Do you know what’s never going to change? Human nature. It’s why big transformative changes to society will only happen when there’s a dramatic need for change, and it usually happens at the last minute when there’s no other option.

Morgan Housel wrote about this in his book Same as Ever: A Guide to What Never Changes. Here’s a sample:

The circumstances that tend to produce the biggest innovations cause people to be worried, scared, and eager to move quickly because their future depends on it.

Stress focuses your attention in ways good times can’t. It kills procrastination and indecision, taking what you need to get done and shoving it in your face so that you have no choice but to pursue it, right now, to the best of your ability.

Big, fast changes happen only when they’re forced by necessity. Consider how wartime pressures lead to dramatic technological breakthroughs or how companies facing existential threats suddenly unlock creative solutions to problems they previously ignored.

Think about it—how was the nuclear bomb created? The space program? Both were born under immense pressure.

Elon Musk, one of the greatest entrepreneurs of our era, uses inspiration and immense pressure to align his teams toward achieving monumental goals, like making civilization multi-planetary (SpaceX) and eliminating our dependence on fossil fuels (Tesla).

These are implications and goals that most people don’t think about when they wake up, let alone care about. But he does, and he inspires his teams to care as well.

At the heart of this dynamic is the principle that incentives shape behavior. When the stakes are high enough, individuals and organizations align their energy and resources toward solving the problems that matter most.

But what if we didn’t wait for a crisis to spark innovation? What if we designed systems and cultures with the right incentives to encourage creative problem-solving before emergencies arose?

Designing Incentives for Innovation

1. Create a Sense of urgency without the crisis: Deadlines, competitions, and clear goals can mimic the effects of necessity without real disaster. Companies like SpaceX and Tesla thrive by setting ambitious timelines that compel their teams to innovate under pressure.
2. Reward risk-taking: Fear of failure often stifles creativity. By celebrating calculated risks—even when they don’t pay off—organizations signal that innovation is valued over complacency.
3. Tie incentives to outcomes: Align rewards with tangible results. When people see a direct link between their effort and success, they’re more motivated to push boundaries.
4. Encourage collaboration: Many breakthroughs happen at the intersections of diverse perspectives. Create incentives for cross-departmental or interdisciplinary collaboration.

The Downside of Misaligned Incentives

Not all incentives drive innovation. Misaligned incentives can foster short-term thinking, cutting corners, or prioritizing individual success over collective progress. For example, when sales teams are rewarded solely for quarterly targets, they might ignore long-term customer relationships or ethical considerations.

To drive true innovation, incentives must be structured thoughtfully—encouraging experimentation, accountability, and a shared vision of success.

Bottom line: Innovation doesn’t happen in a vacuum. It’s a product of the environment we create and the incentives we put in place. By understanding and harnessing the power of incentives, we can unlock creativity and build solutions that shape a better future. So, what incentives are driving innovation in your organization? Are they intentional, or do they need a rethink? The best time to align them isn’t during a crisis, but right now.