GUY RAZ, HOST:
It's the TED Radio Hour from NPR. I'm Guy Raz. And today's show, the money paradox.
DANIEL PINK: Here's the thing, we like money. We love money. We love these incentives. They get our attention.
RAZ: This is the writer Daniel Pink. And he wrote a book about what motivates humans. It's called "Drive."
PINK: Is money the best motivator for encouraging high performance in all tasks?
RAZ: And the answer is...
PINK: And the answer is - absolutely not.
RAZ: Not.
PINK: Absolutely not at all things.
RAZ: How can that be?
PINK: Well, here's the thing. It's actually simpler than it seems at the outset. There's a certain kind of motivator that we use in organizations, in schools, in our lives. I call it an if-then motivator. If you do this, then you get that. If you do this, then you get that.
RAZ: So give me an example. What do you mean?
PINK: OK. Let's say you want somebody to stuff envelopes.
RAZ: OK.
PINK: OK. You're trying to motivate somebody to stuff envelopes.
RAZ: Right.
PINK: Not particularly interesting.
RAZ: No.
PINK: Not particularly cognitively complex.
RAZ: No.
PINK: Pay them per envelope.
RAZ: OK.
PINK: Absolutely no question about that.
RAZ: You got to pay them per envelope.
PINK: That's a way to motivate them...
RAZ: Yes.
PINK: ...To do the job.
RAZ: Because they'll do more envelopes.
PINK: Right. And here's the thing, and this is - there's some nuance here.
RAZ: But what if you come across something a little harder than stuffing envelopes? Like, what if you come across the candle problem?
PINK: What it involves is you give people three things. You give them a candle. You give them some matches, and you give them a box of tacks.
RAZ: A candle, some matches and a box of tacks. That's it. So we tried this experiment with a few people. We gave them the candle problem.
PINK: The question is - you need to affix the candle to a wall so that the wax doesn't drip onto the table
(SOUNDBITE OF RECORDING)
UNIDENTIFIED SPEAKER #1: ...Will not drip onto the table.
RAZ: So you can use the thumbtacks and - to sort of like press it up against the wall.
(SOUNDBITE OF RECORDING)
SPEAKER #1: ...Lighting the candle and wetting this entire side of the candle.
PINK: When I did this, I said, OK, I got this. What you need to do is you need to light the matches, melt the side of the candle so it becomes sticky. And then use that stickiness to adhere the candle to the wall.
(SOUNDBITE OF RECORDING)
UNIDENTIFIED SPEAKER #2: All right, so it's melting the candle. You're going to burn your fingers.
SPEAKER #1: I don't think it's going to work.
PINK: It just doesn't work 'cause the candle immediately falls off the wall.
(SOUNDBITE OF RECORDING)
SPEAKER #2: Awe.
PINK: And so what people eventually do - and most people end up solving the problem - is that they realize that what looks to be three elements - the box of tacks, the candle and the matches - is actually four elements.
(SOUNDBITE OF RECORDING)
UNIDENTIFIED SPEAKER #3: I think the box is helpful as a wax catcher. That's it's primary purpose.
UNIDENTIFIED SPEAKER #4: I agree with that
PINK: The tacks are a separate element, and so what they do is they position the candle in the box.
(SOUNDBITE OF RECORDING)
SPEAKER #3: If we support the candle in the box...
PINK: And use the tacks to tack the box onto the wall.
(SOUNDBITE OF RECORDING)
SPEAKER #4: And then use the box as the catcher of the wax.
SPEAKER #3: Right.
PINK: And that allows the candle to be affixed to the wall without dripping wax onto the table.
(SOUNDBITE OF RECORDING)
SPEAKER #3: Light the candle.
SPEAKER #2: Yeah. I'm trying.
SPEAKER #3: Oh.
SPEAKER #2: Oh, there you go.
RAZ: OK, this is not so simple. You have to literally think outside the box. So what happens if you add a little bit of money to the equation? Well, the psychologist Sam Glucksberg did just that. He tried it back in the 1960's, which is a story that Dan Pink told on the TED stage.
(SOUNDBITE OF TED TALK)
PINK: This shows the power of incentives. Here's what he did. He gathered his participants, and he said, I'm going to time you, how quickly you can solve this problem. To one group, he said, I'm going to time you to establish norms, averages for how long it typically takes someone to solve this sort of problem.
To the second group, he offered rewards. He said, if you're in the top 25 percent of the fastest times, you get $5. If you're the fastest of everyone we're testing here today, you get $20. Question - how much faster did this group solve the problem? Answer - it took them, on average, three and a half minutes longer, three and a half minutes longer. Now this makes no sense, right? If you want people to perform better, you reward them, right? Bonuses, commissions, their own reality show - incentivize them. That's how business works. But that's not happening here. You've got an incentive design to sharpen thinking and accelerate creativity, and it does just the opposite. It dulls thinking and blocks creativity.
And what's interesting about this experiment is that it's not an aberration, this has been replicated over and over and over again for nearly 40 years. These contingent motivators - if you do this, then you get that - work in some circumstances, but for a lot of tasks, they actually either don't work or often, they do harm.
RAZ: What explains that?
PINK: What explains it is the power of if-then rewards and the power of these kinds of incentives. We love them. They get our attention, OK. Our eyes widen and - but more important, our focus narrows. That's actually good for some things, but for a creative problem, it actually inhibits you.
RAZ: It's actually a bad incentive.
PINK: Right.
RAZ: To offer money, in this case, is a bad thing.
PINK: Yeah.
RAZ: And this idea has been tested in all sorts of ways - at the London School of Economics, at MIT, Carnegie Mellon, the University of Chicago. The list goes on and on. And every single experiment came up with the same answer - that money actually narrows our focus and restricts our creativity.
(SOUNDBITE OF TED TALK)
PINK: Let me tell you why this is so important. That routine, rule-based, left-brain work - certain kinds of accounting, certain kinds of financial analysis, certain kinds of program computer programming - has become fairly easy to outsource, fairly easy to automate. Software can do it faster. Low-cost providers around the world can do it cheaper. So what really matters are the more right-brain, creative, conceptual kinds of abilities.
Think about your own work. Everybody in this room is dealing with their own version of the candle problem. And for candle problems of any kind, the solution is not to entice people with a sweeter carrot or threaten them with a sharper stick. We need a whole new approach. The good news about all of this is that the scientists who've been studying motivation have given us this new approach. It's an approach built much more around intrinsic motivation, around the desire to do things 'cause they matter, 'cause we like it, 'cause they're interesting, 'cause they're a part of something important.
And to my mind, that new operating system for our businesses revolves around three elements - autonomy, mastery and purpose. Autonomy - the urge to direct our own lives. Mastery - the desire to get better and better at something that matters. And purpose - the yearning to do what we do in the service of something larger than ourselves.
RAZ: But, I mean, like, that feeling of ownership, which is great and I think everybody wants it, like, but, like, that doesn't pay for your mortgage or your...
PINK: That's why I say you've got to get the money right at the threshold.
RAZ: Yeah.
PINK: Guy, you know what? I'm going to give you full autonomy over everything that you do.
RAZ: OK. I take it.
PINK: I'm going to talk to you, every single day, about how important what you do is each day, contributes to this beloved, public radio network...
RAZ: Yeah.
PINK: ...And to the entertainment and edification of people around the country.
RAZ: Yeah.
PINK: But I'm going to pay you $5,000 a year. That's not going to work.
RAZ: No.
PINK: Right. Get the money right as a threshold, then move on to these other things.
RAZ: If we've known this - yeah, so, like, why are we where we are?
PINK: That's a really important question, and it's frustrating. And, I think, in business in particular - first of all, there are some signs that it's changing. And it's changing in smaller companies and in newer companies. OK. But if there is this evidence that says if-then rewards are not that effective for more complex, creative thinking, why do we keep deploying them for everything?
RAZ: Right.
PINK: Remember, these if-then rewards have been effective for a long time. What happened is that what people are doing has changed. And yet, how we're motivating them hasn't changed. And they're easier. They're totally easier. If I say, oh, I'm your boss.
And I say, hmm, what can I do to put Guy in the right position so he has sufficient levels of autonomy in the way that he wants? How can I come up with better mechanisms inside to give Guy feedback more regularly, information on how he's doing so he has a sense of making progress? How can I show Guy that what he does here every day makes a difference in our organization, makes a difference in our world? That's hard. If I say, hey, Guy, your ratings go up, I'll give you a $10,000 bonus...
RAZ: Yeah.
PINK: I just got Guy's attention.
RAZ: Yeah.
PINK: Guy's psyched. I walk back to my office, pat myself on the back for being a charismatic leader. And so these if-then rewards are really easy. And so I think for those reasons, we get seduced and, again, use them for everything rather than where they work.
RAZ: Can I still get the $10,000?
PINK: No.
RAZ: Daniel Pink. He wrote all about this in his book called "Drive: The Surprising Truth About What Motivates Us." Check out his full talk at TED.NPR.org. I want the $10,000.
PINK: We all want the $10,000. I want the $10,000.
RAZ: That'll motivate me.
PINK: Yeah.
RAZ: Yeah.
PINK: Why did I come in here today? Are you guys paying me?
RAZ: Uh.
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