“Social has already crested as an exciting cultural phenomenon. Yes, it will always be with us, but social will soon lose its status as Flavor of the Month. Google should be focused more on inventing what comes after social.”

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Where not to use extrinsic incentives: innovation

We now know what Page hasn’t been reading in the ten years while he has been waiting in the wings watching Eric Schmidt run Google. He hasn’t been reading Dan Pink’s book, Drive. 

If he had been reading that book, he would have learned that extrinsic incentives like money are good when the goal is clearly defined and doesn’t involve much thinking or creativity. When the goal involves innovation and creativity, then extrinsic drivers tend to be ineffective and even counterproductive.

What research shows is that once a basic level of remuneration is in place, it’s more effective to rely on intrinsic motivation and inspire people to achieve the goal, and then provide unprogrammed bonuses if they succeed brilliantly.

Extrinsic incentives–the favorite tool of traditional managers– are dangerous because they divert people’s attention from the point of what’s needed and instead focus attention on producing whatever “scores points”.

We see this happen over and over again in the financial sector when people are incentivized by money: they end up doing “whatever it takes” to make money, even risk bringing down their own firms and the entire international financial system as in 2007.

At Google, we can expect to see the new incentives push Google employees to “force social features in places where they don’t belong. A team tasked with some online service should focus on making that service awesome, not wrecking it with contrived social features.”

The big problem is that Page is chasing yesterday’s Next Big Thing, rather than inventing the future. As Elgan points out, “Social has already crested as an exciting cultural phenomenon. Yes, it will always be with us, but social will soon lose its status as Flavor of the Month. Google should be focused more on inventing what comes after social.”

To achieve that Google needs to be asking: who are our clients and how can we delight them? It’s not going to be by copying Facebook.