Intrinsic motivation comes from within, such as when we engage in an activity or hobby for the pure satisfaction of doing it. That is the motivation that my less-than-perfect-test-scores student had. Extrinsic motivation comes from external goals (such as when we do a job to get paid). Some people might say they work because they want to make a difference and because their work means something; this is intrinsic motivation. Other people might say they work because they need the money; this would be extrinsic motivation. Most people work in organizations for both reasons: they like what they do, but they also want to get paid.

However, there is an ego-driven disconnect in how people view their own teammates’ motivation: most people believe they are motivated by intrinsic factors, but falsely assume that others are motivated by extrinsic factors. For example, 64 percent of attorneys report that they became a lawyer because it was their calling—an intrinsic motivation—but these same attorneys believe that 62 percent of their colleagues are motivated by money—an extrinsic motivation.

When we believe that others are extrinsically motivated, we tend to use material rewards to get them to do what we want them to do to the exclusion of intrinsic rewards. When we do this, however, a number of problems crop up. First, although the promise of external rewards can be temporarily satisfying, it ultimately requires a never-ending stream of extrinsic incentives to maintain that satisfaction. This is because people quickly adapt to extrinsic rewards and need more and more to feel satisfied. For example, suppose that you reward a team member with a bonus for meeting a difficult deadline. The next time you are involved in an engagement that has a tight deadline, the team member will expect a bonus reward and may even expect a reward larger than the previous one.

Second, over time, extrinsic motivation, in the absence of intrinsic affirmation, may very well undermine the employees’ own interest in their job. This is because they may come to believe that they only work for the money or extrinsic reward. Finally, offering only extrinsic rewards results in less persistent and more superficial processing of information.

Maarten Vansteenkiste and his colleagues set up an interesting comparison of how intrinsic and extrinsic goals affect motivation and performance in two groups of schoolteachers. One group was told that they could save money by learning how to recycle (extrinsic motivation). The other was told they could learn how to teach their students the value of recycling and help with the problem of excess waste in their community (intrinsic motivation). Otherwise, there were no differences in how the groups were treated. Their performance was measured by a self-report, in which they answered honestly how much of the information given to them on recycling they had read, what the quality of their personal contribution in a group discussion about recycling with others was, and whether they took advantage of learning more about the subject by visiting a recycling plant or going to the library. The teachers given the intrinsic goal showed more autonomous motivation (i.e., they did tasks in a proactive fashion without being asked), persisted longer at difficult tasks, and processed information at a deeper level than those who were intrinsically motivated. Best of all, their performance was superior in the test task. The message: find a way to connect to the intrinsic interest of people—at least if you want them to self-motivate, persist, think deeply, and perform well! Managers often fail to take advantage of the power of praise in motivating others.

Most people have heard the term cognitive dissonance, but they have not heard about the $20 versus $1 experiment. Leon Festinger, a psychologist and group expert, reasoned that if you had perfectly normal people do a really boring task, they could actually learn to love it—if you did not pay them very much. Sounds strange, right? Festinger had a large number of people turn wooden knobs—the most monotonous activity he could imagine—and he either paid them $20 or $1. Then, those folks had to tell another prospective participant how much they actually enjoyed doing the task. The $20 people said they hated the task and only did it for the money. However, the people who were paid only $1 actually grew to like the task! Why? The people who were paid only $1 could not tell themselves or anyone else that they did the task for the money, so they reasoned that they must be doing it because they loved it. Cognitive dissonance is the strong need for people to bring their beliefs into alignment with their behaviors: being paid only $1 for the boring task was disconcerting until the people doing it came to believe that they actually must like doing the task. By coming to such a conclusion, they resolved the dissonance. This also explains why people report loving volunteer work—clearly, they don’t do it for the money.

What is the impact of rewarding people with money or goods to the exclusion of praise and recognition? If leaders only offer extrinsic rewards for great performance, might this eventually lead people to devalue their own intrinsic interest? For example, if someone enjoys public speaking or helping others for the pure pleasure of the activity, could offering this person a reward or cash payment lead (but not inevitably lead) that person to be less interested in the task itself over time? To examine this question, Teresa Amabile studied artists who worked either on commission or for no commission. Amabile reasoned that artists who are hired or paid to produce artwork (i.e., commissioned) would be extrinsically motivated, whereas those who were not under commission worked for the pure enjoyment and self-fulfillment of doing their craft—and therefore, were likely to be intrinsically motivated. And indeed, the least creative projects were those produced by artists who were hired or paid, suggesting that intrinsic motivation might be undermined by extrinsic rewards.

However, it is foolish to think that people don’t want or need to be paid for their work! Employees’ expected reward for high performance increases their feelings of performance pressure, which in turn is positively associated with their interest in their jobs. Performance pressure increases intrinsic interest and leads to greater creativity. People who receive rewards for high performance feel more pressure, but they also have more intrinsic interest and exhibit greater creativity.

I am not suggesting that people should not be paid or given extrinsic rewards. The key is to tie extrinsic rewards to creative idea generation. Indeed, when youngsters are given rewards for creative performance, their creativity increases in subsequent tasks. In one study, the promise of a reward for picture drawing increased creativity if children had previously generated novel uses for physical objects, with or without reward. However, the promise of reward did not increase creativity if the children had been rewarded for using objects in conventional ways. The takeaway is that training in creative thinking conveys a desire for creative performance that responds positively in the face of reward. This reward-creativity relationship is strengthened when kids are given training in divergent thinking and when creativity is emphasized. The same is true for adults. Reward promised for creativity increases college students’ creative task performance. Employees who expected to be rewarded for high performance increased intrinsic job interest and made more creative suggestions at work. Apparently, when people expect rewards for performance, they are more self-determined.

Claudia Mueller and Carol Dweck reasoned that even praise could backfire under the wrong conditions. Mueller and Dweck noted that there are at least two ways we can praise others—we can praise their innate, raw talent or we can praise their effort and resolve. For example, suppose that a manager makes a successful presentation for a client. We could either praise that manager’s intelligence or we could highlight her exceptional motivation and effort. Intelligence and talent are largely immutable factors—not easy to take away, but also not easy to improve. They are fixed traits, so praise will not likely affect them. However, motivation and effort can be changed and improved. To test their hypothesis that praising intelligence might ultimately not be as motivating as praising effort, Mueller and Dweck studied 128 fifth-graders who were all tasked with solving ten Raven’s Standard Progressive Matrices—nonverbal multiple choice measures of the reasoning that is linked to overall intelligence. Some students were praised for their intelligence (fixed trait); others were praised for their effort (malleable trait). The results of the study demonstrate that praise for intelligence had more negative consequences for students’ achievement motivation than praise for effort. Students praised for intelligence cared more about performance goals than learning goals, compared with those praised for effort. Failure was particularly problematic for those praised for intelligence: when they failed at a task, they displayed less task persistence, enjoyed it less, thought they had less ability, and ultimately performed worse than children praised for effort. Also, children praised for intelligence described it as a fixed trait more than children praised for hard work, who believed it to be subject to improvement. The bottom line: people want to believe that they can continually improve and thus, focusing on effort and persistence are key for motivating the creative team.

In another investigation, people were either intrinsically motivated (told to focus on their personal enjoyment of a task), test-focused (told they would be evaluated), or both (told to focus on their own enjoyment and that they would be evaluated). Before the task began, each group engaged in a noncreative or creative pre-task. The noncreative pre-task was simply substituting one word for another in a paragraph. In the creative pre-task, people read about a dream someone had, and then discussed the dream with an analyst. Those who had engaged in the creative pre-task and were purely intrinsically motivated were more creative, motivated, and remembered the information five days later.

When was the last time you were so completely immersed in doing something that you lost track of time and found yourself engaged, interested, and even joyful? Psychologist Mihalyi Csikszentmihalyi refers to this state as psychological flow. Flow is a feeling of spontaneous joy, even rapture, while performing a task. When people experience psychological flow, they are thoroughly immersed in what they are doing and focused on the present (as opposed to the past or future). Most important, they have struck a balance between boredom and stress, such that they are completely engaged and challenged but not overcome with anxiety and fear.

What are the conditions of psychological flow? The good news is that you don’t need to be a theoretical physicist or ultra-distance runner to experience flow. Normal people can also experience flow if they:

• Have clear goals
  
• Get immediate feedback
  
• Experience deep concentration
  
• Focus on the present
  
• Take control
  
• Lose their ego
  

The critical thing is to balance the challenge that faces you with your skill level. If your level of skill is high and the challenge is also high, the conditions are right for flow. If the challenge exceeds your skill level, you will most likely feel anxiety. If you are highly skilled but not challenged, you will feel apathy and even boredom. Football analyst and former coach, Jon Gruden, experiences a state of mental flow every day. So excited about his work each day, Gruden plaintively asks, “Who needs sleep?” when he wakes at 3:15 and arrives at the office at 4 a.m. to watch game footage and practice films. When Gruden’s mentor advised him that football is not everything, Gruden remarked, “It’s my rhythm; it’s the beat that I go to.”

• Clear goals: First and foremost, the creative team needs to have absolutely clear goals. A sense of purpose and mission is paramount. For example, consider the creative team at Charter House Innovations, a furniture manufacturer that started out by providing interior furnishing to the quick service industry, such as McDonald’s and Burger King. That led to hotels. Many furniture companies would be happy supplying hotels, but the company took it one step further and, in an unorthodox move, provided its own hotel to allow the team to maximize their creative potential. The team tested everything that would go in the guest rooms; it soon discovered that the beds were not comfortable, so Charter House then starting selling the beds that went into the hotels—after a team member tested several beds at her own home!
  
• Immediate feedback: For a state of team flow and complete engagement to occur, the team needs to get immediate feedback. Too often teams work without any indication of how they are doing, or feedback is delayed and muted. Conversely, teams who are positioned to get immediate results can quickly make revisions and changes. For example, to help Parkinson’s disease patients, doctors teamed up with software developers at the University of Maryland to develop state-of-the-art technology that provides real-time feedback on a patient’s progress. Because the software immediately translates a patient’s movements onto a computer screen, doctors can alter the patient’s therapy instantaneously.
  
• Deep concentration: The team needs to be able to concentrate deeply. It is important that the team not be distracted or diverted from their task. Complete engagement requires minimizing extraneous interruptions. For example, Harmon.ie, a software company in California, found that nearly 60 percent of employee work interruptions involved social networking, e-mail, or text messaging. To limit the distractions, some companies have instituted a No Facebook Friday rule to help teams focus on their work.
  
• Focus on the present: Too often, teams drift into discussions of the past or hypothetical discussions of the future. To experience true flow, teams need to live in the present. Larry Page, Google’s CEO, keeps his staff focused on the tasks at hand by mandating that meetings run no longer than fifty minutes. Page says that having meetings go longer means having to allow for a bathroom break, which would break the focus of the here and now.
  
• Control: Teams experiencing psychological flow are in control rather than being controlled. Practically, this means they are empowered and have assumed responsibility for their work.
  
• Loss of ego: Finally, team members experiencing psychological flow have to lose their egos. The key is the mission and the goal, not their personal agendas. History was made in August 2012 when the US 4×100 relay team of Carmelita Jeter, Allyson Felix, Tianna Madison, and Bianca Knight raced to Olympic history, winning the gold medal and setting a new world record. Their success followed sixteen years of stunning failures by the US women’s team. Tellingly, their coach explains the need for putting egos aside, “I don’t care if they like each other, but for thirty-seven seconds, I need them to love each other.”
  

If you could spend one hour doing something that could guarantee that your creative team would remain motivated and engaged what would you do? Consider the following.

Have you ever wondered how your moods affect your motivation? And your creativity? And how your mood affects those of people around you? In general, the research suggests that positive mood is associated with greater creativity. Indeed, there is a strong, positive linear relationship between positive mood and creativity. Perhaps the most persuasive evidence is the result of a meta-analysis of sixty-two experimental and ten nonexperimental studies that evaluated the relationship between mood and creativity. The results indicate that positive mood enhances creativity, and the strength of the effect is contingent on the comparative or referent mood state. In other words, if you are naturally cheerful, then positive mood won’t have as much of an impact as it would for a person who is usually neutral.

If you are curious about your own moods, think about which of the following words describe you most accurately:

Interested, excited, strong, enthusiastic, proud, alert, inspired, determined, active, and attentive indicate positive mood. Conversely, distressed, upset, guilty, scared, hostile, irritable, ashamed, nervous, jittery, and afraid all indicate negative mood. In my research with Cameron Anderson at the University of California, Berkeley, we measured the chronic (daily) moods of people engaged in conflict and negotiations using the words above. We found that powerful negotiators were particularly contagious—meaning that their moods spilled over to affect those they were dealing with. In addition, their moods affected whether they were able to craft creative win-win agreements in complex negotiations. In short, unhappy leaders were more likely to negatively rub off on others. The implications for creative collaboration are pretty dramatic: mood undeniably affects mental processing, and our moods have a measurable impact on others. Further, the more power, status, and influence we have, the more contagious we are with regard to our mood. Some leaders are keenly aware of how much their personal state of mind and mood affects their employees. For example, Gary Burnison, CEO of Korn/Ferry International, the world’s largest executive recruiting firm, noticed that when he was having what he calls a “gray day,” his employees started to wonder if they should be concerned too. To compensate, Burnison began to pay more attention to how he talked and conveyed messages to employees in meetings. As a start, he used fewer PowerPoint slides, which he thinks did not come across as positive, and instead concentrated on conveying a positive tone when talking to his staff. Burnison’s intuitions are spot-on. Indeed, people who witness authority figures acting in a rude way are less creative. And unbridled anger is as injurious as “smoking a pack of cigarettes each day.” Moreover, witnessing rudeness in one’s organization decreases citizenship behaviors and increases dysfunctional ideation (negative, ruminating thoughts). The reason is that rude people put most of us in a bad mood.

Cultivating a positive workplace pays off. In another study of 222 employees in seven companies, measured positive affect was correlated with greater creativity in an organization. Positive affect is a precursor to creative thought, and often the incubation period is up to two days. That means that the cognitive-neural pathways stimulated by mood last for over forty-eight hours. Stated another way: if you are in a positive mood on Monday, you might fully expect to have a creative breakthrough on Wednesday!

In another investigation, temporary work groups were induced to experience a positive, neutral, or negative mood before engaging in a creative production task. Positive mood increased creative performance as well as the efficiency of implementation, but negative mood had no effect. Positive moods increased the task focus of the groups. People who are led to be in a positive mood generate more original ideas than people who are in a neutral mood. Similarly, people who have been offered positive (as opposed to negative) feedback are more likely to give helpful hints to others.

Yet, does negative mood always adversely affect creativity? No. Negative moods stimulate creativity under certain conditions. For example, groups of people in negative moods generated more creative advertising slogans than groups in positive moods. In this case, the key driver was persistence—people in negative moods persisted longer. And positive mood may not help teams perform well in noncreative tasks, such as solving problems and completing logical syllogisms. For example, people in positive moods are more likely to select an unqualified conclusion, spend less time on a task, diagram the key relationships of a problem less thoroughly, and perform less well on the completion of a syllogism. Below, we draw a distinction between activating and deactivating moods and make the point that negative moods that increase arousal might very well spur creativity

In general, however, the preponderance of evidence suggests that positive mood increases creativity. What are the implications for the creative conspiracy? Clearly, there are benefits to positive mood. But I do not advocate that people paint on a fake smile. Feigned affect and false smiles may very well be more damaging than a heartfelt negative display of emotion. A study of feigned affect among bank tellers revealed that over time, this led to worse customer relationships!

The more we see something or spend time with someone—even things and people we don’t like—the more we come to like them. Psychologists refer to this as the mere exposure effect. The mere exposure effect has been demonstrated with nearly everything under the sun—including words, paintings, pictures of faces, geometric figures, sounds and people—whether we initially like them or not! The mere exposure effect takes place without conscious thought and very quickly. What’s the implication for creative teamwork? Simple: doing a particular task leads to liking it more and more. Being around familiar people leads to liking them more and more. Think of it as a kind of self-fulfilling, positive-mood prophecy!

One key to positive mood then is to make some things familiar. Happy people are drawn to tasks that involve creativity. Even more notable, when happy people are threatened with a negative mood, they exhibit even greater cognitive flexibility—they open their minds to think about new ways to look at the situation. Happy people effectively transform tasks so as to maintain their positive mood and their high interest level. In studies of negotiation and creative problem-solving people who are happy or in an otherwise good mood are more likely to generate creative, nonobvious solutions.

Some moods are activating, in the sense that they prepare one for behavior and action (e.g., anger, fear, happiness, elation). Other moods are deactivating, meaning that they do not prepare one for action states (e.g., sadness, depression, relaxation, serenity). Intuitively, we might think that relaxation would lead to greater creativity. However, when people are relaxed or “chilled out,” they are not actually very creative. Activation can be thought of like your heart rate. Excitement is positive and activating and increases our heart rate. Relaxation is positive, but deactivating—it decreases our heart rate. Activating moods lead to more creative ideas and more original ideas than do deactivating moods. There are different reasons why both positive and negative activating moods increase creativity. The reason positive activating moods increase creativity is that positive moods increase cognitive flexibility (i.e., broaden one’s thinking). In other words, people in an active, positive mood think of more solutions to problems and challenges. The reason negative activating moods increase creativity is that negative moods increase persistence. In other words, people in an active, negative mood persist more vigorously and try harder.

Not surprisingly, nearly any kind of physical activity can lead to an activating mind-set. I know of one professor who begins each class by asking students to stand up and walk around. Mark Rittenberg, CEO of the consulting firm of Corporate Scenes, punctuates his hour-long presentations with a vigorous chanting exercise at the halfway point. In short, moving and other physical activity are activating. Moreover, they have life-changing effects on our mood and even our life span! So, don’t stop moving! Women who sat six hours or more per day increased their risk of death by 37 percent over a thirteen-year period compared with people who sat fewer than three hours a day. Men who sat more than six hours per day increased their death risk by 18 percent over thirteen years compared with men who sat for fewer than three hours a day. It is for this reason that many companies now offer yoga, swimming, running, weight training, and cycling programs as an integral part of the workday. The key to staying active is recovery. What’s the best recovery? Sleep! In Silicon Valley, we see examples of tech workers who sleep with devices that measure their REM, ingest low-glycemic food, and have dumped their desk chairs in favor of standing or treadmill desks. When they brainstorm, they bypass the conference room and go for a walk. Innovative companies are supporting their creative tech teams and offer free gym memberships, on-site gyms, nap pods, and hammocks—not to mention onsite chefs who produce healthy gourmet meals. Google offers onsite physical therapists, masseuses, and chiropractors along with gyms and fitness classes. Biometric screening measures blood pressure, cholesterol, and health apps. Similarly, Facebook features yoga and boot camp classes, personal trainers, nutritionists, and, of course, health dashboards for tracking body signals. Keith Rabois, COO of Square, relies on a Zeo sleep monitor to pace his day, and his team checks his sleep score before pitching him radical innovations.

My colleagues and I conducted a series of studies that suggest that when it comes to creativity, it is more conducive to be in an activating mood than a deactivating mood. Positive moods can increase creativity when they promote safe work environments and increase creative cognition. Negative moods can increase creativity when they signal an aversive environment that motivates flexible thinking. What’s interesting about activating versus deactivating states is that pleasant, soothing things tend to calm us down and deactivate us; but boring, tedious, annoying things tend to make us search for ways to activate a more pleasant state. For example, in one of our studies, we asked people to list two activities that they would perform to increase their creative thinking. Not surprisingly, most people believe that engaging in activities that induce positive-deactivating moods (pleasant moods) increase creativity more than do activities that induce positive-acting moods and negative moods. Participants showed a strong bias toward positive-deactivating activities (57 percent) followed by positive-activating (32 percent) and negative-activating (10 percent) and negative-deactivating (1 percent). Only 42 percent of participants chose to engage in an activating activity over a deactivating activity. Moreover, negative-activating activities were underutilized. These (faulty) beliefs lead people to engage in deactivating activities that fail to enhance creativity over positive- or negative-activating activities.

Armed with these findings, we then attempted to discover how certain types of corporate off-sites might affect creativity. One group of business executives was told to tell a story about an experience in which they felt proud. Another group of executives was told to tell a story about a time in which they were embarrassed. Whereas the majority of participants believed that talking about a moment of pride would result in greater creativity (88 percent) than talking about an embarrassing moment (12 percent), the actual results proved them wrong. Executives who shared embarrassing stories generated 26 percent more creative ideas than did those who shared proud stories! The reason is that embarrassing stories do two things: they are activating in that people laugh and get excited and they also involve some risk because we make ourselves vulnerable.

So far, we’ve talked about mood—temporary emotional states that impact our own behavior and others’. But what about chronic, more enduring states—such as our overall level of happiness, and, for that matter, our outlook on life? How do they impact performance and creativity?

Before reading further, take the following true/false quiz:

1. Happy people are more productive at work than unhappy people.
   
2. Happy people have better immune systems and are less likely to get sick than unhappy people.
   
3. Happy people live longer and have better lives than unhappy people.
   
4. Happy people have more money and other material resources than unhappy people.
   
5. In general, positive mood is conducive to creativity and innovation.

   Answer key: 1. True, 2. True, 3. True, 4. False, 5. True

   
   

If you are surprised by any of the answers, you, like many people, have probably thought that happiness is nice—kind of like a luxury—but not really a necessity. In fact, however, happiness has benefits that are much greater than just good mood. Happy people live longer and are less likely to suffer from debilitating diseases. Happy people are less likely to get sick and they have better immune systems. Happy people perform better at work. Happy doctors have higher patient satisfaction scores, and their patients live longer. Happy people are absent less often from work and are more likely to engage in random acts of kindness and organizational citizenship behaviors. Happy people have better social relationships. They are more likely to get married, stay married, and have happy marriages. In contrast, unhappy people are absent more from work and change jobs more often. They are less cooperative and less helpful. They perform worse at work. And they negatively affect the loyalty of their customers and clients.

But, just what is happiness? Happiness is your enduring level of well-being. It is how you feel in general (for the past several months). If you are curious as to how you stack up to most Americans, Michael Fordyce’s Emotions Questionnaire asks, in general, how happy or unhappy do you usually feel? Using a ten-point scale, ranging from 1 (extremely unhappy; i.e., utterly depressed and completely down) to 10 (extremely happy; i.e., ecstatic, joyous, fantastic), where would you rate yourself? The average US person is about a 6.92 (mildly happy, feeling fairly good, and somewhat cheerful). Similarly, most people feel happy about 54 percent of the time; they feel unhappy 20 percent of the time and neutral about 26 percent of the time.

In my research with team leaders, the average level of subjective well-being (i.e., how satisfied are you with your life?) is 5.43 on a seven-point scale (1 = very dissatisfied; 7 = very satisfied).

Another widely researched measure is Sonja Lyubomirsky and Heidi Lepper’s General Happiness scale:

• In general, I consider myself (not a very happy person vs. a very happy person)
  
• Compared to most of my peers, I consider myself (less happy vs. very happy)
  
• Some people are generally very happy. They enjoy life regardless of what is going on, getting the most out of everything. To what extent does this characterization describe you? (not at all vs. a great deal)
  
• Some people are generally not very happy. Although they are not depressed, they never seem to as happy as they might be. To what extent does this characterization describe you? (less happy vs. more happy)
  

You can answer each of the statements above on a 1–7 scale. To score, total your answers and divide by 4. The average for adult Americans is 4.8. Two-thirds of people score between 3.8 and 5.8.

What are the implications for the creative conspiracy? Take the time to find out what the chronic level of happiness and well-being of your team is. If it is on the low side, don’t despair! Yes, it is true that some of our enduring level of happiness is rather fixed or immutable, but a great deal of it is highly subject to the intentional activities that we consciously choose to engage in. This means that we can change our enduring level of happiness by thinking more deliberately about what we want to invest our time in.

At this point, you are probably wondering whether happiness is mostly due to nature or nurture. Do we inherit happiness or do we fall into or out of it as a function of our circumstances? The answer is, both. First the bad news: about 40 to 50 percent of your chronic level of happiness is inherited. Thus, if mom or dad was a curmudgeon, then there is nothing you can do about it—you got some of their genes! Now the good news: 20 to 30 percent of your chronic level of happiness is determined by your conscious activities—the behaviors and choices that you make on a daily level dramatically affect your enduring level of well-being. In one powerful class assignment, Marty Seligman of the University of Pennsylvania, told his students to do one of two things: go out and enjoy themselves or help somebody. Specifically, one group was instructed to enjoy themselves (i.e., party, celebrate, go out on the town); another group was told to engage in a philanthropic activity (i.e., use their skills to help somebody, such as offering to tutor a struggling student or volunteer at a local charity). The students then wrote about how they felt afterward. The results were life-changing. Initially, both groups were equally happy. However, as soon as one week and even one month later, the students who had helped others were happier than those who simply engaged in a pleasurable activity. The positive effects of the philanthropic activities were much longer-lasting. Bottom line: improving our enduring level of happiness involves more than simply engaging in the good life or pleasures; rather, it involves using our unique strengths to help others and our teams.

The problem is that most people falsely assume that acquiring material goods and making more money will improve their happiness. Material wealth and income do improve happiness, but only up to a point. To a person living below the poverty line and under stress about how to pay bills, making more money dramatically improves happiness. However, once people reach a moderate level of income, increasing income after that does not buy more happiness. Even people who win multimillion-dollar lotteries eventually return to their set point, chronic level of pre-lottery-win happiness. A study of twenty-two lottery winners proved that even though they won a fortune, they were not happy and satisfied living their “everyday” lives.

Why? The answer lies in what is known as the hedonic treadmill. As we make more money, it feels good initially, but then we quickly adapt to our new level of income and, in fact, feel that we must keep increasing our income to keep up. The more money you make, the more money you spend, but you’re not necessarily happier. Studies of shopping and product purchases also reveal that new purchases do increase our level of well-being—for about ten to fourteen days. Then we adapt, meaning the new dining room table is—well, no longer new. The new car now has a scratch on it, and our neighbor just bought a nicer model. In the introduction of his book Enough, investing legend and Vanguard founder John Bogle relays the following story: “At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, ‘Yes, but I have something he will never have … enough.’”

The mistake that we see most people make is that they are chasing temporary happiness instead of enduring happiness. What are the keys to enduring happiness?

Self-reflecting about happy events: People who think about happy life events for eight minutes every day for three days are significantly happier than those who don’t. These effects last up to four weeks!

Meaningful conversations: People who have a deep, meaningful conversation with someone at least once per week are happier than those who talk about superficial interests.

Physical activity: People who engage in aerobic activity increase not only their physical health, but improve their long-term moods. Dancing improves happiness. Jumping jacks improve happiness. Playing Boggle, Taboo, or charades or other energetic games improves happiness. Rapidly and energetically recounting a story to friends improves happiness.

Envisioning happiness: People who brainstorm their top ten dream vacation destinations, the fifteen favorite people in your life, and set their screen saver to scroll through inspirational quotes are happier.

Gifting: People who give something to others are happier.

The power of positive mood has gained recognition as an iPhone app. For $1.99, you can download the Live Happy app and be reminded of scientifically proven benefits of positive psychology. The app, designed by psychologist Sonja Lyubomirsky, is a buddy that prompts you to engage in positive activities, such as looking at a photo of your child or expressing your gratitude to a coworker.

Chapter Capstone

We’ve examined two key types of motivation—intrinsic and extrinsic. Intrinsic motivation comes from within and it sustains us and motivates us to persist and be creative. Extrinsic motivation, in comparison, is based on rewards. We’ve seen how using extrinsic rewards to the exclusion of intrinsic motivation can eventually undermine people’s motivation and ultimately hurt their performance—although this is in no way an argument that we should start praising people and freezing their salaries. However, most leaders miss key opportunities to affirm intrinsic interest because they falsely believe that others are purely extrinsically motivated. We reviewed the model of psychological flow—a state in which people are so involved in their tasks that the act of doing the task is its own reward—and have considered some concrete suggestions for creating conditions for psychological flow in creative teams and instilling intrinsic interest in people. We examined how positive mood affects creativity and we made a strong business case for happiness. Finally, I hope this chapter has dispelled the notion that happiness is something that a person falls into; rather, we can cultivate happiness by choosing to invest our time and energy in pursuits that sustain ourselves and our teams.