So what motivates you?
Is it money? Is it praise? or maybe power?
Let see what is motivation. The Wikipedia definition goes like this: "Motivation is the reason or reasons for engaging in a particular behavior ..." [more] . Books on Organizational Behavior or Behavioral Science provide many theories of Motivation, which definitely have practical implications, but lets dive deeper into the motivation of a Software Developer (we will look at the team as a whole later on). 
Most developers will respond with 'challenging work', whenever asked the hot question - what motivates you? Some will give a secondary response as 'money'. But studies have shown that money is only a hygiene factor, i.e. if compensation is low, it causes dissatisfaction, but a high compensation fails to motivate. [More]
So let’s look at the primary response - 'challenging work' (CW). Does this mean complex code? Difficult bugs? What is this elusive CW?
Understanding CW
As I said earlier, most people's formal response regarding their top motivating factor is CW. Many studies have shown that nature of work is indeed the top motivating factor for most people. But the question is - under what circumstances?
Let’s see this bunch of developers involved in porting Windows Mobile 6.0 on the latest SoC with the most interesting peripherals. Lets also assume that they all agree, this is CW and they are highly motivated and working hard (we will define 'working hard' sometime later)
Now imagine the following scenarios:
1. We turn the AC off for the day - by afternoon the place is stuffy and uncomfortable
2. Lets replace the fresh bean coffee machine with an old pre-mix machine
3. Lets tell the developers that the grapevine says - this time the hike will be minimal.
What do you think - will CW still keep them motivated?
CW vanishes in thin air
So, what happens when the AC breaks down etc. etc.? The answer is very well given in the age old theories, but not understood well.Let’s take Maslow's Hierarchy theory (please read this). The general understanding is that people move from lower levels to higher levels as their needs mature - i.e. once their "Deficiency needs" are fulfilled, they will move up the pyramid to the "Growth needs". But as Maslow himself described, people may temporarily regress to lower level needs due to many factors - and this happens quite frequently in our present day fast paced life.
So, the AC, coffee etc, have become basic needs - in the office environment, and any problem here will cause the person to come down in the pyramid. And at this point - "Growth needs" like CW or praise from the manager will go unheeded.
What this means is - given a condition where everything in the environment is perfect - you can apply motivational theories to keep your team productive. But the problems are:
1. The environment is never perfect - some of the Deficiency need will be unfulfilled at any given time - be at office or at home
2. You don't have much control on the environment, so you can rarely cater to the 'Deficiency needs'
This sounds pretty depressing. The question is - can we motivate people even when there are unfulfilled 'Deficiency needs'? Can we motivate people when we don't have challenging work to give them? When the salary offered by your company is not at par with the market? When the coffee machine breaks down? When the grapevine says that there will not be any hike in the next appraisal cycle?"
The answer is YES. You can make people work with great energy almost under any circumstances, and the tools and resources to make this happen have been documented extensively. The resources are all there in form of books, trainings and other material.
But do you have the time to go through all the books and materials? And which of these items apply to our specific domain? How do you find the right material? And with all the pressures of delivery, status reports etc. etc. - where do you get the time to acquire this knowledge?
And then, you can acquire knowledge - but how do you put this in practice and make it into a skill which you can apply daily?
