Improving Performance Effectiveness: Making Competition Work for You (1992)

In the Fall 1992 issue of Management Quarterly, Steve Collier concludes his discussion of the current paradigm shift with several comments on A New Paradigm of Competition.(1) The concept of competition has long received incredible attention among management scholars and practitioners, but it has become especially popular in recent years. Books, magazine cover stories, even a federal commission has emerged to improve America's ability to compete into the 21st century. As Collier and others in the rural electric industry point out, this new spirit and practice of competition is also affecting electric cooperatives around the country. Interestingly, however, there is still no universal agreement as to what is competition (i.e., how to define it), and there is much debate as to when it is appropriate (i.e., good competition versus bad competition). In this article, I will review ideas from over six years of my own study of cooperation versus competition. More importantly, I will discuss how rural electric cooperatives can benefit from a 'paradigm shift' in their philosophy towards cooperation and competition. Historically, the essence of cooperatives is cooperation--pooling resources to achieve success through economies of scale. However, there is a growing body of evidence that cooperation by itself tends to create complacency. Instead of viewing the collective as just an institution for mutual support, all members can benefit and avoid such complacency by also viewing the cooperative as an arena in which members push each other to do better--to compete with each other to motivate increased levels of effectiveness. By avoiding some of the potential detriments of competition, electric cooperatives can become more externally competitive by being more self- or internally-competitive. Cooperation versus Competition For close to 50 years now, the concepts of competition and cooperation have been juxtaposed as mutually exclusive and contradictory ideas. In the 1890's and through the first several decades of the 1990's, psychologists were discovering that individuals and groups performed tasks better when competing against others on the same task, than when trying to achieve a predetermined goal. By the same token, economists were claiming that price, productivity, and quality benefitted the consumer when several firms were competing to provide the good, rather than one firm alone existing to manufacture it. In fact, the Sherman Anti-Trust Act, and ensuing legislation, served to ensure that consumers could expect to enjoy the benefits of marketplace competition by the act's emphasis of prohibiting restraint of open competition. Over the years, competition has become synonymous with western economic and organizational Calls for free trade, speaking with their feet, the invisible hand, and the quality revolution all symbolize our reliance on the marketplace to decide who provides the best good or service. Thus, being competitive came to mean providing a better good or service than the next guy. Even today, the call is to discover ways to improve our ability to compete, to win the marketplace. At the individual level, competitiveness became synonymous with a western tradition of upwardly mobile behavior. Our heros were typically those individuals (business, athletic, scientific) who persevered and won against overwhelming odds or against formidable opponents. However, starting 50 years ago, some began to question the value of competition in western society. In the pursuit of winning, competitors were judged as engaging in various behaviors that seemed more devoted to eliminating their opponents than in enhancing their own potential for success. Such noted psychologists as Muzafer Sherif and Kurt Lewin observed the severe levels of tension, hostility, and even sabotage that would occur under highly competitive situations. Economists and politicians found that the Sherman Act alone did not prevent companies from finding ways to assist in the failure of other firms as a way to increase their own success (including the more recent events of Ivan Boesky, the S&L problems, and, of course, any recent presidential election). …