By: Steve Smith  

In the West we believe firmly in the power of competition but the basis for this belief has not to my knowledge been clearly articulated. In this article I take a close look at this topic and and contrast it with co-operation.

Definitions

What is a fair competition? Sports are certainly an example of competition. Examinations are another example. What are the characteristics of a competition? I contend that a fair competition has the following characteristics:

1. A defined start time and place and a defined finish place or time.
2. There are a clear set of rules defining the competition, including rules of what is acceptable behaviour, what the goals are, how the winner is decided etc.
3. A competition can be between individuals or a team.
4. The competition is carefully monitored from start to finish to prevent cheating and foul play.
5. Everyone knows the rules.
6. Competitors are NOT expected to also co-operate. Competition and co-operation are mutually exclusive.
7. Competitors are approximate peers.
8. The purpose of a competition is to rank people

The only other kind of competition besides fair competition is unfair competition.
The word competition is used in two senses:
A competition is a highly structured event.
Competition is a form of behaviour.
What is co-operation? In any kind of group or organization, a certain amount of co-operative behaviour is required for the organization to function. We do not speak of a co-operation but instead of an enterprise or project or organization and co-operation is an intrinsic feature of these things.

Characteristics of a Co-operative venture

1. Amorphous - occurs on a daily basis, with no clear finish point.
2. Not clearly defined rules. Rules for what is not allowed. Not for what is required.
3. Involves 2 or more people.
4. Is not monitored
5. It is not the case that everyone knows all the rules. Not always clearly defined rules.
6. There must be a minimum amount of co-operation for an organization to function at all. Competition and co-operation are mutually exclusive, so this implies that competition is not appropriate and must be strongly discouraged.
7. Participants may be at any level of skill and with different abilities and knowledge.
8. The purpose of an organization is to produce products or provide services or to achieve a goal which is not attainable by individual effort.

The word co-operation is only used in one sense
Co-operation is a form of behaviour.
The characteristics of Competition and Co-operation can be compared point by point.

Most people would agree that if people are in a competition you cannot reasonably ask them to also co-operate. You cannot reasonably ask people to co-operate with their competitors. In other words you cannot reasonably ask people to both compete and co-operate at the same time. You can only reasonably ask people to do either one or the other - compete or co-operate. If you ask people to compete then most people would agree that it should be a fair competition, so it must be set up with the characteristics of a competition listed above. A fair competition in the workplace would have to be set up as an examination. This is impossible because people must interact and communicate to do their job. The only reasonable thing to ask people to do in the workplace is to all co-operate.

W. Edwards Deming pointed out that one of the problems even with fair competition is that it demoralizes at least half of the participants. Demoralized people are less productive.

In a company environment the day to day activities must be co-operative. There are certain situations where a competition may be desired for example in the hiring process, when a position becomes vacant internally or in the selection of a supplier. Examinations or other carefully structured competitions could be used to make a fair selection. Once the hiring has been done or the supplier selected, the modality becomes one of co-operation.

In a competition all the competitors are kept separate from each other - there are no interactions. The purpose of a competition is to rank each competitors ability separately from all other competitors. In an organization there are constant interactions between everybody in the organization. Everybody is impacting to some degree on other people's productivity. It is impossible to measure a person's productivity on the job. You would have to follow someone around every second of the working day and observe every interaction and estimate the impact on that person's productivity and even then how would you measure a person's productivity?

The question will then arise for many people of what will motivate people? W. Edwards Deming said "pride of workmanship". Most people like to be able to say that they are good at their job. They take pride in what they do everyday if they have a chance. In companies that promote co-operation throughout the whole company there can be a real "team spirit". There is also a pride of identity of working for a company that provides quality products or service. If there is profit sharing or bonuses based on the success of the company as a whole everybody looks at the big picture - the whole company.

It is in fact quite natural for people to co-operate. Our ancestors were forced out of the forest on to the plains, because of a change in the climate and had to compete with big predators. Humans can't run very fast, they don't have big claws and big teeth, or a good sense of smell. They do have two hands and a brain and they lived in small tribal groups. It was natural for the men to go hunting and co-operate on the hunt. Typically the whole tribe would generally co-operate.

I have worked as a computer programmer and I always strove to write quality code, however the emphasis was always on speed, so the person who wrote the code fastest was rewarded, but often they wrote junk code. A programmer who then comes along later and has to work on that code can very quickly work on quality code while a programmer who works on junk code takes much longer to fix a problem or do an enhancement. Of course the person who wrote junk code was rewarded, but actually it costs the organization more to maintain the code. Quite aside from this of course it also costs the organization, because any customer who doesn't get quality goes to the competitors sooner or later.

The famous management consultant W. Edwards Deming made a mathematical argument for the power of co-operation which I will give a simplified version of below.

If there are 3 people on a team, who will be designated as A, B and C, then the total productivity of the team is given by the following equation:

Total = A + B + C + AB + BC + AC

A, B and C are the productivity of A, B and C and AB is the result of the interaction between A and B, and similarly for BC and AC.

If competition is encouraged by management for the team, then the terms AB, BC and AC will be negative, because these people will not share information and in fact will often work against each. As a result the total will be less than the sum of the parts.

If co-operation is encouraged by management for the team and bonus or rewards are given based on the productivity of the team, then the terms AB, BC and AC will be positive, because these people will share information and support each other and work together. The terms AB, BC and AC will be positive and the total will be more than the sum of the parts.

It is a long time since I have done any mathematics, but a friend who wishes to remain anonymous has made an interesting point and I have used this point to propose the following generalized equation.

This equation is at the following URL. At the moment I can't get it into this article for technical reasons, but it is further down in the article. Previous version of this article

TP is the total productivity of the organization, P(x) is the productivity of person x alone AP(x,y) is the additional productivity resulting from adding all interactions between person x and person y (positive, zero or negative) n is the number of persons in the organization.

What this equation means is that the total productivity of the organization is the sum of the total productivity of every person in the organization. The total productivity of every person in an organization is their individual productivity plus the sum of the additional productivities. Additional productivity for any given person x results whenever person x interacts with any given person y. For every person x there is a potential additional contribution to their productivity from every other person y in the organization because of interaction. This additional productivity may be positive zero or negative. These interactions may be direct or indirect. Person x and person y may interact more than once, so the total of all interactions for person x and person y is added to give the additional productivity for person x. These additional productivities for person x are added to the productivity of person x alone to give the total productivity for person x.

The larger the organization the more people are potentially contributing to the productivity of any given person in the organization and this is true for every person in the organization. If top management encourages co-operation, then the contributions from other people will be mostly positive or zero. If top management encourages competition the contributions to a given person's productivity from other people will be mostly negative or zero. The larger the organization (the larger n is), the more people are potentially making contributions to a given person's productivity, either negative or positive depending on whether competition or co-operation is encouraged.

What happens in an organization that encourages competition? To start with it�s not a fair competition � it�s not structured, there are constant chaotic interactions, there is no monitor � it does not give any accurate measure of the relative abilities of the competitiors.

In such an organization when an interaction occurs between two people what happens? They are competitors. There is usually a lot at stake. There is no monitor to ensure there is no cheating or foul play. They are not necessarily peers. What will they do? Typically they will in one way or other attack each other in one of a thousand subtle or not so subtle ways. A competitor is essentially an enemy. They will certainly not share any information, give any tips. They will reduce each other�s productivity, effectiveness and efficiency. And everyone in the organization is doing this potentially to every one else in the organization � everyone is reducing everyone else�s productivity. Even when people are not directly interacting, they will attack each other and undercut each other in subtle or not so subtle ways if they are set up as competitors. When everyone in an organization is having their productivity reduced, the total productivity of the organization goes down. The same logic applies between branches, divisions or any way an organization is divided. If there is competition between them they will attack each other and reduce each other�s productivity. Total productivity goes way down because it is the sum of the productivities of the people in the organization. This also applies at any scale � also between organizations, companies, cities, states, countries etc.

In an organization that encourages co-operation these attacks will not occur and people will just get the job done with the minimum of fuss. Productivity will go way up. In time they will start to share information, give tips, tell other what they need to know etc. and productivity will go way up. If there is profit sharing � where the increased profits are distributed to employees, the benefits of co-operation will be fed back to the people who are co-operating and they will co-operate more, because they see how they are benefiting which will result in more productivity. Ultimately it will plateau. On average over a period of time, people will both get help and tips from other people and give help and tips to other people. Also in an organization that promotes co-operation there will be more harmony and less stress. It is natural for people to co-operate. People will be to some degree friends, and bonds will form. The time spent working can be reduced and people can spend more quality time with their families.

The effect of additional contributions to any given person's productivity from other people becomes larger as the organization becomes larger. This is predictied by the equation, because as n - the number of people in the organization becomes larger, the more people are potentially contributing additional productivity to a given person. This is true for all people in an organization. For example, in a company with ten people, for a particular person there are nine other people who may potentially make additional contributions to a person's productivity. For all ten people in the company there are nine other people who can potentially make additional contributions to their productivity. If people are educated and understand and agree to co-operate, then for the particular person there are nine potential additional contributions to their productivity from other people. This is true for every person in the organization. If people are asked to compete, there are nine additional negative contributions to each person's productivity. If the organization has 100 people in it, then for a any given particular person, there are 99 potential additional contributions to their productivity from other people. For every person in this organization there are 99 other people in the organization who may potentially contribute to their productivity. The larger the organization, the larger is the effect of additional contributions to a given person's productivity from other people. One way to achieve this larger size of an organization is simply for two companies to agree to co-operate. They would still be independent, but they may co-operate on project or sale. The equation predicts that the productivity of each company should go up if they do this. This implies in fact, that everyone everywhere should be educated and understand and agree to co-operate in all interactions in the business world. Certainly another approach is for all companes in an industry to discuss, educate and agree to co-operate. The equation predicts that productivity would go up, because in a sense there is a single large organization. Industries shold co-operate with other industries there are involved with. Countries should co-operate - productivity would go up. When people co-operate they are friends and when countries co-operate they become friends also and the risk of war goes down. Beside war is extreme competition and greatly reduces productivity as well as being terribly destructive. If countries compete they become enemies, and the risk of war goes up. One way for countries to begin co-operation is for the governments of both countries to get together for a casual walk-around party, so they can get to know each other. They should not talk about work. Security must be very good of course.

Dr. Deming said "Don't work harder, work smarter". Co-operating is working smarter. People don't constantly have to work harder and harder, because their not competing with other people, yet productivity is going up because they are co-operating. Quality of life improves, and the work week can be reduced so people can spend more time with spouses and children and doing something they love to do. If you want to compete, play a sport.

People need to understand why they are being asked to co-operate. I suggest that before top management asks everyone to co-operate, it would be useful to ask people to read and discuss this article.

Competition between companies is detrimental in the same way as competition between people is detrimental. When companies are in competition with each other, they will attack each other in subtle or not so subtle ways and reduce each other's productivity. This is also of course, unfair competition. There is an considerable loss to the economy of a country and to the global economy, because of the idea of competition in the market place. The problem is that companies must be educated and agree to co-operate which does take some time, because co-operation is a two way street. However a company can choose other companies, particularly suppliers, customer companies and even former competitors and educate them and reach agreement with them to co-operate. This results in a larger system and increased productivity as the equation above predicts.

Because of Charles Darwin it is commonly believed that in nature it is "survival of the fittest". Nature is seen as competitive. In fact nature abounds with examples of co-operation. Every multi-cellular organism on earth (every plant and every animal) is a testament to the immense abundance of co-operation in nature because of the co-operation between all the cells of these organisms. Even in eco-systems there are numerous examples of co-operation between species and between individuals of a species, for instance bees pollinate flowers and receive nectar.

The entire human world could be looked at as a single gigantic organization. The n in the productivity equation would be the number of people in the human race and the TP in the productivity equation would be the total productivity of the human race. The other arguments in this article would also apply. It is still true that if a competition is appropriate then it should be set up as a fair competition otherwise management asks everyone to co-operate. Countries could be seen as departments in this gigantic organization. Alternatively perhaps industries could be seen as departments.

If a C.E.O. wants to try asking his or her whole company to co-operate, he or she could give it a trial for a day and after that evaluate if he or she wants to continue asking the whole company to co-operate on an on-going basis.

I find "Open Book Management" to also be a powerful additional approach to management.

For a model of an organization that is structured to promote co-operation, see the article "Co-operative Democratic Organization Model" in the Editorial of this web site.

Some Links to Deming Web sites.

Fordham University - Deming Scholar's M.B.A.

Deming Electronic Network

U.K. Deming Forum

References

Rafael Aguayo, Dr. Deming, The American Who Taught the Japanese About Quality, Simon & Schuster, 1990
W. Edwards Deming, Out Of The Crisis, M.I.T. C.A.E.S., 1982.
W. Edwards Deming, The New Economics, M.I.T., C.A.E.S., 1995.