Wednesday, 9 June 2010

What Motivates Us?

Just the other day I had posted the review of some studies done by D. Ariely on the relationship between bonuses and performance. Today I found this great animation of some of the studies carried out in the field of motivation. Very fun to watch!

Apple to Enter the Ad Business

Apple recently reached the 1 billionth app sold on its App Store. The lucky guy who downloaded the billionth app won a $10,000 iTunes gift card, an iPod touch, a Time Capsule and a MacBook Pro. That's a nice way of gaining fidelity from customers! More recently the iPad was released worldwide and in a few moths the new iPhone will hit the markets. In a few words this means that people are going to download more and more apps. That's why Steve & Co. must have thought that it was worth milking the cow in as many ways as possible: for example, by entering the ad business.

Nowadays developers already put advertisements into their applications, but that's done in a kinda goofy and frustrating way. Every time you mistakenly press with your finger on one of those stupid banners contained in the apps you are ripped out of the app and taken into the browser into a page that you could not care less about. The result, as mentioned by Jobs himself, is that people do not press on the banners.

Apple decided to develop a way in which it could be possible to see ads by remaining in the app. The ads are going to be interactive, emotionally engaging and very easy to develop. Steve jobs recently showed in a presentation how the new ad platform is going to work; strangely enough the ad used for the demo was the ad for the new upcoming Toy Story 3 produced by Disney Pixar (Jobs sits in the board of directors) which as humbly admitted by Steve is "awesome" and "really good".

Developers will get the 60% of the revenues from these ads; the rest will probably go into Apple's safe. Given the huge number of apps sold by the Cuppertino company this may be a good move. Moreover, this is going to help developers to make some money so that they will keep developing applications, maybe make some money out of it and - most of all - prices wil remain reasonably low for consumers.

If you are interested in learning more about Apple's (well, Steve's) vision of the future you can give a look at the videos of this year "All Things Digital" conference (covered by yesterday's Wall Street Journal). Here Steve talked about why he believes the iPad is the first step towards the end of traditional PCs and about Apple's idea to enter the ad business. Also present at the conference were other big fishes such as Facebook's Mark Zuckerberg, James Cameron, Steve Ballmer, etc... . If you want to see the videos you can click here. Enjoy!

Monday, 7 June 2010

Big Bonus = Better Performance?

What's the relationship between pay and performance? Is it wise to pay executives with incredible bonuses? Higher pay equals more motivation? Dan Ariely, professor at Duke University and author of "Predictably Irrational" and most recently of the new book "The Upside of Irrationality" tried to answer these questions (and many others) with one of his nice experiments.

Imagine the following experiment: you are given six tasks to perform. All the tasks require a mix "creativity, concentration, memory and problem-solving skills". Each task lasts for some minutes; all together they last for about an hour. In the first condition you are told that if you do very well in the six task you will get the equivalent of one day of compensation. In the second condition you are given two weeks of compensation. In a third condition you are given, instead, five months of compensation!

Professor Ariely and his collaborators run this experiments in rural India (where the average person monthly spending is about $11). In this way they could perfom the experiment without "raising the eyebrows and ire of the university's accounting system", but still offer very meaningful rewards to the people involved.

The results showed that money can be a "double-edged sword". In fact more money are motivating you to perform better. But, this holds true up to a certain point. After a certain amount, big bonuses have a stressing effect: you feel like you have to give more but enter into a stressed state of mind and are not able to perform well anymore. As mentioned by Ariely in a recent interview on his book: "when it comes to creativity and problem solving and thinking and memory and concentration, it turns out you can't will yourself to higher level of performance. And instead, the high bonus actually got people to be very stressed."

Therefore, according to Ariely's experiments, the incredible bonuses executives are taking would not lead them to perform better. If you want to find out more about the relationship discussed here and learn much more about the way in which irrationality governs our life give a look to Dan Ariely last book: The Upside of Irrationality: the Unexpected Benefits of Defying Logic at Work and at Home.