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Thousands of years ago, the human drive was focused on survival. We can call this drive, or operating system, Motivation 1.0. As society became more complex, so did our operating system. We came to realize that humans are more than just the sum of our biological urges; we developed a second operating system, Motivation 2.0, which was focused on external rewards and punishments. Harnessing this drive became essential to economic progress, especially during the last two centuries, as business saw workers as parts in a complicated machine. The bedrock assumption of Motivation 2.0, which is now deeply ingrained in our organizations and daily lives, is that the way to improve performance, increase productivity, and encourage excellence is to reward the good and punish the bad.

This operating system worked for routine tasks, but it’s incompatible with how we work in the twenty-first century. 

Consider: the largest and most popular encyclopedia in the world was created by tens of thousands of people who write and edit the articles for fun. They have no special qualifications and they are not paid a dime for their work. The conventional view of human motivation has a very hard time explaining Wikipedia.


Behavioral scientists divide what we do on the job into algorithmic tasks—those with set instructions and processes that can be outsourced or automated—and heuristic tasks—those that require you to experiment and create. In the twentieth century, most work was algorithmic; today more and more work is heuristic. And while extrinsic or external rewards and punishments can motivate someone doing routine work, they actually dampen the enthusiasm and creativity of someone doing the kind of creative, heuristic work on which modern economies depend.

Motivation 3.0 is the upgrade necessary for the smooth functioning of twenty-first century business.

NO MORE CARROTS AND STICKS The traditional reward-and-punishment system works fine in some settings but it’s a deeply unreliable predictor of human behavior. We need a new way to think about motivation. If you want to motivate a child to learn math, you might think it a good idea to encourage her with a payment for every workbook page she completes—but social science research has shown that while this may encourage her in the short-term, it will actually turn the task of doing math into a chore, and she’ll lose interest in the long-term. Tangible “if-then” rewards can wipe out intrinsic motivation, diminish performance, crush creativity, and crowd out good behavior. For artists, scientists, inventors, students, in fact everyone, intrinsic motivation—the drive to do something because it is interesting and absorbing—is essential for creativity. The economy is moving towards creative and conceptual forms of work, yet business is still clinging to the old “if-then” reward structures of extrinsic motivation. These external carrots not only crush creativity and encourage short-term thinking, they can become addictive: pay your son to take out the trash one day, and he’ll never want to do it again without getting paid. Sometimes carrots and sticks work just fine: they are great for rules-based routine tasks with little intrinsic motivation or creativity but beware using rewards of any kind for non-routine conceptual tasks. In such cases, use rewards in a way that gives useful information about performance.

There is a body of work in the social sciences based around the concept of self-determination theory, the idea that humans have an innate inner drive to be autonomous, self-determined, and connected to one another. This approach lays the foundation for a new human operating system, Motivation 3.0, based on a new type of behavior: Type I.

Motivation 2.0 used and encouraged Type X behavior that was fueled by extrinsic desires, not intrinsic ones. Type X behavior cared less about the inherent satisfaction of a task and more about the external rewards that the task can bring.

Motivation 3.0 depends on and fosters Type I behavior, that is less concerned with external rewards and more with the inherent satisfaction of the activity itself. Type I behavior doesn’t disdain money or recognition, they are just not the most important considerations. Type I almost always outperforms Type X in the long run; and encouraging this behavior is better for people’s physical and mental well-being.

For professional success and personal fulfilment, we need to move ourselves and our colleagues from Type X to Type I.

As a boss, encourage Type I behavior by relinquishing control. Involve people in goal-setting; use non-controlling language (“think about” instead of “must”); and hold regular office hours when any employee can come talk to you about anything. Create diverse teams focused on collaboration, not competition. Animate with purpose, not with rewards. Encourage self-organizing teams. Build projects around motivated individuals.

Get compensation right: ensure internal and external fairness; pay people a little more than the market average; and make sure any performance metrics are varied, relevant to the company as a whole, and hard to cheat.

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