To be clear, I’m not saying financial incentives lack impact. Indeed, the evidence from economics makes clear: People do respond to incentives (even if they are not the primary source of motivation for the best people). To ignore the influence of incentives is to ignore human nature. And that leads me to a key point: The wrong incentives are not merely benign; they can be outright dangerous. If you’re trying to build a great company guided by a deeply held set of values, you simply cannot afford to have incentives that reinforce behavior incompatible with your core values, or worse, that reinforce the behavior of the wrong people and drive away the right people. Indeed, the wrong incentive system can encourage people to do the wrong things and perhaps even throw a company into crisis.

With rare exceptions, those who work in internal functions aren’t exposed to market forces. While staffers may be individually competent and compassionate, collectively they’re the corporate equivalent of the administrative state. They wield immense power, but are subject to few checks and balances.

The argument for centrally run functions is that they ensure consistency, promote best practices, and mitigate risk. Problem is, few leaders stop to ask whether these benefits could be acquired more cheaply or with fewer side effects.

The live 360s are so useful because individuals become accountable for their behavior and actions to the team. Given how much freedom we grant employees, along with the general “don’t seek to please your boss” climate, this co-responsibility provides a safety net. The boss doesn’t tell the employee what to do. But if the employee acts irresponsibly, he will get feedback from the group.

Intrinsic rather than instrumental motivation is required at all levels of the successful business and is a hallmark of such businesses. Disney employees are not told to go and make money for Disney. They are told to make sure the guests have fun. They feel they are part of a great business. The result makes a great deal of money for the Disney Corporation. It is all that way around.

The relationships with others essential to activities such as parenthood, education and research are valued for themselves, not just for their consequences. Most humans are good at detecting instrumentality – the false bonhomie of the used car salesman, the cynical hypocrisy of the vote-seeking politician – and are repelled by it. There is a difference between the firm that promotes the welfare of its employees because its executives care, and the firm that promotes the welfare of its employees because its finance department has calculated the net present value of reduced staff turnover. And employees can usually tell which is which.