In Obliquity, John Kay argues that many of our most important goals are best achieved obliquely rather than directly. For example, companies that try directly to maximize profits often fail whilst those that aim just to be good businesses succeed in narrow financial terms; Kay contrasts Lehmans and Enron to Boeing and Honda. The reason for this, he says, is that the world is complex, changing and unknowable and in such an environment flexibility, adaptation and evolution is superior to conscious design.
There is one implication of this that he doesn’t tease out sufficiently - that high motivation can be counter-productive.
By this, I don’t just mean the standard Yerkes-Dodson effect, that over-motivation can lead people to choke. Nor do I mean what Dan Pink says - that financial motivation can crowd out other motives such as creativity and altruism and crowd in venal ones such as cheating.
True as these are, I mean a third thing - that high motivation plus ignorance can equal disaster. If you’re heading in the wrong direction, driving fast merely takes you further away from your destination. For example, banks’ efforts to maximize profits led to the hunt for yield that caused them to collapse. Had they been less keen to maximize profits, they might have survived.
Conversely, a lack of motivation can be a road to success. There’s a scene in Worried about the Boy - which most of us from working class backgrounds will recognize - in which Boy George’s dad berates him for his lack of ambition and for not doing anything with his life. But in fact, dossing around in squats gave Boy George the style and the contacts that led to his subsequent success.
Econ 101 tells us that it’s a good thing to maximize profits or utility. But this is only true under conditions of full information - a condition which, in the real world, never exists. And second-best theory tells us that, in an imperfect world a single attempt to increase efficiency can take us further away from optimality.
Now, you might think this is trivial. It’s just a restatement of Herbert Simon’s satisficing.
Maybe. But there’s a message here which vulgar libertarians might find unpalatable - that we shouldn’t, perhaps, worry too much about policies which reduce incentives. High marginal taxes might deter bosses from undertaking reckless expansions. Nationalizing banks might lead to less pursuit of merely transient and illusory profits and hence greater macroeconomic stability. And allowing people to stay on the dole for long periods gives them time to find jobs for which they are suited.
So, could it be that the widespread emphasis upon motivation and incentives rests more upon misunderstood economics or simple moralizing than it does upon actual evidence?
There is one implication of this that he doesn’t tease out sufficiently - that high motivation can be counter-productive.
By this, I don’t just mean the standard Yerkes-Dodson effect, that over-motivation can lead people to choke. Nor do I mean what Dan Pink says - that financial motivation can crowd out other motives such as creativity and altruism and crowd in venal ones such as cheating.
True as these are, I mean a third thing - that high motivation plus ignorance can equal disaster. If you’re heading in the wrong direction, driving fast merely takes you further away from your destination. For example, banks’ efforts to maximize profits led to the hunt for yield that caused them to collapse. Had they been less keen to maximize profits, they might have survived.
Conversely, a lack of motivation can be a road to success. There’s a scene in Worried about the Boy - which most of us from working class backgrounds will recognize - in which Boy George’s dad berates him for his lack of ambition and for not doing anything with his life. But in fact, dossing around in squats gave Boy George the style and the contacts that led to his subsequent success.
Econ 101 tells us that it’s a good thing to maximize profits or utility. But this is only true under conditions of full information - a condition which, in the real world, never exists. And second-best theory tells us that, in an imperfect world a single attempt to increase efficiency can take us further away from optimality.
Now, you might think this is trivial. It’s just a restatement of Herbert Simon’s satisficing.
Maybe. But there’s a message here which vulgar libertarians might find unpalatable - that we shouldn’t, perhaps, worry too much about policies which reduce incentives. High marginal taxes might deter bosses from undertaking reckless expansions. Nationalizing banks might lead to less pursuit of merely transient and illusory profits and hence greater macroeconomic stability. And allowing people to stay on the dole for long periods gives them time to find jobs for which they are suited.
So, could it be that the widespread emphasis upon motivation and incentives rests more upon misunderstood economics or simple moralizing than it does upon actual evidence?
Hmm. How many dossers in squats go on to have multi-million selling albums then? 50%? 10%? 1%? Or one in 1000?
Boy George's dad may have been wrong, but how many parents have been right in similar circumstances?
Posted by: Jim | May 29, 2010 at 05:15 PM
I though it was obvious that I was using that as a concrete illustration of a more general principle - that youngsters who appear to be drifting are very often just finding out what they want to do. For example, my mum wasn't happy about me doing a masters degree, although it proved to be the route to a high-paying job.
Posted by: chris | May 29, 2010 at 06:15 PM
That's true Chris, but isn't Jim right to ask what happens on average? In geek speak: the relationship between motivation, ignorance and outcomes is going to have a lot of variance and it does look a bit like you're telling a story that describes one part of the distribution.
Posted by: Luis Enrique | May 29, 2010 at 07:55 PM
@Luis - but if you're going to be informationally complete then you need to factor in the costs of failure. Once that is done, the case for high motivation policies in banking (as an example) is clearly exploded.
Posted by: Metatone | May 30, 2010 at 03:55 PM
"...many of our most important goals are best achieved obliquely rather than directly..." Honestly, I don't think this is always the case. It is true though, that sometimes, while we are completely focused on a single goal, we make a lot of mistakes due to anxiety and due to the other aspects, that are being neglected when we are focused on a single aspect. However, when it comes to business both focus and motivation are the key to achieve goals. Otherwise, we are talking about luck, and that is another subject.
Thanks for sharing this worth reading post.
Posted by: Fred Kapoor | June 01, 2010 at 06:45 PM
sdfgd
Posted by: دار التميمي حمد | June 13, 2010 at 05:36 PM