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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Does More Money Motivate Higher Performance?

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One of my blog readers – Boaz Fletcher – sent me an awesome video this morning from RSA Animate.  It’s 11 minutes long and is a fascinating lecture by Dan Pink about The Surprising Truth About What Motivates Us.  I love the RSA Animate format – an artist animates the talk on a giant whiteboard in real time.

In this case Pink takes on the question of “Does More Money Motivate Higher Performance?”  In the first few minutes he shows that while this works for tasks requiring mechanical skill, this does not work for tasks that require even rudimentary cognitive skill.  In fact, in these cases there is an negative correlation between greater monetary reward and increased performance.  It’s counterintuitive, but the talk illustrates it beautifully with several examples that will appeal to any technology entrepreneur. 

There are several deeply insightful points including the notion that we crave autonomy and mastery in addition to simply making a contribution and getting rewarded economically for it.  Furthermore, if the “profit motive” gets unmoored from the “purpose motive”, bad things happen. 

Ultimately Pink makes a good case that as managers and entrepreneurs, we need to get past the ideology of using carrots and sticks to motivate people.  Grab 11 minutes and learn something important today.

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