5 reasons why money can’t buy progress

I am not, despite some recent discussions, opposed to money. I like money. Who doesn’t like money? But there is danger sometimes of seeing money as an absolute, something than universally incentivises, shapes behaviour, and supports progress. Money isn’t the root of all evil. But neither is it the root of all progress. It fact often it may be a relatively weak incentive to progress…and sometimes a disincentive.

Anyway, here are 5 reasons why money can’t buy progress. And since I can’t set my blog to music, I am just going to suggest you play this for a few seconds to get you in the right mood.

1) Cash rewards can be a disincentive to performance

“For simple, straightforward tasks, rewards work. And the bigger the incentive, the more they work.

When a task gets more complicated, and requires conceptual, creative thinking (like genuinely progressive tasks) autonomy, mastery and purpose are all much better incentives than money.

…And when the profit motive is detached from the purpose motive. Bad things happen.”

2. A Fine is a Price (not a disincentive)

Often we try to use money, or more often the removal of money, to drive better behaviour. More often the opposite happens, because paying money is an excuse for acting like a jerk.

Clay Shirky spoke on this subject last week at the MIT Media Lab, describing how schools have experimented with enforcing fines for parents who are late picking up their kids. Rather than reducing late pick-ups, this fine increased them – because suddenly it was about the cost, not the basic lack of humanity towards teachers who have been cooped up with your kids all day and want to get on with their lives. And then even when the fines are removed, people continue to act like jerks.

If you want a more visceral example, spend some time in New York restaurants. People’s blood will boil with rage if you fail to leave at least an 18.5% tip for your waiter. But it is also entirely normal for people to not say thank you when waiters bring them things. Because a fine is a price.

Clay Shirky, auditioning for inclusion in watch people jump

3. The balance sheet is a scorecard, not a business plan

Every great company that I have come into contact with has a clear vision or mission that comes before everyone else. For example Google exist to organize the world’s information (and not be evil.) And IKEA have the wonderfully Swedish vision of ‘Creating a Better Life for the Many People.’

These vision-led companies are of course insanely huge and insanely profitable. But they didn’t start with the balance sheet. Their healthy balance sheets simply reflect that they are well-run companies with a powerful economic vision. Any company that starts its business planning with the balance sheet will mainly go backwards. Because the balance sheet is a scorecard not a business plan (copyright, the smartest guy I know.)

The IK in IKEA - amazing at making money, more passionate about getting well-designed furniture in the homes of low-middle income families

4. The design constraint of ultra-affordability

It is so easy to be stupid when you have lots of money. When you have no money, you have no choice but to be very smart.

Now there is no denying that some degree of resource is essential to invention, and quite a lot of resource is often essential for true innovation – because to go really big, you need some support.

But it is no accident that Larry and Sergey started in a garage, using Lego as a key building component. Or, on the flip-side, that the fat cats of tech are being gobbled up by geeks locked in basements. Starting with the assumption that money is not going to solve the problem makes you focus on what is really going to solves the problem. ie, you.

Dammit...got to buy a garage...

5. The poor man has the best tunes

Quality of creative output is inversely proportional to relative wealth status. Or…it is in your interest to keep your favourite bands small, because once they get rich they won’t be able to make good music any more.

There is a big caveat here, which is that the creative process requires freedom, basic tools etc. And DOUBLE caveat – once you get back to the beginning of this century, this is a pattern that obviously falls over. It is fair to say you had to be rich to be Proust. Or Tolstoy. Or that you had to be at least able to support a lifestyle at a royal or ecclesiastical Court to make any music or drama in Europe for many centuries. Almost too many caveats to make this meaningful…

BUT there is certainly a trend in pop culture of character learnt in adversity, great work done as adversity turns into popularity, and then decadence as wealth sets in. Because extreme wealth is distracting, isolating, and destructive of motivation. Which is one of the reasons you can go from the intensity of the band at the top of this post to the artist at the bottom in a little over a decade…

About these ads

2 Comments

Filed under Uncategorized

2 responses to “5 reasons why money can’t buy progress

  1. There is no doubt that money as an incentive can lead to peverse results. You give some good examples above. Even supposedly economically rational bankers can’t get it right.

    However, is it the least worst option? Is the only catch all tool that we have that works on most of the pople, most of the time?

    You seem to be spending a lot of time at the MIT Media Lab recently and it is clearly proving to be an inspiration. (Definitely in the blogging sense, but I reckon more brodly too.) Are we going to get a post any time soon explaining why you are spending so much time there recently?

  2. In Japan, a waiter would be offended if you tipped him, because he does the best job he can because he has a sense of pride in what he does.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s