In America $75,000 per year buys happiness. That is to say that before $75,000 there is a direct correlation between money and happiness; yet, money in excess of $75,000 does not bring additional happiness.[1] Even more fascinating is how Americans spend their money. The typical American uses 75 to 80 percent of his/her income to fulfill basic needs such as water, food, shelter, clothing, healthcare, and education, while those in developing countries spend well over 90 percent on basic needs. [2] One effect of this trend shows up in American nutrition. The entire focus of nutrition in this country has changed from making sure Americans get enough calories to ensuring that Americans do not consume empty calories. The most malnourished zones of the United States are those same places where obesity is rampant.  While this is unfortunate in many respects, the epidemic of obesity also signifies a landmark in our collective level of abundance. Furthermore, the 15% of our income that is discretionary goes a lot further than it ever did before. “Twenty years ago, every household owned a camera, a video camera, a CD player, a stereo, a video game console, a cell phone, a watch, an alarm clock, a set of encyclopedias, a world atlas, a Thomas Guide, and a whole bunch of other assets that easily added up to more than $10,000. Now, all of that comes standard on today’s smartphone, or can be purchased at the app store for less than $10.”[3]

There is no debate that our world is changing rapidly and that our level of abundance is increasing exponentially, but it is less obvious that our increasing level of abundance is changing our motivations as well, in a way that will transform management in the 21st century. To understand how our motivations are transforming, imagine for a moment that a generous billionaire gives you enough money to meet all of your monetary needs for the rest of your life. You are so excited that you take a two-year vacation to travel the world and celebrate. Now, take a moment, or an hour, to think of what you would do with the rest of your life? Many people respond that they would change very little or nothing about their lives. Other people imagine starting an organization to serve society. Most telling of all is that no one answers, “nothing.”[4] In the future, advances in agriculture, renewable energy, water filtration, robotics, education, and healthcare will allow hundreds of millions of Americans to fully consider this question and, most importantly, to act upon it. The consideration of this one question is transforming our collective motivation and the world we live in and will continue to do so throughout the 21st century.

Half a century ago, when psychology was mainly focused on fixing pathological problems, Abraham Maslow decided instead to study the lives of successful and self-fulfilled individuals; e.g., Albert Einstein, Fredrick Douglass, and Eleanor Roosevelt. He observed that only after an individual’s lower-level needs are satisfied can he/she focus on higher needs. For example, if a man spends the majority of his days hunting for his family’s next meal, he will see very little value in pursuing an education or preserving the environment. The need for food suppresses his higher needs. What’s more, Maslow’s Hierarchy shows us that when people’s lower-level needs are met, as is the case today in America, they focus their attention more on social, esteem and personal mastery needs; i.e., friendships, family, social, community and religious groups. They seek respect, pursue hobbies, try to make a difference in the world, and are driven by autonomy, mastery, and a higher purpose, and our changing motivations are changing the world around us. One notable change are the perplexing economic defeats of recent years: Wikipedia’s defeat of Encarta and Firefox’s defeat of Internet Explorer. Additionally, the fact that the free open-source operating system, Linux, runs one-quarter of all corporate servers, and Apache, the free open-source Web server software, runs half of all corporate Web servers is baffling because the incentive model suggests that such results shouldn’t even be possible. [5]  Why would well-paid professionals that already have jobs spend their personal time on voluntary projects for free? And, how are these products competing with corporate funded products, and winning? The answer is that this is the result of a transformation in our collective motivation. We are entering a realm of abundance that is yielding perplexing motivations and perplexing economic results.

In the 21st century, the commoditization of scale will move our society further up Maslow’s Hierarchy and will pose a threat to traditional corporate management. The benefits of scale are not going away; instead, the benefits of scale are being commoditized. “In today’s world, you don’t need to have scale to enjoy scale.” [6] The commoditization of scale was recently summarized in a Popular Science article by Peter Diamandis and Steven Kotler in an article called The New Age of Invention:

Amateur scientists and inventors now have access to tools exponentially more powerful and affordable than those a generation ago. They can transform ideas into physical products in a matter of days. And they can directly distribute those innovations—whether a new engine or an entirely new form of life—to a market of billions…DIY scientists and inventors are now using increasingly powerful tools to tackle challenges once reserved for governments and large corporations. They are delving into robotics, bioengineering, nanotechnology, manufacturing and aerospace design in the same way that hot-rodders in the 1950s remade their cars piece by painstaking piece. They are building unmanned aerial vehicles in their garages and creating customized life forms in their kitchens…More than two billion people are connected to the Web, and nearly any one of them can access most of the same sources a well-funded researcher can. They can receive expert advice on just about anything and outsource any job beyond their ken into a global supply chain of coders, developers, designers and parts manufacturers.” [7]

The most impressive member of this new do-it-yourself (DIY) generation is the 14-year-old boy, Taylor Wilson. He recently became the youngest person to achieve nuclear fusion, and he did it in his own garage.[8] We are truly entering a new age where DIY inventors are no longer reliant on powerful corporations to fulfill their passions, and this is creating a volatile economy for large corporations. According to the BCG article Adaptive Advantage, “The once strong correlation between profitability and industry share has now almost disappeared in some sectors…The probability that the market share leader is also the profitability leader declined from 34 percent in 1950 to just 7 percent in 2007.[9] Large firms can no longer rely on being the biggest as a strategic advantage. In the 21st century, even the largest corporations will need to develop a difficult to replicate, persuasive strategy that assumes that everyone has the same advantages of scale.[10]

In the 21st century, corporations will need to adjust to a new type of employee. In the future, the ubiquity of robotic, bioengineering, nanotech, manufacturing and aerospace technologies will have a greater effect on coming generations that the ubiquity of the camera had on this generation and that the ubiquity of the automobile had on hot-rodders in earlier generations. In the case of photography, advances in still and video photography and studio and editing software demonetized film and made it ubiquitous. As a result, a generation of DIY photographers and videographers emerged. Facebook, Instagram, Pinterest and YouTube have become their playground. A quick visit to any of these websites will give you a glimpse as to how ubiquitous, demonetized technologies in robotics, bioengineering, nanotech, manufacturing and aerospace will transform the capabilities and motivations of generations to come. Another way of putting it is this: In the 21st century, businesses must consider how they will manage generations of Bill Gateses, Henry Fords, Wright Brothers, Benjamin Franklins, Walt Disneys, and Charles Darwins because the new DIY generation will enjoy the level of abundance and the wide-array of cross-disciplinary hobbies that these men did. Walt Disney, for example, spent his free time building model trains, steam engines, drawing and animating, dancing, acting, and performing comedy. The Wright Brothers spent their free time bicycling, repairing bicycles, hang gliding, running a newspaper print shop, and designing their own printing press before ever pursuing their aeronautic ambitions. And, Charles Darwin spent his free time studying coral reefs, breeding pigeons, performing elaborate taxonomical studies of beetles and barnacles. He wrote papers on the geology of South America and spent years researching the impact of earthworms on the soil.[11] Generations of DIYers are following their passions just as these men did without the help of large corporations, venture capital firms, or banks. In 2011, the social fundraising website Kickstarter.com had over 30 million visitors, launched 27,086 creative projects and product ideas, hit a milestone of 1 million pledgers, and received almost $100 million in pledges. To put this into perspective, the 2011 fiscal budget for the National Endowment for the Arts is $154 million. [12] The undeniable fact is that Americans are less dependent on large corporations to fulfill their passions. In the 21st century, corporations will find it difficult to motivate the latest generations of workers with 20th century incentive systems. In fact this is already happening. Stories of high potential employees with low engagement at work are the norm in the corporate world, sparking the success of sitcoms like “The Office”. The Corporate Executive Board reported in 2010 that high-potential employees are increasingly disengaged and seeking new career opportunities. Some 25 percent plan to leave their current employers in the next year compared to 10 percent in 2006. About one in five identify themselves as ‘highly disengaged’–a three-fold increase since 2007.[13] As Americans become less and less dependent on large corporations to meet their needs and fulfill their passions, Americans are becoming less satisfied with corporate management techniques. In the 21st century, corporate management will be forced to align with Maslovian principles. While this transition will prove difficult and messy for businesses, one thing remains clear: those who do not change will be left in the 20th century.

The most innovative organizations are already developing a strategy beyond scale that appeals to a new kind of employee with impressive cross-disciplinary capabilities and complex motivations. Take Google for example: early on in Google’s history, it developed a program called Innovation Time Off. For every four hours engineers spend on official company projects, they are expected to spend one hour on their own pet project. According to Google’s Vice President Marissa Mayer, Innovation Time Off has led to 50 percent of all Google’s new products.[14] Another example of 21st century management involves the most awarded car manufacturer in the world, Toyota. At Toyota, every employee is required to spend hours per week as an analyst and problem solver individually and jointly improving Toyota’s manufacturing and business processes in a system that has been best described by the organizational theory expert Paul Adler as Democratic Taylorism. [15] Toyota’s bureaucracy enables every employee with the tools and authority to make the improvements that drive Toyota’s quality and success. Another example of 21st century management comes from a company that is consistently ranked as the most innovative in the world—Apple. Steven Jobs explained what makes Apple so innovative by describing why concept cars look so amazing, and yet, the final design usually looks so “blah”. The traditional production model, he explained, is a linear system where designers come up with a dazzling and innovative design for a car. At that point, the design is handed off to the engineers who figure that they can make the car with 70% of what the designers asked for. Then, they pass their engineering designs off to manufacturers who determine that they can do some of what the engineers asked for. Five years later, the original design has been watered down and the product released to the public looks almost identical to last year’s model. In contrast to the Linear Production Model, Apple has developed a Concurrent Production Model. At Apple, designers, engineers, manufacturers, and salespeople are expected to spend hours of their time working together to ensure that the product that is manufactured matches the original design of the product. This cross-disciplinary cooperation leads to the invention of new engineering and manufacturing techniques that adapt manufacturing to the original product design and not the other way around.[16] The process is time consuming and, just like Innovation Time Off, appears inefficient, but the results speak for themselves.[17] Beyond the corporate world, the MIT Human Dynamics Laboratory is rewriting the laws of business success in the same way that the Wright Brothers rewrote the physical laws governing flight. MIT researchers have invented an instrument called the Sociometric Badge, which is worn around the neck of test subjects like a name tag. The Sociometric Badge tracks the proximity, location, face-to-face interactions, and social signals of the wearer, but not her words. With only the information collected by the Sociometric Badge, researchers can predict the, with 89% accuracy, the success or failure of a business team and its hard-dollar productivity.[18] Even more importantly, the MIT research has the ability to change behavior and drive performance. For example, MIT researchers were able to make recommendations to Bank of America’s call center that saved $15 million per year at $0 cost.[19] In the same way that rewriting the laws of flight revolutionized the human capacity for flight, data analytics will revolutionize our capacity to produce business success. The innovative techniques that have been developed by Google, Toyota, and Apple are only the beginning. The more we apply data analytics and ingenuity to organizational design, the exponentially faster management will transform and the more necessary it will be for managers and companies to keep up.

The start of the 21st century will be a confusing place for most companies and managers. Scale will continue to be commoditized, employees will possess a multitude of cross-disciplinary skills, Maslovian Management will be the key to engagement, and innovation will be king in all industries. As the famed Management Guru Fredrick Herzberg put it, “money and benefits are simply hygiene factors.” “Good benefits and pay help keep people in a job, but more and more hygiene factors do not make people work harder. If you really want to motivate people, you have to go beyond hygiene factors and enrich jobs so that they are intrinsically motivating.” [20]  People need to be able to pursue mastery in a variety of disciplines, they need a degree of autonomy to pursue cross-disciplinary connections, and they need to feel as though they are part of a community that is contributing and giving back to the world. Those businesses that figure out how to do that for the current and coming generations of DIYers will be the businesses that will innovate and thrive in the 21st century.

 


[1] Kotler, Steven; Diamandis, Peter H. (2012-02-21). Abundance (Kindle Locations 4401-4404). Simon & Schuster, Inc.
[3] Kotler, Steven; Diamandis, Peter H. (2012-02-21). Abundance (Kindle Location 4406). Simon & Schuster, Inc.
[4] Kofman, Fred (2007-05-01). Conscious Business (p. 83). Sounds True.
[5] Pink, Daniel H. (2011-04-05). Drive: The Surprising Truth About What Motivates Us (p. 22). Penguin Group.
[9] Reeves, Martin ; Deimler, Michael S. (2012-01-25). “Adaptive Advantage: Winning Strategies for Uncertain Times” (Kindle Locations 66-67). The Boston Consulting Group, Inc.
[11] Johnson, Steven (2010-10-05). Where Good Ideas Come From: The Natural History of Innovation (p. 171). Penguin Group.
[14] Johnson, Steven (2010-10-05). Where Good Ideas Come From: The Natural History of Innovation (p. 94). Penguin Group.
[15] Liker, Jeffrey (2003-12-17). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer (Kindle Location 3021). McGraw-Hill.
[17] Johnson, Steven (2010-10-05). Where Good Ideas Come From: The Natural History of Innovation (p. 171). Penguin Group.
[20] Liker, Jeffrey (2003-12-17). The Toyota Way : 14 Management Principles from the World’s Greatest Manufacturer (Kindle Location 3927). McGraw-Hill.