that person would, or that team would, would get a prize.

They would actually get a financial prize, so

the, the teams who win actually do make money out of this.

And the other teams would not.

The teams would try again later.

So they had to be quite creative.

I won't go into details about how they designed these tournaments to

make sure that people continued to compete in them.

But at the heart of it was this logic that what drives programmers is

not a steady pay check, it's the desire to get recognition among one's peers.

So, on the course soon we'll find a link to a,

a detailed case study about TopCoder.

But hopefully you've captured the essence of it.

It's all about using the web to make work more intrinsically interesting.

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