In 1968, The Ohio State Buckeyes football team started one of the most cherished traditions in American sports. According to team legend, a member of the coaching staff proposed an idea to motivate the players. After each game, the coaches would reward the best players with small stickers resembling buckeye leaves to place on their helmets. The staff reasoned that rewarding stellar individual performances would provide the right incentive to excel. The Buckeyes won the national championship that year, and football teams around the country have copied the tradition of rewarding individual excellence.

But by 2001, the once-dominant Buckeyes had slipped into mediocrity. When Jim Tressel was hired to coach the team, he completely revamped how players earned a buckeye. Instead of rewarding a player for scoring a touchdown, for instance, every player on the offensive unit would get a sticker if the team scored more than 24 points. And the coaching staff gave every player on the team a sticker after each win. Favoring teamwork over individual performance paid off almost immediately—the team not only won a national championship the following year, but the Buckeyes have been one of the most successful teams in the country ever since and are a threat to win the National Championship again this year.

Although leaders are concerned with collective success, most organizations—from sports teams to universities to global companies—still focus on rewarding individual performance. The majority of Fortune 500 companies reward the most productive individuals, not the most effective groups or indispensable group members. We believe that leaders at these organizations are overlooking something fundamental about human nature—our tribalism.

Human beings evolved in groups, and most of us still work in groups every day. Our affinity for groups is wired deeply into our basic biology. Indeed, humans are unique among primates in that we readily cooperate with in-group members–even if they are completely unknown to us. This is why sports fans can show up to a stadium and immediately share common purpose with 100,000 complete strangers. Even more striking, research in our labs has found that the simple act of joining a group can produce a dramatic influence on brain function and behavior. At the mere flip of a coin, people readily befriend and place their trust in fellow in-group members. And our research has found that creating mixed-race groups can override implicit racial bias. Group identification is one ingredient that can bring strangers together.

Given that group membership is such a deeply rooted part of human nature and organizational success, a central element of leadership is the management of group identities. In short, great leaders are “entrepreneurs of identity.” They embrace our tribal nature and seek to shape the identity of their fellow group members. This social relationship between leaders and followers is at the heart of transformational leadership.

When a person starts to identify with a group, it triggers a fundamental shift in their goals. Events and decisions that were once evaluated with reference to oneself (“what’s in it for me?”) are now evaluated in reference to the group (“what does this mean for us?”). In fact, research shows that even otherwise selfish individuals often become cooperative—and even altruistic—when they identify with a group. Once their self becomes fused with the group, they are motivated to pursue what they understand to be the goals of the group.

Group identity can explain a range of remarkable behaviors, ranging from putting in long hours at work to making the ultimate sacrifice for one’s country. Many experiments have now shown that members will act to benefit to their groups, even when doing so exacts a personal cost. One reason is because we share in the success and rewards of our in-group members—we bask in their reflected glory and feel pleasure when they receive a reward. As such, the key to leading groups is fostering an environment in which individual group members deeply identify with the team.

To cultivate a strong group identity, leaders can take the following steps: (1) ensure the group satisfies basic the psychological needs of individual members, (2) generates super-ordinate goals, (3) rewards individual contributions to the group, and (4) values dissent.

Focus on employees’ social needs. Organizations traditionally use financial rewards to motivate employees, but great leaders also fulfill the social needs of their employees. Compelling groups satisfy one or more fundamental human needs, including the need to belong, obtain status, feel distinctive, and maintain certainty or control. By balancing individuals’ need to belong with their desire to stand out, a leader can build a sense of “optimal distinctiveness” among group members. Leaders seeking to increase members’ group identification need to first consider the basic social needs of their members and then determine how the group might do a better job fulfilling them. Set superordinate goals. Recent neuroscience studies suggest that cooperation is inherently rewarding. But many people will only cooperate with fellow in-group members. In many organizations, the loyalty of employees lies with their department or project team, rather than the whole organization. While internal divisions can be useful at times—a bit of healthy competition between departments can drive people to work harder–employees can lose sight of organizational goals or may even sabotage other departments. Visionary leaders communicate the superordinate goals of the organization and explain how all the divisions, departments, and project teams are necessary for achieving these goals. Reward both collective and individual effort. Leaders need to reward behavior that advances the goals of the organization, rather than the individual. Effective leaders provide bonuses, recognition, raises, flexibility, and opportunities, based on the entire team’s performance. To avoid free-riding (when team members shirk their personal responsibility), individual rewards should also be given to individuals who make important contributions to the team’s success. This rewards indispensable team members—the unsung heroes who work late, cover for colleagues, and enhance the success of the group. Combining individual and collective rewards can promote stronger group identity and ensure that individual members are encouraged and motivated (not only financial, but also socially) to pursue the team’s goals and help the team succeed.

Group cohesion can also be a weakness—suppressing dissent and creativity, and creating mindless conformity. How can leaders capitalize on the benefits of group cohesion while avoiding its drawbacks?

Avoid the downsides of conformity by valuing dissent. Many people assume that dissenters are trying to damage the group. But our research suggests that committed group members are the ones who are most likely to speak up when things are going badly for the group because they care deeply about group success. Thus, constructive dissent needs to be explicitly valued in organizations to avoid groupthink and bad decision-making. Leaders need to make it easy for group members to speak out against bad ideas. For instance, leaders can designate certain group members to act as devil’s advocate to ensure the group reaches the best possible decision. To create a culture where constructive feedback and innovation flourishes, leaders should also encourage their employees to pursue organizational goalsrather than simply follow organizational norms.

The bottom line is that leaders need to understand and harness the tribal psychology that is deeply imprinted onto the human brain. The ease with which people categorize the social world into groups speaks to our nature, and provides a powerful potential tool for leaders. Our capacity to identify with groups provides the foundations for cooperation with others—even complete strangers. Thus, great leaders must become entrepreneurs of identity.