How To Incentivise Creativity

Should people in creative jobs be subject to competitive markets forces? Popular belief says no. But research suggests that competition, in fact, increases creative output - up to a point.

- Johan Fourie

Your company wants a new logo. Do you: 1) ask the top brand management firm for a few suggestions, 2) get two or three companies to compete in a tournament setting, 3) launch a national competition to get as wide a selection of entrants as possible?

The option you choose depends on your belief about the creative process. Ask any management guru about the factors that drive creativity and they’ll say something like: Creativity is an extraordinarily complex phenomenon almost entirely stimulated by intrinsic motivation instead of extrinsic pressure.

They might even argue that high-powered incentives may stifle creativity by crowding out intrinsic motivation. Creatives, they would say, should be left alone, free from competition, motivated by their own artistic commitments. Regardless of the number of contestants, the winner will always be the one with the most intrinsic motivation. You might as well go for the best firm (within your budget) from the start.

This is classic social psychology theory, which has gained wide traction in business schools and publications like the Harvard Business Review.

It is also not true.

Economists know that competition is the bedrock of a market economy, incentivising those who utilise their resources most efficiently. Those who cannot keep up with competitors are replaced by them. Yet the belief is widespread that creative enterprises – writing literature, performing an opera, designing a logo – shouldn’t be subject to competitive market forces.