THE BLOG
04/26/2009 05:12 am ET | Updated May 25, 2011

When Money Doesn't Talk

Million-dollar bonuses handed out by failed companies like Merrill Lynch and AIG stir outrage for many reasons--not the least of which is that they are paid, in part, with taxpayer dollars--but they have an added sting right now because, elsewhere in America, not many people are getting raises or bonuses.

Which raises a question: If companies can't motivate people with money, how can they get the behavior they want from their people?

Here's one answer: Instead of motivating people or trying to coerce them, companies can inspire them.

So, at least, says my friend Dov Seidman, who is the CEO of a company called LRN.

"We cannot get performance out of people through carrots and sticks," he says. "We can inspire it in them through values and beliefs."

It's not just Dov saying this.

Rosabeth Moss Kanter, the Harvard Business School professor and former editor of the Harvard Business Review, has a book coming out called SuperCorp: How Vanguard Companies Create Innovation, Profits, Growth, and Social Good (Crown, September 2009). She writes about companies like IBM and Procter & Gamble "that have decided to manage through values, principles and a sense of purpose."

Such talk may sound squishy, but it isn't. I've seen people inspired by a sense of purpose and a desire to serve at a number of companies I've covered: They include Southwest Airlines, UPS, Timberland, Google, the theme parks at Disney and Herman Miller.

Dov and Professor Kanter spoke recently at LRN's Knowledge Forum, an event for the company's clients in Santa Monica, CA. ((Disclosure: LRN is a consulting client of mine. The company helps people do the right thing in the workplace, primarily through online courses about ethics and compliance.)

"This is the moment to turn to things that are more powerful than money. And more sustainable," Dov said. "Values. Ideas. Optimism. Inspiration."

He talked about Google and its famous mission--"to organize the world's information and make it universally accessible and useful." Now there's a reason to get up in the morning and go to the office.

It reminded me that Jeff Immelt, CEO of GE, has said that the biggest payoff of GE's eco-magination effort was that it made people feel better about working for GE.

The trick is to connect people who work at a company--no matter what they do--with the company's efforts to solve problems that matter.

Kanter told a story about P&G, which developed a product called PUR that was designed to make water safe for drinking in the developing world, where tens of millions of children die each year because they lack access to clean water. PUR was sold in tiny sachets, at a low price but "it was very hard to sell," she said. People didn't make the connection between the product and the health of their children. PUR was losing money, she said, but P&G felt an obligation to make it available. So the company set up a nonprofit in cooperation with NGOs like Care and World Vision and with USAID, in an effort to get the PUR packets into the field. You can read the rest of the story at a terrific website, Children's Safe Drinking Water.

"These creative partnerships," Kanter said, "were a result of having a company shaped by purpose, values and principles."

Here's a final example of people being inspired by coming together to accomplish something big and important: Wikipedia. Yesterday morning, I took a run along the Pacific Ocean and listened to a terrific podcast from EconTalk in which the host, Russ Roberts, interviewed a founder of Wikipedia, Jimmy Wales. Wales talked about many things--the Hayekian influence on Wikipedia, whether kids should use it as a research source (yes, so long as they are still in elementary school), its reliability (good) and its growth (slowing a bit).

I came away impressed, more than anything else, by the sheer scale of the volunteer effort that created Wikipedia, which has nearly 2.8 million articles in the English edition alone, all created by people writing without pay.

"It's been a good ride," Wales said.

Roberts asked him to elaborate a bit. Wales replied: "Where it hits me most is when I'm traveling. Just last week I was in the Dominican Republic touring community technology centers in the poorest areas... There were kids there using the Internet and they use Wikipedia every day. Kids living in shacks with tin roofs who would otherwise have very little access to knowledge and education. That's really rewarding."

Wales, who is 43, started Wikipedia in 2001 after a failed attempt to create an online encyclopedia using a centralized structure in which all the entries were assigned and vetted. By opening up the process--tapping into people's passions and their desire to make a contribution--he made possible the creation of something bigger and better than anyone could have imagined.

Why don't more companies generate passion like that from their people? I can't imagine a more sustainable source of competitive advantage.