Managers who try to rule or motive their people through fear do everyone a double disservice.
First, they deny their employees the primal need to feel valued and respected, which according to the research presented by Tony Schwartz in his book “The Way We’re Working Isn’t Working” is as strong as the need for food and shelter. In fact, Schwartz points out research showing that armed robberies are often more about gaining respect than they are about money.
Second, fear shuts down a person’s ability to do anything other than react. Fear actually inhibits cognitive function. When a person is triggered into a fear (or the other end of the spectrum - fight) response, he is bypassing the prefrontal cortex where analytical thinking occurs, and actions are being governed by the limbic system. In the limbic system, the amygdala floods the body with adrenaline and cortisol. These stress hormones increase heart rate, contract muscles, narrow vision, and reduce blood flow to brain so that blood can be diverted to your muscles so you can fight or flee.
If your organization is failing to innovate, is mired in activity with small or meaningless outputs (lots of check-the-box activities, but no real outcomes), look at the communication and management practices of your managers and leaders.