There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self.

~Ernest Hemingway

Last year, eCommerce giant Amazon.com made headlines when their overly competitive corporate culture was publicly exposed. In Amazon’s culture of Purposeful Darwinism, employees are put through the stress of achieving detailed performance metrics, and team-members are encouraged to rip apart their colleagues’ ideas in meetings. Those who make it through are rewarded, and the rest cry whee whee whee all the way back to LinkedIN to look for a new job.

These revelations abhorred readers but one fact could not be ignored…

The system works for Amazon. Their stock price has more than tripled in the last five years as they continue to innovate such ideas as delivery drones, their own operating system (Fire OS), and a grocery delivery service (Amazon Fresh).

It’s no mistake that Amazon co-opted the term Darwinism to describe their management strategy. In nature, survival of the fittest reigns supreme, but fitness is not always about internal competition. Different organisms have all developed different strategies to be successful. Some animals, like tigers, are highly territorial, competitive, and aggressive. Other animals, like bees, survive because they work together.

Amazon thrives on competition. Other companies like Microsoft and Adobe abandoned highly competitive strategies like stack-ranking years ago, and are implementing strategies to create more collaborative workplaces. Their stocks have also risen and innovation at both Microsoft and Adobe has continued to grow. So what is the more effective management strategy for your business – competition or collaboration?

A Business is a Tribe

To answer these questions, let’s look to the New York Times best-seller, Tribal Leadership: Leveraging Natural Groups to Build a Thriving Organization. The authors define a tribe as a group between 20 and 150 people who emerge based on the language they use to describe themselves, their jobs, and other people. If your company is larger than 150 people, it is considered a “tribe of tribes”, and these principles still apply.

According to TL, all tribes operate in one of these 5 stages at any given time (note how collaboration and competition play a role in each):

Stage 1) This is a place of “despairing hostility” where people (dys)function under the philosophy that life sucks. Thankfully this is only about 2% of American professionals.

Stage 2) The theme for the 25% of workplace tribes who operate at this stage is, “my life sucks”. Despite the fact that this is a marked improvement from the despair found in Stage 1, pervasive apathetic victimhood controls here.

Stage 3) This is the competitive culture that controls at about half of all American workplaces. The philosophy here is, “I’m great, and you’re not”. Lone warriors believe that knowledge is power and they are unwilling to share it. The goal is to win at the expense of everyone else. Sound familiar?

Stage 4) Welcome to the collaborative culture where everyone seems happy, inspired, and genuine (approximately 22% of American businesses). This culture operates under the philosophy that, “we’re great”. For this group the competitor lies outside the company (for us it’s not a specific competitor but rather outdated business practices like command and control management). Accountability to a set of shared core values and to the company mission inspires people to do their best work.

Stage 5) This culture’s theme of “life is great” will likely offend the sensibilities of stages 1, 2, and 3. Stage 5’s “innocent wonderment” influences a belief that they have infinite potential to work towards global impact.

Organizations that have moved along to higher stages are values and purpose driven. At these stages, workplace stress declines, employee engagement improves and employee turnover drops. People ultimately want to be part of a company where they are driven toward lofty goals, not driven away from negative repercussions like constant management rebukes and threats of termination.

Collaboration vs. Competition

Let’s take a closer look at these two general types of management strategies.

Advantages of Collaborative Cultures:

– People feel less at risk of losing their jobs, leading to lower stress levels.

– Creativity improves because people are able to access their higher brain functions instead of staying in fight or flight mode.

– Innovation improves because people are more willing to bounce ideas off each other without fear or reprisal, or having others steal their ideas.

– Morale improves company-wide because people feel better and more inspired about coming to work.

– When employees have access to one another’s ideas, projects move faster and result in higher quality products and services.

– In this HBR article, Adam Grant analyzes a study of over 3,500 business units across many industries. The study found that collaborative companies were more profitable, productive, and efficient, with higher customer satisfaction and lower turnover. Their employees “build cohesive, supportive cultures that appeal to customers, suppliers, and top talent alike”.

Advantages of Competitive Cultures:

– People are motivated to perform more than just the minimum.

– People are driven (through fear) to achieve goals which leads to the perception of increased personal power.

– Some people thrive in highly competitive environments and are driven to outperform others.

When I look at this comparison, it appears that competitive cultures are mainly beneficial because they can move the 31% of businesses who are mired in stages 1 and 2 into the more successful stage 3. Employees who are driven towards personal accomplishment are far more valuable than those who are just trying to do the minimum while hoping that nobody bothers them. But for those cultures who wish to step into true global impact, collaboration is imperative.

The crux of the collaboration/competition argument was stated in Tribal Leadership by Bob Tobias (Who’s that? As general counsel for the National Treasury Employees Union, Tobias won a $533-million judgment against Richard Nixon on behalf of every federal employee):

I would ask what their goal is. If it’s to win, keep on doing [internal competition]. If it’s to make a larger impact, how do you create relationships to get what it is you want them to do? You can’t do it by yourself; you have to work with others.

The Modern Enterprise Problem

But winning today is not as simple as it used to be. Technological advancement means that new products and services (including those of your competitors) can penetrate the market in years, not decades. Innovation must occur far more rapidly these days for businesses to stay competitive.

In this study of over 30,000 public firms over 50 years conducted by Martin Reeves, Simon Levin, and Daichi Ueda, businesses today are disappearing six times faster than 40 years ago. The authors believe that these businesses fail to adapt to the more complex modern business environment.

When tension exists between what is good for individual agents and what is good for the system, collapse is inevitable. To succeed, company leaders must create a context for behavior instead of micromanaging individuals.

In other words, creating a values-driven culture that emphasizes autonomy and collaboration, is far more adaptable and therefore more likely to succeed. Ironically, Amazon’s Purposeful Darwinism applies principles of adaptation within the organization, but ignores the need to adapt to a competitive marketplace. Big picture? Collaboration and innovation are what influence success, not fear tactics.

One of the most critical components of corporate survival today is the feedback loop. According to the authors, “feedback is the mechanism through which systems detect changes in the environment and use them to amplify desirable traits”. This means that leaders must create mechanisms to gather information and innovative ideas from front-line employees by encouraging them to share openly.

According to Reeves, Levin, and Ueda, collaboration is the managerial strategy that is scientifically proven to work:

In society, complex adaptive systems require cooperation in order to be robust; direct control of system participants is rarely possible. Individual interests often conflict, and when individuals pursue their own selfish interests, the system overall becomes weaker, and everyone suffers.

The Neuroscience Behind Innovation

It appears that collaboration is more sustainable in today’s highly competitive environment from a management strategy perspective. But what works best for each individual employee?

Competitive environments shut down the part of the brain that sparks those innovative thoughts which can keep businesses steps ahead of their competitors.

Science shows that when people feel unsafe, they are unable to access their pre-frontal cortex. This is the part of the brain responsible for abstract thinking, planning, and thought analysis. Amy Arnsten, a neuroscientist at the Yale School of Medicine, explains that we are designed to shut-off this part of our brain when we feel threatened.

So when managers yell at employees, or when environments are overly-stressful, a more primitive part of the brain is activated – one that is adept at split-second decision making. Even mild stressors in relatively unsafe environments can shut down the higher brain functions responsible for our best and most creative work.

And the opposite is also true. When we are alert and feel safe, “arousal chemicals” in the brain give us the power to think critically, retain information, and plan for the future.

Collaboration Wins! Yay! What Now?

If you are looking to develop a more collaborative environment, these elements are a must:

1) Leaders must set clear goals. In her Forbes article, What Makes Collaboration Actually Work in a Company?, Kare Anderson shares the views of Cisco executives Ron Ricci and Carl Wiese. According to Ricci and Wiese, “ambiguity generates distrust, resistance, and fiefdom fighting”.

2) Transparency improves collaboration. According to Bob Marsh in his contribution to the SalesForce Blog, openly sharing sales leaderboards introduces light competition. The visibility created opens opportunities for coaching and learning between sales reps. (Of course, management has to prioritize collaboration over competition for this to be effective).

3) Modern office spaces have evolved away from cubicles and closed doors. Open layouts allow people to keep the culture strong and connected, while larger semi-private spaces allow for spontaneous collaboration opportunities.

4) Collaboration tools like Slack and Basecamp allow remote employees to work together on team projects and keep other teams up-to-date on progress.

5) Employees need metrics to measure their performance, if they are to become “superior to their former selves”. These include setting weekly goals and accomplishments, quarterly objectives, and other metrics specific to individual roles.

Company cultures that encourage collaboration, high-performance, trust, and entrepreneurialism, feed into each employee’s internal personal barometer for success. Creative people who are internally motivated need safe environments so that they can consistently bring fresh ideas to the table and allow their business to stay competitive.

In this sense collaborative environments are spaces where employees work together, but where they are also in constant competition with themselves to execute ideas and become better today than they were the day before.

Read on: 5 moe articles to help you : 5 moe articles to help you improve your management skills.

Image Credit: Ralf Κλενγελ