The Wrong Incentives
The candle problem was created by Karl Duncker in 1945 as a cognitive performance test which tested an individual’s ability to problem solve in the face of functional fixity. Functional fixity is a cognitive bias that limits an individual’s ability to see a use for an object beyond its traditional use. The example most often given is that of a hammer. When we think of a hammer, we think of banging nails, but it has many uses, ranging from the mundane to the completely bizarre: a paper weight, a measuring stick, a hole digger, a back scratcher, the list goes on. Ultimately, functional fixity is a symptom of our brain taking shortcuts. In order to rapidly process the vast stimuli received by our brain at any given moment, it forms associations that help relieve the strain. The older we get, the greater the bank of shortcuts available to us, or the more established these shortcuts have become. Therefore, a 5 year old is likely to think much more creatively than a 75 year old because they have not lived long enough to firmly establish these shortcuts.
In the experiment, all individuals were given a candle, a box of matches, and a tray of pins on a table. They were asked to fix the candle to the wall in such a way that no wax would drop onto the table when the candle was lit. This inspired a series of attempted solutions: melting the wax with a match and sticking the candle to the wall, or attempting to pin the candle to the wall. Very few individuals saw the tray containing the pins as anything more than a way of storing the pins - functional fixity. The solution was actually almost painfully simple, pin the tray containing the pins to the wall and place the candle inside the box. Now that doesn’t necessarily prove functional fixity, maybe there were other reasons behind the lack of creativity. So, Duncker ran the experiment again but placed the pins separately beside the box. Now the rate of success increased 2-fold, we have our proof.
In 1962, Sam Glucksberg took Karl Duncker’s experiment one step further. He wanted to assess the impact of reward on creativity in problem solving. The participants were separated into two groups. Group One were told that the top 25% fastest times would be rewarded with a $5 prize and the fastest overall time would be rewarded with a $20 prize. Group Two were told that they were conducting the experiment to determine an average resolution time, no incentive was given. If you’re anything like me, you would expect the incentivised group to solve the problem quicker than the non-incentivised. They have something to gain. You would be wrong. It took Group 1 on average three and a half minutes longer to solve the problem.
What does this mean? - To solve this problem quicker, you would want participants to think creatively. This clearly proves that a monetary incentive achieves the opposite, it narrows our focus and douses our ability to think creatively.
As in the initial Duncker experiment, Glucksberg repeated the experiment with the pins separated from the tray. This time the results were as we would have expected them to be initially, the incentivised group performed better than the non-incentivised group. But why? When we have a simple task with a simple set of rules, we want to narrow our focus, in fact, creative problem solving becomes our enemy because we begin to over think the problem. This shows that the extrinsic carrot and stick incentive structure that the business world is based on, only actually works for the mundane, manual tasks that don’t require any creativity.
What incentives do we need?
If extrinsic performance based incentives don’t work, what does?
To get to those elusive Stages 4 and 5 that I mentioned in my Tribal Leadership article, we need to drill down into what intrinsically motivates us. By that I mean, how can we create an environment of self-motivation where the incentives come from within. Research finds that employee productivity increases with employee engagement and employee engagement is based on 3 key factors: Autonomy, Mastery and Purpose.
Autonomy is the need to dictate your own life and work. A person feels most motivated when they have control over what they do, when they do it, how they do it and who they do it with.
Mastery is the desire to get better and better at something that matters. We are motivated by improvement for the sake of improving - motivated by the process, not the goal.
Purpose is the yearning to do what we do in the service of something larger than ourselves. If a person doesn’t understand the reasons behind why they are doing what they are doing, they are not going to be very motivated.
How does this all relate to digital transformations?
As I have extensively discussed, modern digital transformations are built on extrinsic motivators. They are used as cost saving initiatives or profit enhancers, they don’t ask questions like what is the purpose of this transformation?; what areas do we need to master to achieve success?; to whom do we need to give autonomy to achieve success?
In my previous article, ‘What actually is a digital transformation?’, I spoke about the distinction between change and transformation. I concluded that transformation was the result of fundamental change. Now when I think of the candle problem, I see current attempts at digital transformation as being attempting to stick the candle to the wall by melting the wax, or using the pins to pin the candle to the wall; they are missing that edge of creativity that uses the tray, they are missing fundamental change. In other words, like in the candle problem, most organisations have all the resources they need right in front of them, it’s their execution of these resources that is proving the difference between success and failure.
Now I have already explored the holy grail of solutions to this problem in my exploration of Digital Factories in a previous article ‘Digital Factories - the incubators of agility’. But what I have learnt through maturity into this blog, is that such radical change is neither feasible nor realistic. Like I said, it’s better to simply use the resources already available. So, do we have any real-world examples to emphasise this?
Give up Control
Management is not naturally occurring, it’s a man-made concept. It’s great for compliance but if you want engagement and creativity, self-direction is better. If you look into the business world you can see lots of examples:
Atlassian - they run what they call ‘ShipIt’ days. This gives their employees the following 24 hrs to work on what you want. The next day, they present back to the team.
Google 20% Time - Employees are afforded 20% of their paid working hours to work on personal projects. Half of the new products in a given year come during 20% time.
Results only working Environment (ROWE) - employees can show up when they want, how they want. Full autonomy. Almost across the board, productivity and creativity went up and turnover went down.
If the prospect of transformation is too daunting, let’s start with little steps of change to see if we might stumble onto something revolutionary. Can we start by giving our employees 24hr ‘ShipIt’ days once a month? Can we then legitimise this by writing 20% time into employee contracts? Why are we so afraid of ruling out a ROWE?