Most of us believe incentives motivate most of us.
Reward the behaviors you want.
The way pro athletes are financially rewarded.
Penalize behaviors you don’t want.
The way pro athletes are fined for transgressions.
We believe incentives motivate our colleagues.
Even motivate our spouses, sons and daughters.
And that’s probably true up to a point.
But recent research suggests a flaw in this thinking.
The greater the reward, the more it may demotivate.
This could be caused by excessive fear of loss.
Neuroscientists offered cash prizes up to $100.
Participants had only to hit a video game target.
Higher stakes showed a drop in brain activity.
This was in the “rewards” area of our brains.
They read this as neurological “loss aversion”.
Some subjects feared losing the prize.
That led them to “choke”.
We have seen athletes choke with a game on the line.
We have seen others “take over” the game.
Great athletes take over rather than choke.
This has little to do with athletic ability.
At the pro level, all are exceptional athletes.
It’s the inner game that matters most.
What can we learn from this?
As leaders, we must pay attention to how others act.
Which ones rise to greater incentives?
Which ones choke on higher rewards?
Which ones excel when the game is on the line?
How do we ourselves react to greater risk?
Entrepreneurs are praised as great risk takers.
But many fear loss more than crave rewards.
Knowing this, measure your own risk tolerance.
Use Ben Franklin’s risk-benefit analysis model.
Do the rewards out number the consequences?
That can be our go signal to go for the gold.
If consequence outweighs reward, do the opposite.
This is what true leaders do every day.
It is the way they think and analyze future actions.
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