Steve Levitt: Why incentives don't work. And how to REALLY motivate people

In this clip that Leaders in London kindly allow us access to, rogue economist Steve Levitt, author of Freakonomics, answers a question from the audience on whether incentives really motivate people. He gives a nice example of why cash incentives, bonuses based on targets etc. don't actually work in motivating and engaging people, and then moves on to Google as an example of how to build in engagement with a 'cultlike' culture in which people believe that what they are doing each day at work is important. Ignore his use of 'trick or cajole', as he is talking off the cuff and later his explanation is clearly based on people sincerely believing that the work they do each day is important, and that THAT is what motivates and engages people. He gives the example of Google giving their people 20% of their time to themselves - one day a week - to work on their own projects because they know that their shared belief in Google means they will deliver value from that time spent working on their own ideas. This clip (about four mnutes, I think) is a powerful reminder that culture may indeed be more powerful than strategy. And that a critical part of a leader's job is to understand and tap into what people feel is important and let them reflect that in the work they do every day. You can find out more about Leaders in London 2008 by clicking on that link. Yes, that one half a sentence back.