Dear Friends,

Lately, it feels like CEOs are flexing their muscles again. From saber-rattling return-to-office mandates to blunt memos declaring the end of rewarding employee loyalty, the pendulum of power has swung back to the corner office. After years of a tight labor market that empowered workers, a slowing economy has shifted leverage to leadership. And some leaders are making the most of it.

Cognition’s CEO told new employees after an acquisition they’d be expected to work 80+ hour weeks — and that many of his people “literally live where we work.” AT&T’s John Stankey recently wrote that the company would no longer reward loyalty, implying employees must show full commitment without expecting any in return. At Meta, Mark Zuckerberg labeled about 5% of employees “low performers” before laying them off. Many say they have never received a poor evaluation. Former staff speculated it was less about performance than about instilling fear.

There’s something seductively simple about this playbook: Do what I say and I’ll pay you. Don’t, and you’re gone. But as a management scientist, I can tell you this is not only wrong — it’s deeply counterproductive, especially in companies that depend on innovation.

Decades of research, particularly by Teresa Amabile, show that people are at their most creative when they’re driven by intrinsic motivation — a genuine love of the work itself. The moment you overlay extrinsic motivators — bonuses, fear of punishment, external evaluations — you smother that internal fire. Paradoxically, people end up less motivated, less engaged, and far less creative. You cannot pay people into being innovative. And you certainly cannot scare them into it.

The most innovative workplaces share key traits: investment in people, consistent culture, adaptability, risk tolerance, a clear mission, and psychological safety — the sense that you can challenge ideas without fear of reprisal. Those are the conditions where creative people do their best work, and they’re the cultures that drive breakthrough innovation.

So if you’re leading an organization tempted to turn the screws, remember: fear and money may deliver compliance, but they will never deliver creativity. If your company’s future depends on innovation, the real lever of power isn’t control — it’s culture.

—Gautam

Billion-Dollar CEO Pay Packages Are a Disaster

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Further Reading….

If you like this kind of deep dive on leadership and innovation, I’ve got some more suggestions. Here are some books you’ll love.