Traditionally, if you want something done by another person, you can simply commission it. In business, the most obvious example of this is the hiring of people who are paid to work on specific tasks. For particularly important tasks, incentives are built in to increase employees' motivation. There's even an old saying spoken in countless Principles of Management classrooms: “If you want something done in business, measure it. If you want something done well, monetize it.” This method has its roots in the early management practices of the industrial era; individuals were hired to complete specific tasks inside a highly structured factory. As the economy grew, despite its shift from industry to information, the old methods clung on, even in regard to managing creative work. That we commission and reward creative work the same way we do industrial work is part of the Incentive Myth, which is the larger notion that the output and quality of creativity can be increased with incentives. This is how the majority of for-profit businesses and even many nonprofit organizations work. But many organizations are departing from the Incentive Myth. These organizations have found little correlation between creative work and the size of an incentive. Instead, these companies and nonprofit groups alike are seeking out talented individuals and finding ways to encourage their creative genius without traditional incentives.

Jad Abumrad is one such creative genius. At least, that's what most people label him ever since he was awarded a MacArthur Fellowship in 2011. Abumrad is the creator of Radiolab—a radio program syndicated through National Public Radio—which he hosts with cocreator Robert Krulwich. Radiolab does not feel like a typical radio show. Each episode focuses around a concept, typically scientific or philosophical in nature. Each episode is elaborately stylized, blending together expert interviews and host dialogue with music and sound effects to create a unique listening experience. Abumrad, who majored in music composition at Oberlin College, started the show as a collaboration between himself and Krulwich. Their first major project was an audio experiment for This American Life that they created in 2003, but that never made it to air. The two refined their collaboration, and Radiolab launched its first official season on New York Public Radio in 2005. Six years later, Abumrad's first hint that he might win the MacArthur award came in the form of a vague email sent by the MacArthur Fellows Program director at the time, Daniel J. Socolow. Abumrad says that his first reaction was that he'd received a scam email, but in later conversations with Socolow, the reality of the award set in.

The MacArthur Fellowship is a grant given to individuals who are believed to have exceptional creative potential. Currently, the award is a five-year stipend of $100,000 per year. The recipients are chosen based not just on the creativity of their past work but on how that work demonstrates potential for future advances. The fellowship focuses on labeling its recipients as exceptionally creative, but most people in the media refer to the award as the “genius grant.” The MacArthur Foundation disagrees with this label, finding the concept of “genius” too limiting. Genius is a measurement of intelligence alone; what MacArthur seeks is creativity. Just as Radiolab episodes differ from traditional radio programs, the MacArthur Fellows Program is not run like your average grant program. In a traditional grant program, individuals or teams apply for a grant by completing a lengthy proposal outlining what funding they need, what they plan to do with the funding, and the results they expect to achieve. When a project is funded, there is an expectation that it will yield these results with very few surprises. The MacArthur Fellowship is different in two key ways.

The first is that MacArthur Fellows do not apply for a fellowship or grant. There is no specific proposal. Instead, they are nominated anonymously by a pool of people that the MacArthur Foundation keeps even more confidential than its list of nominees. The secret pool of nominators is ever changing. Nominators are chosen based on their expertise and familiarity with exceptionally creative people in their respective fields. Winners do not even know they were being considered until they are selected. Abumrad says that he was totally unaware of his nomination or selection when Socolow called him to verify the news. According to Abumrad's account, Socolow almost teased him, asking if he'd known anyone who had won the award.¹ “I'll give you a hint,” Socolow reportedly told Abumrad, “Their name starts with an A. The next letter is B. And the next letter is a U,” at which point Abumrad caught on.

The MacArthur Fellowship differs from traditional grants in another, more significant way. The $500,000 stipend is awarded with no strings attached and no obligation to spend the money in a certain manner. According to its website, “The MacArthur Fellowship is designed to provide seed money for intellectual, social, and artistic endeavors. We believe that highly motivated, self-directed, and talented people are in the best position to decide how to allocate their time and resources.”² The fellowship is designed to provide maximum freedom for recipients to follow their creative impulses. “It totally reverses the normal funder-recipient relationship,” Socolow told the Harvard Business Review in 2007.³ Instead of committing its grant recipients to specific projects that had to be approved ahead of time, MacArthur trusts that the award will be best used if the foundation steps back from the process entirely and gives its fellows maximum freedom to create.

The inspiration for this unique program has its roots in the very founding of the MacArthur Foundation. The foundation was started in 1978 upon the death and endowment of John D. MacArthur, a wealthy Chicago businessman. MacArthur chose the original board but provided no guidelines for it to follow. In one of its first meetings, the board began discussing an article by Dr. George Burch titled “Of Venture Research.” Burch's argument was that money should be awarded to researchers differently than was being done at the time. Burch believed that creative individuals should be given the freedom to think and act without having to convince an organization to fund them.⁴ In 1981, the board awarded its first set of stipends, and the tradition of the no-strings-attached MacArthur Fellowship was born. Since its inception, MacArthur has awarded stipends to an increasingly diverse set of fellows, including scientists, poets, historians, physicians, novelists, nonprofit leaders, musicians, anthropologists, and the aforementioned radio show host. Although the foundation does not require specific products or even reports from its fellows on what they've done since being awarded the stipend, the fellows have put their grants to good use writing new literary works, expanding their own research projects, funding programs that provide modular housing to the urban poor, and even remodeling an ancient monastery to serve as an international artists' residence.

The MacArthur Fellowship stands in opposition to the traditional process of nonprofit funding, but it also finds itself outside our commonly held beliefs about creativity, incentives, and productivity. Fortunately, many organizations appear to be taking cues from the MacArthur Fellows Program and have begun experimenting with a different model. In line with the research on creativity in the workplace, these organizations are experimenting with different methods for enhancing creative productivity. They're moving away from the industrial era thinking that inspired the Incentive Myth and moving toward new practices that stimulate employees to think more creatively. These new practices are having a dramatic effect on innovation.

During the height of the industrial era, the captains of industry were beginning to have problems with their crews. Factory work is often repetitive; the same series of tasks is repeated every few minutes, every hour, day after day. It was hard to keep individuals motivated to perform those tasks quickly and efficiently. At least until Frederick Taylor, the father of management science, did something about it. A factory manager and mechanical engineer by training, Taylor developed a system that he believed would better manage industrial labor. He argued that if people found work dull and unmotivating, the best way to improve performance was to attach a monetary incentive to it. Workers would become motivated by the prospect of earning more money. In the early 1900s, when Taylor was experimenting, much of the work he studied was industrial work, which lent itself to this incentive scheme. As society developed, however, the tools Taylor proposed did not. For a long time this wasn't an issue. Throughout the twentieth century, as more Americans traded in their factory overalls for button-down shirts, much of the work they were doing was still repetitive and routine. Especially in the lower levels of an organization, most white-collar work was still something that involved a little training and a lot of repetition. Taylor's methods of using monetary incentives to inject motivation into these roles still seemed effective.

But creative work is different. In the work Taylor wrote about, there were usually clearly spelled-out instructions, and the task was to follow those to the letter. In creative work there are no spelled-out instructions, and the tasks to follow have to be discovered first. This type of work is becoming more prevalent. According to a recent study by the consulting firm McKinsey & Company, close to 70 percent of job growth in the United States comes in the form of jobs for which instructions aren't known and problems still need solutions.⁵ These jobs call for creativity instead of repetitiveness. There is no routine, and there is often plenty of motivation inherent in the work itself. The presence of this inherent motivation makes Taylor's ideas ineffective.

Research on the role of incentives in creative work has been undertaken for almost as long as research on creativity itself. Some of the finer points are still being worked out, but the field is moving toward consensus on a few important issues. Motivation is one of the biggest influencers of creative expression; recall that it is one of Teresa Amabile's four components of individual creativity. As individuals become more motivated to solve problems or engage in creative work, the likelihood of an innovative solution increases. However, the type of motivation present seems to matter almost as much as whether or not it is present at all. Motivation comes in two forms, intrinsic and extrinsic. Intrinsic motivation comes from inside ourselves; it is the desire to complete a task for the simple enjoyment of the task. When we are naturally interested in our work, engrossed in it while we do it and thinking about it even when we're not, we are intrinsically motivated. Extrinsic motivation is the opposite. It is motivation that comes from outside ourselves—like an incentive. When we complete a task for some reason other than the task itself—say, a bonus check or a good grade—we are extrinsically motivated. As the research on motivation and creativity piles up, it appears to be leaning toward a conclusion: intrinsic motivation results in far more creative work than extrinsic motivation.

In one of the more popular studies that demonstrate this conclusion, a team of researchers led by Amabile examined the creativity of artists when working on pieces they chose to create as opposed to their creativity when working on commissioned pieces.⁶ Amabile and her team assembled a group of twenty-three painters and sculptors and asked them to choose twenty pieces of art they had created, ten of which they had been commissioned to create and ten of which they had created for the simple joy of practicing their art. The researchers took the 460 total works and displayed them to a panel of art experts, from museum curators to gallery owners to other artists. The panel was asked to rate the quality of each piece. They were not told who created the pieces or which pieces were created for money and which were not. They were just told to assess each piece individually. When the researchers calculated the rating results, they found that those pieces that artists had been commissioned to create were rated as significantly lower in quality than those pieces the artists created for the love of working on them. Although it's certainly possible that the artists working on commissioned pieces had some level of intrinsic motivation while at work, it's also possible that the presence of a payment for the work could have negated some of their intrinsic motivation, which in turn had a negative effect on the overall quality of the piece. This study demonstrates what Amabile calls the intrinsic motivation principle of creativity: “Intrinsic motivation is conducive to creativity; controlling extrinsic motivation is detrimental to creativity.”⁷ Amabile's explanation is that when extrinsic motivators like incentives are present, they divert the attention of the individual away from the work itself—there is too much focus on thinking of the money and not enough focus on creating. Think of how the artists in the study could focus entirely on their work when creating for themselves but also had to consider the demands and desires of clients for the pieces that were commissioned. Amabile's thesis is supported by forty years of research from another psychologist, Edward Deci, who found that the presence of certain extrinsic rewards could actually remove the intrinsic motivation that was already present in an individual.⁸ In certain conditions, incentives can actually block the motivation we need to do creative work.

This doesn't mean that people should never be compensated for their creative work. We all need a level of compensation substantial enough to avoid being distracted by our financial situation and to allow us instead to focus on being creative. Structuring that compensation for creative work is just more difficult than Frederick Taylor could have predicted. However, incentive and reward systems can be designed to avoid dampening intrinsic motivation. Amabile has even suggested that extrinsic motivators are not always detrimental; they just need to be in line with the intrinsic reasons for completing a task.⁹ Incentives that aren't perceived as a direct controlling mechanism—a carrot or a stick—can actually enhance intrinsic motivation. Incentives or rewards that are used as a form of recognition for quality performance seem to increase intrinsic interest in creative work. Moreover, rewards that enable people to work on something they are naturally interested in have an even greater effect.

Think about the MacArthur Fellows Program, which offers a monetary prize based on past creative work. The fellowship itself is a form of recognition, and the stipend allows the recipient to choose what to work on in the future. The MacArthur Foundation is adamant in emphasizing that the money is not a reward for past work, however. Instead, it views the fellowship as an incentive, as a means of encouraging even more creative work from its fellows. The award is an extrinsic motivator that is aligned with the fellows' intrinsic motivation. Obviously, it's difficult for an organization to copy the MacArthur Fellowship model. Few consultants would advise their clients to hand out sums of cash and trust that their employees will return the favor by pursuing creative work that will help the company turn a profit. However, some organizations have begun experimenting with something like the MacArthur model on a much smaller scale. These companies are giving “genius grants” to their people in the form of time off to tinker with intrinsically motivating projects and rewarding them when that work helps the company.¹⁰

The most famous of these “tinker time” programs can trace its history all the way back to 1925 and a man named Dick Drew. At the time, Drew was selling sandpaper.¹¹ He worked for a fairly large industrial products company, and his main job was traveling around demonstrating the effectiveness of his company's sandpaper products. Drew's work took him to a lot of auto body shops, where he noticed that most of these shops shared a common problem. When they were done making their repairs, shop workers would have to repaint the body of a car. If the car they were painting was two-tone, it was particularly difficult to repaint perfectly. Usually the shop team would paint the car entirely one color and then apply sheets of butcher paper to the places that they wanted to protect so that they could paint the rest of the car a second color and create a two-toned paint job. It was a smart process, but it had a flaw. When they removed the tape, it would remove some of the first coat of paint with it. The adhesive they were using was just too strong. They then had to repaint the damaged sections by hand, adding several man-hours to the job.

Drew's mind made a connection between the taped butcher paper on these cars and the sandpaper samples in his briefcase. Sandpaper is basically a combination of two elements, sticky paper and an abrasive. Glue is applied to one side of the paper and then dipped in crushed minerals. If the abrasive was never applied, however, the product was simply paper with a moderate adhesive on one side—which was similar to what these shop workers needed. When Drew returned to his office, he began to experiment with his sandpaper. It turned out that the glue used to make sandpaper, though weaker than what the body shops were using, was still too strong to help them. So he began to tinker with the glue's formula, trying to weaken the adhesive. Once he found the right adhesive formula, he still had another problem to solve: how to apply it to the paper properly. Without the addition of the abrasive, the paper had one sticky side exposed, which made it hard to package and sell, as the sheets would just end up sticking to each other.

It was around this time that Drew's manager intervened. Drew's boss, William McKnight, saw that Drew had spent a significant amount of company time over several months and had only produced a sticky paper that clumped to itself. McKnight ordered Drew to stop working on the project. McKnight saw the company as a sandpaper company, and told Drew that he needed to sell sandpaper or find another company to work for. Drew didn't listen. He stopped working on the project during company time but would often stay at work to continue his experiments long after everyone else left. Eventually, he found the solution to his packaging problem. Because the paper was only slightly sticky, it could be rolled up on itself like ribbon, and pieces separated from the roll when they were needed. Within less than a year of his initial idea, Drew had invented masking tape. Drew's product didn't just appeal to auto body shop workers looking for a better way to paint cars. It turned out that nearly everyone had a use for removable tape. Within three years of Drew's initial idea, his company, 3M, was selling more of Drew's tape than its sandpaper products.

McKnight never forgot how Drew had ignored his order to stop working on the project. He didn't punish Drew. Instead, he eventually reorganized the entire company around Drew's creative deviance. Shortly after he became president of the company in 1929, McKnight created a new policy: 3M's technical staff could spend up to 15 percent of their time working on projects of their own choosing without needing approval from their supervisors.¹² The rule became known as 3M's “bootlegging policy” and is still in place today. According to the former head of R&D for 3M, most of the company's core products emerged from time spent by bootlegging engineers.¹³ Spencer Silver and Art Fry's aforementioned invention of the Post-it Note in Chapter Two, for example, was made possible through the time allotted to them to bootleg. Although McKnight's policy predates the MacArthur Fellowship, it bears a striking resemblance to the philosophy behind the program.

Following in the footsteps of 3M, an increasing number of companies are experimenting with giving their employees “genius grants” of free time to work on intrinsically motivating projects instead of incentivizing them to do the work assigned to them. Australian software company Atlassian began to give its people twenty-four hours every quarter for such activity.¹⁴ Employees could work on whatever project they desired as long as it was outside the realm of normal work and as long as they committed to sharing their results the next day. Their experiments with free time generated numerous software bug fixes and product ideas. In fact, the program was so successful that Atlassian adopted a formal policy of giving employees 20 percent of the workweek for bootlegging time.¹⁵

Innovation powerhouse W. L. Gore uses a method similar to 3M but gives people slightly less bootlegging time. At Gore, associates reserve 10 percent of their time to pursue new, speculative projects. In fact, the Elixir guitar string project mentioned in Chapter Three actually began as a 10 percent time project for Dave Myers and two other Gore colleagues.¹⁶ They eventually convinced six other associates to join them, and after three years of working on the guitar strings as a side project, the team finally proposed the idea to the rest of the organization and transformed it into an official project. The same 10 percent of company time is allotted to scientists at Corning, a glassware company. At Corning's Sullivan Park R&D lab, scientists reserve 10 percent of their workweek for “Friday afternoon experiments” to pursue ideas that might seem slightly crazy.¹⁷ Scientists use the time to pursue offbeat ideas under the radar of their managers and also to resurrect projects their bosses might have killed.

The social media company Twitter holds regular “hack weeks”: employees are given an entire week to pursue an interesting project that is outside the regular domain of their job. Many work on new software fixes, but any project is fair game. For example, a few folks banded together and created a low-fi but hilarious recruiting video that quickly went viral. The hack week concept was so successful at Twitter that founder Jack Dorsey took it with him when he founded the payment processing company Square. At Square, hack week has birthed a wealth of great projects. The extension application Square Wallet, which makes it possible to pay vendors using only a smartphone, began as a hack week project, as did a wireless receipt printing method. But whimsical projects aren't off-limits either. One hack week, a team developed an application that allows Square employees to monitor the company pool table to see if it's taken or available for play. Another engineer figured out how to install a prepaid cellular phone inside a hollowed-out banana. Although it's easier to calculate the return on investment from a project like Square Wallet, the pool table app or banana phone project is just as important for inspiring and developing employees' creativity. Often during hack week, employees with great ideas but no experience in programming learn the coding skills they need to turn those ideas into valuable product fixes or extensions. So what if that learning happened while rigging up a video camera to monitor the pool table?

At Facebook, employees gather once a month for twelve-hour “hack-a-thons.”¹⁸ Everyone in the company is invited to pull a collective all-nighter from 8 pm to 8 am, during which he or she experiments with new projects. There are only two rules for participating in a hack-a-thon. The first is that the projects cannot be part of the person's regular work. The second is that the next morning, individuals or teams have to deliver a brief presentation about what they worked on and what they accomplished during their hack. Hundreds of people participate every month, and the morning is filled with presentations. Some people spend the night coding new applications. Facebook Chat began its life as a hack-a-thon project and eventually became a full-time job for its hacker. Others spend their time on experiments that seem less than useful at first. One team decided to hack an identification card reader and attach it to a keg of beer. When someone swiped her Facebook credentials, the card reader took a picture and posted it as a status update on the user's Facebook profile before allowing her to pour a beverage. Even though the idea seemed pointless to the hackers at first, those who saw their presentation the next morning found the technology useful for places other than bars. A similar technology is now being utilized at conferences and trade shows, where attendees swipe their name badges at vendor booths or other stations and the reader updates their status on Facebook.

Perhaps no company has taken the idea of autonomous work time further than 37signals, a software company that makes Web-based applications for businesses. In June 2012, 37signals announced that it would be giving all of its employees an extended stretch of time—an entire month—to experiment on whatever they wanted.¹⁹ Employees set aside everything in their normal work schedule except customer service and server maintenance. Although it took a few days for employees to adjust to their newfound autonomy, eventually they started tinkering with new ideas. Some worked solo for the entire month; others formed teams immediately or as the need for extra help arose. On July 11, the company reunited for “Pitch Day,” during which everyone shared the results of the monthlong experiment. One team presented a set of new customer service tools that was quickly appreciated and accepted. Another team developed a data visualization technique for better analyzing the way customers interact with the company's products. They solved the challenging problem of how to make their wealth of user data a source of insight. Not all pitches were accepted, but all of them were a source for new, innovative ideas. Jason Fried, cofounder of the company, has already resolved to make these experiments a regular part of how 37signals works. “How can we afford to put our business on hold for a month to ‘mess around’ with new ideas?” Fried writes, anticipating the most common question. “How can we afford not to? We would never have had such a burst of creative energy had we stuck to business as usual.”²⁰ Fried continues, “If you can't spare some time to give your employees the chance to wow you, you'll never get the best from them.”

In the traditional approach to managing employees, your people are paid to complete specific tasks, not to tinker with new ideas. Even when individuals in artistic industries are “commissioned,” there is usually a specific product the commissioner is expecting. These traditions are rationalized through the assumption that the higher the incentive, the better the work. They rely on the Incentive Myth. But programs like the MacArthur Fellowship are unique in that they don't ask for a specific project before awarding someone funding. The monetary stipend is beneficial, but the biggest benefit comes from the autonomy awarded by the foundation to its fellows. What many for-profit companies, from 3M to Twitter, share with the MacArthur Fellows Program is a belief that if they can identify talented, creative people with a track record of quality work, then they're better off allowing those people to work autonomously on projects that are intrinsically motivating. There is risk to this process, just as there is risk that giving $500,000 to a lone “genius” won't yield a single quality work. However, the research supports that the risk is well worth it. These organizations believe that the opposite approach, wasting money on incentive programs to produce artificial motivation and poorer-quality work, is even riskier.

2. MacArthur Foundation, “Fellows Frequently Asked Questions,” MacArthur Foundation, http://www.macfound.org/fellows-faq/ (accessed June 15, 2012).

3. Diane Couto, “Picking Winners: A Conversation with MacArthur Fellows Program Director Daniel J. Socolow,” Harvard Business Review 85 (2007): 121–126.

4. George E. Burch, “Of Venture Research,” American Heart Journal 92, no. 6 (1976): 681–683.

5. Bradford C. Johnson, James M. Manyika, and Lareina A. Yee, “The Next Revolution in Interaction,” McKinsey Quarterly 4 (2005): 25–26.

6. Teresa M. Amabile, Elise D. Phillips, and Mary Ann Collins, “Creativity by Contract: Social Influences on the Creativity of Professional Artists” (paper presented at the meeting of the American Psychological Association, Toronto, Ontario, Canada, August 14–18, 1993).

7. Teresa M. Amabile, Creativity in Context (Boulder, CO: Westview Press, 1996), 107.

8. Edward Deci and Richard Ryan, Intrinsic Motivation and Self-Determination in Human Behavior (New York: Plenum, 1985).

10. David Burkus and Gary Oster, “Noncommissioned Work: Exploring the Influence of Structured Free Time on Creativity and Innovation,” Journal of Strategic Leadership 4, no. 1 (2012): 48–60.

11. Rosabeth Moss Kanter, John Kao, and Fred Wiersema, Innovation: Breakthrough Thinking at 3M, DuPont, GE, Pfizer, and Rubbermaid (New York: HarperBusiness, 1997).

12. Daniel Pink, Drive: The Surprising Truth About What Motivates Us (New York: Riverhead, 2009).

15. Daniel Pink, “Reap the Rewards of Letting Your Employees Run Free,” Sunday Telegraph, December 5, 2010, 8.

16. R. Keith Sawyer, Group Genius: The Creative Power of Collaboration (New York: Basic Books, 2007).

17. Robert Sutton, Weird Ideas That Work: How to Build a Creative Company (New York: Free Press, 2002).

18. Tina Seelig, inGenius: A Crash Course in Creativity (New York: HarperOne, 2012).