Market Curiosity: Exploring Markets And Systems

February 1, 2011

Mauboussin’s excellent “Blaming the Rat: Incentives, Motivation, And How They Interact”

Filed under: Systems — Tags: — Jeff Fitzmyers @ 1:44 pm

I really enjoyed Mauboussin’s article.

For decades, psychologists believed that two kinds of drive were essential to human behavior. … biological [and] external… The idea is that if you reward someone for a certain behavior you’ll get more of it, and if you punish them you’ll get less of it. This type of extrinsic motivation is at the core of a lot of training techniques… But… some tasks provide intrinsic reward. One example is open content production … “the incentive to freely contribute largely comes from intrinsic motivation.”

The challenge is that intrinsic motivation only thrives when an organization fosters autonomy, a sense of mastery, and a feeling of purpose… Many popular management techniques—budgets, goal-setting, and financial reward systems—actually undermine the conditions that encourage intrinsic motivation…

For these individuals, money has little to do with satisfying material needs but is important as evidence of excellence…

Many activities have outcomes that are the product of skill and luck. Examples include sports, gambling, investing… In these cases, incentives should align with the process by which individuals make decisions, and not by the outcomes.

Trade for the love of it, focus on sticking to a proven decision making process, and eschew having goals like making ???% per month.

Feb 17: I have felt uneasy with the above graphic for a while: It’s incorrect in a way. What works is the union and supporter of what I love and what I’m good at. The article about JoeBen Bevirt’s flying turbine is really interesting to me. Doing what he loves and is good at made him at least $100,000,000.

2 Comments »

  1. […] Focus on the union of what you love and what you are good at. […]

    Pingback by Designing efficient societies… « Designing Efficient Societies — October 9, 2011 @ 9:58 pm

  2. […] Focus on the union of what you love and what you are good at. This creates people who are fulfilled, and less likely to fall for the con of others “helping” them out. […]

    Pingback by Designing efficient societies… « Designing Efficient Societies — October 13, 2011 @ 10:16 pm


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