Competition, Cooperation

Are You In Favour of Teamwork?

A personal example. My automobile, sitting in front of my house, would not start. I called Bill at the Exxon station not far away. When the man from the Exxon station came, I noted he was in a truck owned by his competitor across the street. How smart these people are, I perceived. Each station owns one truck. By borrowing the competitor’s one and only truck, if it be idle, both stations provide their customers service equivalent to ownership of perhaps 1.8 trucks, at the cost of owning only one. Advantages: these stations both retain business of customers at lowest cost. Even further cooperation: one station stays open late one night, the other stays open the next. Result: they both retain business; a late customer need not drive to some other part of town to fill his tank.

The reader may note that the result of every example of cooperation is that everybody wins.

- Dr. W.E. Deming. The New Economics, 3rd ed. (p. 62)

We have grown up in a climate of competition between people, teams, departments, divisions, pupils, schools, universities. We have been taught by economists that competition will solve our problems. Actually, competition, we see now, is destructive. It would be better if everyone would work together as a system, with the aim for everybody to win. What we need is cooperation and transformation to a new style of management.

- Ibid. (ix).

One of the first steps in the transformation will be to learn about cooperation: why, what, and how.

- Dr. W.E. Deming as quoted in Neave, Dr. Henry. The Deming Dimension. (p. 219)

DR. DEMING would often lament in his seminars how “we are being ruined by competition” resulting in heavy losses to organizations, businesses, and society. Competition, he would demonstrate, drives a host of poor management practices, such as short-term/quarterly dividend thinking, rating/ranking people, merit pay, MBO (management by objective), numerical targets without methods to achieve them, MBR (management by results), purchasing at lowest cost, and delegation of quality'. Alternatively, as Deming notes in his story about the shared tow-trucks, when we cooperate we can naturally lower costs and provide better service.

Source: The New Economics, 3rd.ed. (p. 86); In the original sketch for this diagram, Deming described it as “The present system of management compared with predicted results of transformation to cooperation: WIN/WIN”

Five Types of Competition

In his book, Dr. Deming: The American who Taught the Japanese About Quality, Rafel Aguayo argues that “competition” as a concept carries multiple meanings which he breaks down into five definitions:

1. Competition “against”, as a win/lose contest, as Deming describes.

2. Implied existence of alternatives, eg. to compare prices.

3. “As good as” someone else’s offerings, eg. ‘competitive’ offerings that are on-par with others.

4. Superior to someone else’s offerings, eg. more ‘competitive’ offerings that exceed expectations.

5. Competition “with”, as a win/win contest, eg. within the framework of cooperation where each competitor seeks to help lift others for broader benefit.

He observes:

When the word competition is used in the first sense, “win/lose”, then meanings 2, 3, and 4, of “alternative,” “as good as,” or “good,” are often unwittingly implied. The implication that win/lose is innately good and guarantees more alternatives is built into the language. (p. 226)

Example

RFPs or “Request for Proposals” is an overt example of Aguayo’s first four definitions of “competition”. In most (but not all) instances this process is based on the misguided belief of getting value for dollar through a questionnaire and cost assessment. In reality, it’s often about one of the “heavy losses” of purchase by lowest price that Deming describes. Despite the enormous costs to everyone involved, especially to bidding firms, this destructive form of competition persists and the risk mitigation random at best. One doesn’t need to look too hard to find examples of large contracts that went through a bidding process that ended up costing multiples of the original estimated cost, had successive defects and failures, and delivered well past-schedule.

Cooperation

I once had a question from a senior manager participating in a Deming study group session whether Dr. Deming was advocating for socialism, given his opposition to competition (win/lose) and support of cooperation. The answer is a firm NO. For Dr. Deming, cooperation means everybody is better off. EVERYBODY. It’s not something that can be enforced through threats or forbearance. In Henry Neave’s book, The Deming Dimension, he relates how Dr. Deming would explain the difference:

For example, if our flight is delayed and we’ve all been held up in the gate-area for hours, we may eventually be thanked for our cooperation. But:

That’s not cooperation. What can prisoners do?
(p. 220)

Nor does it mean to “collude” with others to disadvantage customers or others in the market. It means cooperative teamwork.

Examples

An example: Here in Canada, cooperation of this kind is not without precedent. While working with managers at one of the three major telcos, I learned how in the 1990s two fierce “competitors” (win/lose variety) collaborated and shared costs to build the first cellphone towers and nascent networks around the Greater Toronto Area, benefiting both companies and their customers. Of course, as soon as detente period after construction expired the companies resumed their usual patterns of behaviour…

In his 2011 book, The Heretic’s Guide to Best Practices, anold friend and colleague from Australia, Paul Culmsee, describes a unique form of contracting practised by construction firms in Pacific countries called relationship contracting or alliancing that is entirely predicated on non-adversarial cooperation and trust as table-stakes, supported by common principles such as joint management of risk, commitment at all levels, integration, mutual support, cooperation, fairness, collaboration and shared commitment, and perhaps most importantly: fun.

Reflection Questions

Consider Dr. Deming’s thoughts on cooperation versus win/lose competition and the above examples. What similar scenarios have you observed in your career or current role? What were the outcomes? Was cooperation a natural way of doing business, or the exception to the rule? What experiment could you design to demonstrate the effectiveness of cooperation over competition? What alternatives to using Requests for Proposals can you think of? Is it the only way to obtain the right partnership?