Better Decisions For Entrepreneurs
Sophia, a passionate baker from Nicosia, turned her love for baking into a successful business with "Sophia’s Artisan Bakery." Initially driven by her intrinsic joy for creating delicious breads and pastries, her bakery quickly gained popularity. As she started receiving lucrative offers to supply baked goods for events, Sophia expanded her business, opening a second location and hiring more staff.
But as more and more money was flowing in, Sophia started feeling uneasy. Yes, she no longer had money troubles and, at this rate, could even enjoy early retirement. But did she still love what she was doing? Something was missing...
Sophia the baker may or may not be a fictional character, but her story is ever so familiar.
We throw ourselves into a project or career direction that we love, full of passion. We enjoy every minute of it, cherishing the joy and fulfillment this work brings us. Money is scarce at first but that’s ok, we have our intrinsic motivation driving us. Then, once success comes, something inside us shifts. We start feeling burdened and uninspired.
As entrepreneurs, we might rationalize this shift as caused by the increase in our responsibilities. More clients means more work. More staff means more management duties. More administration, more accounting, more stress etc.
But there’s another thing that happens that we are not aware of....
The crowding out of our intrinsic motivation
Studies show that when financial rewards are introduced or increased for an activity people already enjoy doing, they become less intrinsically motivated than before to perform that same activity.
Known as the overjustification effect, this tendency describes the shift of focus from personal enjoyment (intrinsic motivation) to the external reward (extrinsic motivation), which overshadows everything else, including any personal or social benefits.
Image credits: The Decision Lab
Why this happens
Central to the various explanations around the overjustification effect is self-perception theory – the idea that we learn about our likes and dislikes by observing our own behavior, and then making inferences from those observations. Put differently, we grasp our motivations post-activity: if we perform a task primarily for its inherent satisfaction, we recognize our choice. However, if we receive a reward for the task, we tend to think we did it solely for that reward.
Image credits: The Decision Lab
So what?
The effect is that when profits start pouring in our entrepreneurial venture, we might start believing that this reward is the primary reason for our engagement in that activity.
This change in self-perception of motivations stems from cognitive dissonance – we strive to be consistent within ourselves and are driven to make changes to reduce or eliminate an inconsistency. In the case of financial rewards, the more salient and tangible effects (increase in financial gains) dominate and, to regain our inner peace, we change our story to fit more closely with that narrative: we work for profits.
As a result, the enjoyment and self-fulfillment we get out of our work decreases, taking its toll on performance and satisfaction.
This is how financial success can act as a boomerang in the long-term for entrepreneurs.
Now what?
Overcoming the overjustification effect as an entrepreneur involves strategies (or habits, rather) to maintain intrinsic motivation and find a balance between external rewards and personal fulfillment. The underlying mindset is to embrace financial success as a by-product of your efforts, instead of the main driver.
Can you make it a habit to reflect on your initial motivation regularly? To remind yourself why you started this business and reflect on what you love about your work and what aspects give you the most satisfaction.
Can you make it a habit to celebrate your intrinsic achievements? To acknowledge and celebrate accomplishments that are meaningful to you, such as mastering a new skill or receiving positive feedback from satisfied customers. This also means setting such appropriate goals in the first place.
Can you make it a habit to take regular breaks to relax and recharge and keep your passion alive? This also involves delegating tasks that are less fulfilling to you and empower your team to take on responsibilities, allowing you to take time off, but also focus on what you love while working.
P.S. How motivated do you still feel about your work? What habits can you take up to rekindle the pleasure you get out it?
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