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In 1996, economists were puzzled by the success of Wikipedia, a free encyclopedia driven by volunteers, while Microsoft's paid, professional-driven encyclopedia seemed destined for success. This defied conventional wisdom about motivation.

Our societal "operating system" has evolved from survival-based motivation to a system centered on rewards and punishments, which fueled economic growth. However, this system, known as Motivation 2.0, is facing significant challenges in the 21st century.

The problems with Motivation 2.0 can be summarized as follows:

1. Organizing Tasks: Traditional incentives don't align with phenomena like open-source projects, where unpaid volunteers create valuable software. This challenges the belief that external rewards drive all productivity.

2. Thinking About Tasks: Humans aren't always rational wealth maximizers. Decisions are influenced by factors like fairness, purpose, and personal satisfaction, defying Motivation 2.0's assumptions.

3. Carrying Out Tasks: Human motivation is more complex than extrinsic rewards alone. Intrinsic motivation plays a significant role in economic activities.

These challenges highlight the need to reimagine Motivation 2.0 in light of these intricacies.

Work has evolved significantly since the era of Frederick Winslow Taylor, reshaping the foundations of Motivation 2.0. Work now falls into two categories: routine and creative. Routine tasks are diminishing due to outsourcing and automation, rendering external rewards less effective for them.

Work is becoming a more enjoyable endeavor, and the necessity for external incentives is waning. People actively seek work-like experiences during vacations, signaling a shift from viewing work as a disutility to a utility.

With telecommuting and flatter organizational structures, the need for constant employee monitoring has diminished. Self-motivation takes the forefront, mirroring the dynamics of open-source projects where contributors are self-directed.

Motivation 2.0 faces compatibility issues in the face of modern business models, changing economics, and the evolving nature of work. These challenges send a clear signal: a new approach to motivation is urgently required.

Studies show that extrinsic rewards, especially with conditions, undermine creativity and performance. Larger incentives don't always mean better outcomes. Excessive rewards can hinder creative thinking.

Intrinsic motivation, fueled by interest, challenge, and absorption, is crucial for creativity. Artists and scientists excel with intrinsic motivation, yielding superior results. Less rigid funding in science led to better outcomes.

Paying for blood donation can backfire, decreasing donations by half. Rewards should complement altruism, not replace it.

Mixing rewards with intriguing tasks is risky. Extrinsic incentives can harm motivation if they neglect autonomy, mastery, and purpose.

In the realm of extrinsic motivation, rewards can backfire, damaging goals and ethics, demanding higher doses, and encouraging shortsightedness.

Carrots and sticks have seven deadly flaws:

1. They kill intrinsic motivation.
2. They reduce performance.
3. They stifle creativity.
4. They push out good behavior.
5. They breed cheating.
6. They create addiction.
7. They promote short-term thinking.

In conclusion, the traditional system of motivation, known as Motivation 2.0, is facing significant challenges in the modern world. The evolving nature of work and the complexities of human motivation call for a new approach. Extrinsic rewards can undermine creativity and performance, while intrinsic motivation fueled by interest, challenge, and absorption yields superior results. It is crucial to consider autonomy, mastery, and purpose when designing motivational strategies. By reimagining motivation, we can create a more engaging and productive work environment.