Executives Cannot Acquire Innovation. They Should Foster It Instead.

In the dynamic world of corporate management, a growing number of companies are rethinking their strategies to foster creativity and innovation. A culture of fear, long associated with tech giants like Meta Platforms Inc., is being challenged as an effective means to drive success.

Mark Zuckerberg, Meta's CEO, recently announced layoffs of about 5% of the workforce, labelling them "low performers." This move, however, raises questions about the company's culture and its impact on creativity and innovation.

Similarly, AT&T Inc.'s CEO John Stankey has doubled down on the company's return-to-office mandate and declared he will no longer reward loyalty. These decisions, while aimed at operational efficiency, could potentially stifle creativity and innovation.

Teresa Amabile, a management scholar, found that people motivated by intrinsic interests are substantially more creative and innovative than those motivated by external goals. Intrinsic motivation, according to Amabile, is when people are motivated primarily by their own interest and involvement in the task. On the other hand, extrinsic motivation, such as the promise of reward or the expectation of evaluation, can often cancel out internal motivations, leading to a decrease in motivation, interest, and creativity.

Innovative workplaces, therefore, prioritize psychological safety, allowing employees to disagree without fear of punishment. They invest in developing their people, have strong and consistent cultures, are highly adaptable and willing to take risks, and have a clear sense of mission.

Meta Platforms Inc.'s leadership in 2025, particularly heads like Alexandr Wang of the AI department, appear focused on restructuring and hiring freezes driven by controlling costs amid a competitive AI talent market. However, there is no direct evidence they prioritize fostering intrinsic motivation over fear or financial incentives; the current focus seems more on operational efficiency and talent retention under cost pressures.

The slowing economy is shifting power back to CEOs after years of tight labor markets giving workers extraordinary pull. This trend is seeing CEOs swearing off warm and fuzzy cultures and instead prioritizing financial incentives. However, Amabile's work suggests that a competitive market-based culture may stifle creativity and innovation, especially for companies where innovation is a priority.

Gautam Mukunda, who writes about corporate management and innovation and teaches leadership at the Yale School of Management, emphasizes the importance of fostering intrinsic motivation in the workplace. Creative people are more likely to be motivated and fulfilled in workplaces where they feel supported to pursue their life's work.

As the corporate landscape continues to evolve, the focus on intrinsic motivation over fear and financial incentives is gaining traction. Companies that prioritize their employees' intrinsic motivation are likely to foster a more creative and innovative workforce, leading to long-term success. For more insights on corporate management and innovation, visit bloomberg.com/opinion.