You Choose: Money vs Purpose
Have you ever wondered why people play musical instruments on weekends? Why someone takes holiday to go do some photography? Why some skillful traders post insightful analysis for the public? Why someone spends evenings sacrificing their time to write informative articles? And all of that becomes peculiar especially without monetary incentive or economic benefit.
In our life, sooner or later we ask ourselves two fundamental questions: 1) What do we want to do and 2) Why do we want to do it? Instead of gazing into wishful future to seek answers, we can twist the questions to reflect on the present and ask: What are we doing and why are we doing it? Whether you are an investor, a trader, a business personality, an employee, an employer, a spouse, a partner, or in any other profession, all choices are followed by actions that have some motivations and barrage of reasons behind them. Turns out, there is surprising science dictating our unbelievably interesting and engaging motivations.
Money! It’s a dirty topic to talk about in general and especially in the UK. So let’s start with the fact: You cannot live without money and it is a basic need to sustain your life in this world. However, monetary reward, which is a form of an extrinsic motivator, is not always the best motivator. Exhaustive scientific research has been done on this topic but let’s use two studies to debunk the most prevalent industrial and societal logic of “Carrot and Stick” or “Reward and Punishment”. People believe that by rewarding something, you get more of the behavior you want. Similarly, by punishing something, you get less of the undesired behavior.
What science says:
Four top economists from leading institutes of the world, MIT, University of Chicago, and Carnegie Mellon University, conducted experiments at MIT on a group of students by asking them to perform various tasks. Challenges included cognitive activities like memorizing strings of digits, solving word puzzles, special puzzles as well as physical tasks like throwing a ball through a hoop. The performance was incentivized by three levels of rewards:
1. Small level monetary reward = satisfactory performance
2. Medium level monetary reward = medium performance
3. Top level monetary reward = top performance
That’s a normal paradigm, our society works in. The results were analyzed and the following conclusions came out of the study:
1. Higher the pay = better the performance: The rule worked absolutely fine as long as the task involved only mechanical work/physical labor
2. Once the task called for even rudimentary cognitive skill, a larger reward led to poorer performance
Surprise, surprise! The leading economists came to the conclusion that money loses the incentive edge as soon as even rudimentary cognitive skills are called for in a task. Sounds counterintuitive to what society and economics courses tell us. To test the credibility of the findings, the socio-economic influence over the experiment was then changed from higher economy class of MIT students to lowest socio-economic class of Madurai, rural India. Now, those monetary rewards meant a lot.
Here the monetary rewards reflected the amount equivalent to 2-week pay, 1-month pay, and 2 months’ pay. The outcome was:
1. Performance of the people offered the medium reward was no better than the people who were offered the small reward.
2. Lowest performing group of people were those offered the highest monetary reward. Higher monetary incentives lead to worst performance.
This may seem out of the ordinary but interestingly, these results have been replicated by various economists, psychologists,s and sociologists time and again. Money or other reward forms as a principle of “Do this and you will get that” work perfectly as long as the task is mechanical, routine, algorithmic task. When cognitive reasoning, critical thinking, problem-solving, creativity, or complicated interpretation is involved, these rules demonstrably fail. Give a student a prize for reading three books, and many won’t pick up a fourth, let alone embark on a lifetime of reading. Pay a child money to take out the trash and never again would he take it out for free. If anything, as soon as the money buzz is over, you will have to most likely increase the monetary value to get the same task done again.
A paradoxical role for money:
This is not to say that money becomes irrelevant. I have stated earlier that, money is always a baseline and underlying motivation for people to drive action in life. But, the curious thing is the paradoxical relation between money and motivation. Daniel Pink puts it succinctly:
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. The best use of money as a motivator is to pay people enough to take the issue of money off the table.
So, they are not thinking about money, they are thinking about work.
Intrinsic motivators:
Once this extrinsic baseline motivator is put aside, behavioral science points to the intrinsic motivators which lead to higher performance, not to mention personal satisfaction:
1. Ownership or Autonomy
2. Expertise or Mastery
3. Purpose
Let’s see these factors in practice.
Autonomy and Ownership: One of the best places to work in Australia is Atlassian. They have 24 hours ‘Shipit days’ throughout the year. During these four days a year, once per quarter, employees are told to drop their normal work and spend time on any creative project they can come up with total Autonomy and Ownership. They can choose whatever they work on and whomever they want to work with. All that is required is for them to share their experience the next day in a cordial get-together in the company. It is only one day per quarter….but unmanaged, undiluted, purely autonomous, and employee-owned one day. This has lead to an array of innovative outcomes and solutions for the company for both internal uses as well as in public products. Over fifty companies have now incorporated this strategy into their own development plan. Google calls its own version 20% time. Ownership or Autonomy is our desire to be self-directed: to direct our own lives. When we get that sense of self-direction or self-control in whatever we are doing, our level of satisfaction and productivity along with efficiency increases, resulting in better outcomes.
Mastery or becoming an expert is our urge to get better at stuff. We want to improve. We want to go higher than our current state. When I was in 7th grade, I got introduced to basketball. And I just loved it. Problem was that ball was too big for my hands and I used to break my fingers while trying to jump and grab it. I wasn’t that tall then either to add to the disadvantages. Being in a boarding school, the only unsupervised or unplanned time we had was the time on the weekends: in between breakfast, lunch, and dinner. And that was the time I had my autonomy. I used to take the basketball, gather some friends and go to one of the outdoor courts for practicing. There were many days when I spent 4 to 6 hrs alone in the court just practicing shooting in the rain and trying to get rebounds right. I improved and I improved significantly. I was the first kid in 8th grade who made it to the college team. In 10th grade I became junior team captain, then college team captain, and later University team captain too. There was no monetary incentive but what kept me at it was my desire to be good at it. When we get better at doing things we are interested in, that is satisfying! Mastering a skill, becoming an expert in some form of knowledge, improving, and gaining experience in activity, are examples of intrinsic motivation and once we find that interest, and have the autonomy, we put unwavering effort behind it.
Purpose: The biggest element in any success, and as a matter of fact leaving an impact on the world is, a Purpose. The world around us is undergoing a transformation as we live through it and even organizations are talking about what they term now as “Purpose motive”. They want to have some transcendent purpose. It provides a double benefit: makes coming to work better and is a better way to get the best talent. When you see crappy products, ethical flaws, and scandalous behaviors, bad services, uninspiring places, and leaders; the reason is that they have unmoored the profit motive from purpose motive. Their money or profit-oriented approach is no longer attached to purpose motive. Whether it is an organization or an individual, when profit is the paramount motive, great things don’t come from there anymore. You need to have a purpose to make an impact in your own life as well as in the life of others. The scale of impact can be from individuals to the whole world but it starts with one’s own self. Niklas Zennström (Skype founder) had a purpose to be disruptive but in the cause of making the world a better place. He was tired of all the phone bills he was picking from international calls. Steve Jobs (Apple) wanted to put a “DING in the universe”. That’s the kind of thing that might get you up in the morning and racing to go to work.
In the early ’80s, what if I had come to you with a business idea that I want to put together a bunch of people from around the world with highly skilled profile, who would voluntarily spend 20–30 hrs per week, for free, to build a product: you would have thought I was joking. And if I had told you that once the product is made, I will not sell it but give it to the world for free, you would have found me insane. However, this is exactly what happened and the world got LINUX, powering 1 out of 4 corporate servers in fortune 500 companies along with all top500 supercomputers; APACHE powering 67% of web servers; Wikipedia: one of the largest information resources maintained around the world.
You will find similar parallels around you in your sector if you look closely where people with skills are trying to make a difference already. Going back to the questions at the start of this article: WHY are people doing this? These technically sophisticated, highly skilled people, who have jobs and are getting paid to do highly sophisticated, technically challenging work. And yet, during their limited discretionary time, they do sometimes equally if not more, technically sophisticated work, or pursue some other economically non-beneficial interest, not for their employer but either for themselves or for someone else for FREE! The science is overwhelmingly clear: they seek to autonomously handle challenges with ownership, establish mastery and follow a purpose with making a contribution.
Define your purpose, not a goal:
We all want to succeed in something and everyone’s success looks different. However, success is a double-edged sword. One of the most peculiar lessons I learned in my life was on the very next day of my successful Ph.D. defense; the moment of success is too short and passes quickly while failure is long and penetrating. The long and arduous road of Ph.D. with the goal of getting a doctorate degree in a highly sophisticated and in-demand tech field did not satisfy me for more than a day. A new morning brought me back to the start of a new marathon with new challenges and problems. I realized that it was just one step forward towards a bigger purpose. Goals should be your pit stops, not destinations. Build a purpose, define it, think about it every day, and see it in your future. That is what will keep you moving on from goals and push for excellence. This is what will make you better every day.
If you look at the crypto Twitter, tech industry, or any other business around yourself, you can easily apply the theory and filter out those who are purpose-driven vs those who are profit-only driven. Generating income from knowledge is perfectly ok as you sell it to the audience/customers who are not affluent in your trait or need your product, but the world changes with more subtle purposes and visions. I see often two groups: 1) focused on gaining followers/customers to sell their product and make money only and 2) improving themselves, achieving mastery, and establishing an ecosystem for their followers while making money. I tend to resonate with the latter.
Before leaving…
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