Profitably Healthy Companies: Principles of Organizational Growth and Development

WE RECENTLY HELD an offsite retreat for a technology company where one of the participants asked how they would know if their organization was working at full effectiveness. We replied, “If people were giving you their best ideas.” In technology, employees have powerful incentives to withhold information and abscond with ideas that can launch lucrative new businesses. This technology company would have no definitive way of knowing if their people were sharing their best ideas, but it would know about the people who left and started businesses that could have benefited their own organization. We also know that the more individuals’ interests depart from those of the organization, the greater the loss in efficiency. How could this division of motives and goals produce anything but heightened performative frictions? Groups of individuals all working on their own behalf is a poor prognosis for success.

Many of the environmental problems we face today are the result of resource dilemmas dominated by short-termism in which personally advantageous acts spoil or diminish the resources we all share. These situations illustrate social traps in which the pursuit of self-interest impairs the welfare of the group. Thus, the individual who seeks the ease, comfort, and convenience of driving to work, when combined with similar actions by others, contributes to congestion on the highways. The pursuit of private interests creates results that are in no one’s interests. Or, consider a dilemma in which more than six billion players must each forego conveniences and invest time, effort, and money to prevent contamination of the planet and Earth’s atmosphere, but they do not equally share the costs of failure in the near term. Thus, the obstinate solutions to climate change.³

Removing oneself from the entanglements of these dilemma-situations is difficult for two reasons. First, many self-serving rationales are available for taking too much or giving too little. Consider, for example, the following: “My contribution would be so incidental it won’t make any difference” (the drop-in-the-bucket rationale); “I would give but that wouldn’t assure me that I would receive the goods I want” (reciprocity justification); “If I didn’t take as much as I could, someone else would and where would I be?” (sucker justification); or “Most people don’t give anything, so why should I?” (crowd justification).4 A wealth of perfectly reasonable justifications exists for taking the most egocentric path. These rationales seem innocent in isolation, but they are deadly in organizations: “The organization doesn’t pay me enough to give my best ideas away.” The ethical wiggle room is substantial.

These reasons are abetted by a second factor, the nature of dilemmas. Social dilemmas are hard to solve because the most rational decision in a prototypical dilemma is self-interest, a choice that may be amplified by emphases on rational decision making in business and a bottom-line mentality.5 A focus on the bottom line diverts attention to profit maximization and away from other relevant intervening values.⁶ The hallmark, then, of social dilemmas is that self-interested behavior is the dominant action regardless of what others do, even though cooperation would produce the best results over time.

Suppose you are asked to take $10 and either secretly insert the money into an envelope or pocket it. You then are asked to exchange envelopes with another person—given the same instructions—with the qualification that the money in the envelope that is handed over will be doubled. What do you do? Chances are you would keep the money. You would be no worse off if the other acted in kind, and should the other person pass along $10, you now are $20 better off—plus the $10 you kept makes it $30.⁷ This dominant self-interested feature of dilemmas is illustrated in figure 4.1 in the context of the prisoner’s dilemma game.⁸ To succeed, companies must find a way to penetrate the tough exterior of self-interest that is deeply embedded in social dilemmas.

The cooperation problem raised by dilemmas such as the prisoner’s dilemma is, “How do we mitigate the pull of rational self-interest to garner greater cooperation?” The problem is more dire in real life than in the laboratory as many exchanges in the lab settle into cooperative patterns if the play occurs with the same people over time. Players generally adopt a tit-for-tat retaliation-and-forgiveness strategy in which cooperation is repaid with cooperation and competition (self-interest) with competition. The eventual solution is détente produced by the mutually assured destruction that noncooperation would bring.

Our world is much bigger than those faux worlds established in labs. We deal with many different people for different lengths of time. The larger the pool of people and the more transient the relations, the riper the field for slippery operators to exploit others and then disappear into the crowd. In fact, if our relationships were totally random, defectors would thrive and drive cooperation into extinction. If no one was related and meetings were chance, natural selection would favor the defector—a person who pays no costs, distributes no benefits, and reaps the greatest rewards. With many selfish neighbors, cooperators are at a disadvantage.

But relationships are not random. They are based on preferences, spatial relationships, and networks. And people will sort themselves to ease the stress of interpersonal wariness and vigilance. To defend against exploitation, people will emigrate to relational others who they know to be cooperative. That is, cooperative neighborhoods will form as refugees flee from contaminated environments.9 But the splintering of organizations in which people seek out safe harbors does not meet our standard of a well-run organization. For example, we once consulted to an advisory firm where people would fudge the nature of projects in the firm’s enterprise system to avoid contact with certain people that assignments of a certain type would involve—and, instead, they would pair up with people with whom they knew they would get along. We are going to need a more widespread, stable, and effective solution than the one that assortative behavior produces.

Strong organizations are built on the expectations of goodwill and cooperation. We prefer to work and relate to people we can count on: who have accumulated the rich currency of reputation based on hearsay and past actions that have evinced trust and consideration.¹⁰ These perceptions have far-reaching implications in institutions because we make inferences about others we do not know based on their relationships to those we do (see box 4.1).¹¹ Without a foundation of trust and the positive expectations of others that assure employees their beneficial acts will not be exploited, everything else a company does to affect change amounts to tinkering around the edges.¹² Execution will tortuously grind like gears out of sync until people discover that relational abuses are not worth the physical and psychological trauma inflicted, and leave. Conflict is inevitable in organizations, and no better interpersonal elixir can manage it constructively than trust.13

As an essential source of social capital, trust in others’ right motives is key to facilitating exchange and social interaction, and enlivening employees’ civic engagement in the enterprise.¹⁴ The value of trust to organizations is unequivocal. Trust fosters greater satisfaction, social solidarity, optimism, charity, cooperation, well-being, and team performance.¹⁵ Overall, trust acts as a purification system that filters out ambiguous statements and unintended slights so that people assume the good intentions of others and, as a result, give them the benefit of the doubt. Conversely, in cases of extant distrust, every errant comment or boorish act imperils relationships that may take days—or even years—to patch up.¹⁶

Self-maximizing behavior only is rewarding over time when not everyone is playing by the same self-interested rule, but that changes quickly with experience. People will get even and, if made to look foolish by a betrayal of their trust, will get more than even.¹⁷ Furthermore, people will not help those who they believe will not help others, or who are seen as “unhelpful” and, consequently, less likely to “pay it forward.” People selectively channel aid to others who they perceive as being helpful. In one study set in a grocery store, experimenters wanted to see when customers with various loads of groceries would allow a confederate with one item (a bottle of water or a bottle of beer) to move ahead of them in line. The more groceries in their baskets, the more likely they were to allow the confederate to move ahead. In this case, the perceived need and value of assistance was greater. However, this was less likely to occur for the confederate with the beer versus the water. Why? The shoppers attributed certain characteristics to a purchaser of a single bottle of beer as a person less likely to “pay it forward.”¹⁸

Controlled experimental studies show that generosity spreads with at least three degrees of separation. This contagious aspect of cooperation is what has made cooperation evolutionarily adaptive and an essential part of organizational success.¹⁹ (Incivility and egocentricism also spread if unleashed.) Figure 4.2 illustrates three ways cooperation generalizes (from direct reciprocity) under the presumptions that other people are generous in spirit and have the welfare of others in mind.²⁰ Pay-it-forward reciprocity is exemplified by a study situated at a drive-through fast food restaurant where a customer paid for the order behind him. The researchers tracked how long the chain of goodwill would persist: for four hundred customers, as it happens. And other coffee and burger shops have observed pay-it-forward sequences twice as long.21 In these instances, givers give with little hope they ever will benefit from their good deeds. The premise is that the totality of the system will prosper as a result of these simple acts of kindness. A naturalistic organizational study showed the same generalizability of goodwill. Select employees were asked to perform random acts of kindness toward a designated group of employees. The recipients of the kindnesses not only were happier than control subjects (employees who were not targeted for benefit), but they acted kindlier toward others. Their incidence of kind acts increased by almost three times beyond the giving of controls.²² The nonspecific, unscored give-and-take among members of groups enhances trust and is part of the binding power of friendships.

Achieving a stable, cooperative order is the central problem in organization development. It is hard to think of an instance in which collective benefits are achievable without cooperation.²³ We are not alone in making this assessment. Talcott Parsons considered the attainment of social order (attaining cooperation among large numbers of people) the sociological challenge, and Nobel Prize winner Elinor Ostrom viewed it as the central problem in political science. The objective of organizations, then, and the focal quest of this chapter, is how to mold enterprises into productive, cooperative wholes.24

A parsimonious way to think about the task ahead of us is to conceptualize how we might alter the costs and benefits of the matrix in figure 4.1 into one that is conducive to cooperative decision making and actions. We want to transform the matrix.²⁵ One way this might be achieved is by hiring people who are cooperative. People differ in their other-regarding tendencies. Some people have a greater concern for others, assume that others are basically trustworthy, tend to place greater emphases on group goals and norms, and are more attuned to the well-being and fitness of the group’s members.²⁶ Therefore, many companies select new hires on culture fit or values to ensure a more agreeable workplace. Several companies we have visited have dual selection committees that operate independently: one committee evaluates talent; another evaluates fit with the values of the organization. Prospects must successfully pass through both committees to receive an offer.

The most obvious means to “transform the matrix” is to change the payouts, which is achieved through rewards and punishments. Therefore, a company might, for example, reward employees’ displays of cooperation or provide public accolades for teamwork. Organizations could integrate rewards for team play into a balanced scorecard for bonus payouts or build cooperation into the performance management program as a line-item assessment. Conversely, a company could sanction or punish those whose behaviors are uncooperative. Although research varies on the relative impact of rewards and punishments on behavior change, in general, both methods are effective but provide incomplete and unstable solutions.

One drawback to rewards and punishments is that reliable administration requires monitoring or some form of behavioral observation that is not always possible or desirable. The costs of tight oversight are high and the psychological strains of surveillance interfere with the independence and trust of the workforce.²⁷ Second, once a culture is overrun by self-interest, those who are self-interested are reluctant to penalize others for the very behaviors they perform. The figurative blind eye becomes a more pervasive means of dealing with deviance.²⁸ Third, punishment often antagonizes people and interferes with the harmonious social relations that a company wants to instill. Overly severe punishment creates vendettas and may induce retaliatory acts.29 Fourth, the use of rewards and punishments are weak forms of behavior regulation because they make cooperation conditional. The positive expectations we have toward others thins when behaviors clearly are regulated through contingencies. Indeed, studies show that people trust others less if they see that behavioral compliance is secured by rewards and punishments.³⁰ Furthermore, large contingent rewards and punishments often fail to produce desired changes in attitudes. The reason for this failure has a long history associated with cognitive dissonance. The concept of dissonance is much researched, and many competing explanations for results have been offered. However, repeated experimental demonstrations reveal that people are uncomfortable with inconsistencies in their thoughts or between their thoughts and behaviors. In turn, they seek to remove the disparities.

The classic demonstration of dissonance effects comes from Festinger and Carlsmith, who gave subjects $1 or $20 (in 1959 dollars) to lie about the enjoyability of an objectively boring task.³¹ Those who were offered less money reported liking the task more because it presumably is harder to justify their lie with a puny incentive. Aronson and Carlsmith observed much the same a few years later using the well-known forbidden toy paradigm.³² In this paradigm, children either are given a lenient or stern warning to not play with an attractive toy and, following a free play period, are assessed on their liking for the forbidden toy. Children given a mild warning reported liking the toy less—why else not play with it? Thus, the perceived autonomy with which a person acts influences the degree to which their attitudes will change and values will be internalized. In furthering attitude change, then, it behooves companies to keep rewards and punishments at reasonable levels; many lasting changes in behavior only need nudges such as mild sanctioning.³³ For example, people who merely anticipate approval or disapproval increase giving in the dictator game (an economic game that gives the dictator-subject the unqualified right to divide a sum of money between her- or himself and another player).³⁴

Behaviors can be changed in other, less intrusive ways than by modifying payout matrices. Companies can change the nature of relationships. The dilemma in the prisoner’s dilemma assumes that people are self-interested actors and that the goal of the game is to maximize one’s own outcomes whenever opportunity permits. People, however, have other relational motives and different perspectives on one another’s interests.35 For example, a person can try to maximize others’ outcomes (benevolence) or their joint outcomes (cooperation). The type of relationship we have with others influences how we approach our encounters. A one-time meeting between strangers is different than the daily rendezvous of, say, husband and wife. Strangers and friends do not play the prisoner’s dilemma in the same ways. For example, friends cooperate more in the prisoner’s dilemma as opposed to strangers.³⁶ Additionally, friends are more likely to risk playing for more lucrative, uncertain options in coordination games than strangers, who opt for safer, more certain, low-paying alternatives.³⁷ Therefore, an ideal way to solve a social dilemma is to change the character of the relationships so that the interests and goals of the parties involved are mutual.

Those of us who have spent time in organizations know that building a sense of camaraderie can feel forced, as an afterthought or wishful quick repair to broken relationships and severed lines of communication. The panacea of the corporate retreat or one-off “funishment” designed to promote fellow feeling and bring people harmoniously together is hopelessly flawed. Or worse, many employees discover through these sporadic and ill-conceived assemblies how far apart they really are and that cursory attempts to glue people back together simply showcases widespread divisions. People find out that they are not alike, do not fit in, and wonder why they are there.

We once were suspect of the multitude of celebrations some companies stage, but now we understand why. Real people recognize special occasions, life transitions, and rites of passage, and the importance of celebrating, mourning, comforting, laughing, and healing together. We celebrate birthdays, weddings, births, and anniversaries; we help others in need; we grieve others’ losses. We do these things because this is what real people do for one another, sometimes because they care for the other, and sometimes because the doing creates the caring.39 The rituals and traditions of everyday life transform the ordinary into momentous occasions that promote interpersonal warmth and reaffirm communal values. Durkheim saw rituals as a primary way for groups to confirm their intimacy and continuity.⁴⁰ These bonding rituals are like booster shots, continuously bringing people together to participate in the life of the community, to underscore the prevailing beliefs of the community, and to pay tribute to exemplar community members at appropriate times. Indeed, social norms of reciprocity and fairness, politeness rituals, and etiquette are the raw materials that make social engagements predictable and pleasurable. They are essential to preserving the amicable and harmonious relations on which organizations depend.

Prescribing the way people are expected to interact is a crucial way to encourage thoughtfulness and restraint when one is tempted by the mood of the moment, by reactionary impulses, and by self-interest. The all-American pastime of standing in line (the British are quite good at this, too) illustrates the value of etiquette.⁴¹ Suppose we are in a queue for our morning coffee. Although some people in line most likely will need their caffeine fixes more urgently than others, the operative rule is “first come, first served.” This rule ensures that the person at the back of the line, who may want coffee the most, cannot walk to the front of the line to request service first. Etiquette requires people to exercise self-control and to refrain from acting on impulse according to their personal wants and desires. These sorts of politeness rituals combined with the requisite self-control, graciousness (e.g., restraint from muttering annoyingly in line), and sense of fair play prevent chaotic grabs for whatever is in reach. Line aficionados understand that they all have similar needs that will be satisfied in time equitably.

Relationships matter. So do the tasks. A series of experiments conducted by the husband–wife research team, the Sheriffs, showed that previous fractious groups could cooperate with the introduction of superordinate goals (see box 4.2). The well-known Robbers Cave experiments illustrated how formerly competitive individuals could be brought together to work in harmony.⁴³

Box 4.2
Robbers Cave Experiments

Between 1949 and 1954, the husband–wife research team, the Sheriffs (in repeated attempts), manipulated conditions at a boy’s summer camp at Robbers Cave State Park in Oklahoma, first, to provoke animosities between two competing groups—the Eagles and the Rattlers—and second, to see if and how hostilities could be ameliorated. They found that having the groups work jointly toward a shared goal could repair relations among members of the groups. The extremely competitive and tense social climate that the researchers induced abruptly ended when the campers came together to restore the water supply to the camp that ostensibly had been vandalized. Voluntarily coming together to restore a good that would be available to all was enough to improve campers’ attitudes toward former competitors and the quality of relations.

Laced with political overtones, postwar researchers explained that unity and cooperation were possible under the right conditions. Those conditions found eloquent explication in Morton Deutsch’s concept of interdependence structures.⁴⁴ Cooperation is more necessary and more likely when there is a high degree of interdependence on tasks, outcomes, and goals. Often these are aligned, but they are not the same. Interdependence on tasks means that dependencies exist between the execution of one job and another. For me to do my job, you must do yours.

Interdependence of goals means that everyone is striving for the same ends. In the Robbers Cave experiments, the goal was to restore the water supply to the camp that purportedly had been vandalized. Shared goals are important not just because they signify a common pursuit but because they help to predict what people are supposed to be doing. The common knowledge of a shared pursuit provides a firm footing that everyone will act in a certain way. Indeed, a fundamental tenant to team efficacy is that people will participate in concert only if everyone is similarly committed to the same goals. Certain experimental games simulate hunts (stag hunts); you can catch small animals alone or go after the big stuff in groups. If everyone participates and positions themselves in the proper places, you will be able to capture the stag. If, however, confidence is low that people will abide the work that must be done, then people will opt for the default position—just go after the little critters by themselves—since without unanimity of effort, big initiatives will fail and render all work useless.

The ability to influentially convey a common purpose is one of the most basic and essential leadership skills.46 Articulating a compelling common purpose is heralded as a linchpin of leadership excellence and team performance, and as a critical tool in shifting focus from individual to group interests. The grand purposes of organizations are specified in their vision statements that are intended to compellingly portray future states—without descending into pious platitudes or empty verbiage (e.g., “to achieve ever higher profits”).⁴⁷ The best visions generate vivid verbal portraits that appeal to observers’ experiential systems so that they can feel and touch the future.⁴⁸ For example, a measured amount of sugar verses a calorie count is more persuasive and influential on the food choices people make.⁴⁹ Someone in a weight-loss program we once attended used to carry around a twenty-pound barbell, providing a more profound depiction of his goal by showing what walking around with the extra weight really means.

One common misconception of generating a common purpose is that it automatically produces common action. We tend to believe that if our goals are well aligned, our actions will be too. A common purpose, however, does not ensure coordination. For example, a basketball team of five ball-hogs may have a common purpose but the players will not work together well.

The need for coordination underscores a truism. The greatest ally to cooperation is communication: communication about what is important, how an initiative will be approached, what people will be involved and when, and so on.⁵⁰ Communications enable people to make explicit commitments to courses of action, to debate the ethics of decisions, to elucidate norms, to appeal to rules, and to forge closer relations and social ties.⁵¹ Overall, the ability to communicate (directly or through reference to the same script) allows people to reach consensus more rapidly and work together more effectively. So, in the United States, when two cars reach an intersection simultaneously, to avoid collision, the car on the right knows it has the right of way.

Many of the everyday coordination problems we face are easily handled by the shared expectations for behavior we acquire through norms, conventions, and other social constructions that together account for a sizeable part of what we think of as culture.52 Consequently, we know how to dress for different occasions, how to have pleasurable two-way conversations, and which side of the road to drive on, without embarrassment, discomfort, or catastrophe. One of the rules we taught our children as they were learning to drive was to not be nice (within reason). That sounds harsh, however, being nice introduces deviations from conventions that other drivers may not recognize—thus stopping on a highway to let another driver out into the flow of traffic is nice but may not be appreciated by the driver immediately behind who has other ideas about traffic flows.

Culture makes behavior more predictable, facilitates coordination and lowers transaction costs, and enables people to self-regulate their actions without persistent prompts from third parties. Strong cultures usher efficiencies because they remove the waste of deciphering behaviors and expedite routine interactions by eliminating the continuous need for rediscovery and invention.⁵³ These immense benefits cued Peter Drucker’s popular saw, “Culture eats strategy for lunch.” Companies that realize the importance of culture take the time to mold a rich assortment of artefacts (e.g., symbols, rituals, language), norms, practices, and beliefs into consistent, coherent messages that telegraph expected behaviors and establish distinct group identities.

Part of the coalescing power of culture is that we are emotionally connected to people who share our ideas, interests, humor, and world views. The values and attitudes we share through culture are partly what unites and gives us our distinct social identities as members of countries, organizations, and groups.54 This categorization as a member of a group is significant since the greater people’s affiliation with a group, the more important the group and the more motivated members are to fulfill its goals.⁵⁵ Indeed, had the United States heeded one of the recommendations of an interdisciplinary task force on Covid-19, early responses to Covid-19 may have been more compelling. The task force urged the nation to underscore the common good through appeals to a sense of identity, unity, and purpose to elicit healthy, preventative behaviors.⁵⁶

Interestingly, making a group does not require much. A host of studies use what is referred to as the minimal group technique.⁵⁷ Simply, surreptitious connections between people create special affinities. For example, people who were led to believe that they had shared tastes in artists, shared dot estimation abilities, shared musical preferences, or shared perceptual judgments formed stronger social ties and were more cooperative within than between groups. We know that these manipulations are effective because people report feeling a greater connection to those with whom they have been randomly bound and act more favorably toward them versus others (this result has been called the mere membership effect).⁵⁸ It is as if we, as humans, are primed to belong whereby a sharing of perceptions, interpretations, and experiences are enough to induce the feeling of being a part of the in-group.

A recent meta-analysis showed the importance of social identity to organizations. The authors examined the relative effects of general interest variables (e.g., job involvement and job satisfaction) and organizational identification on in-role (job) and extra-role (e.g., helping) performance, and they found that identification was the best predictor of performance. Both variables are important, but as the authors note, organizations have a tendency to spend a disproportionate amount of time, money, and energy making sure people are satisfied with their work and too little attention on identity-enhancement programs.⁵⁹

Creative organizations build a strong sense of inclusion, solidarity, and identity in many ways. Do the following thought experiment: Take a moment to reflect on your college or university experiences and the methods they used to create high identity institutions; so high, at times, that people feel grateful many years after graduation and continue to donate money even after they already paid a great deal for their educations. What did those institutions do to foster such a tight connection? We suggest they did many of the strategies discussed next. A good social entrepreneur could take these criteria and easily forge group solidarity in their own organizations.

The employees at Patagonia call themselves Patagoniacs. Instructure has a panda bear mascot that shows up at corporate events in full body suit. The first thing you get when you join Insomniac Games is a mountain of swag emblazoned with the corporate logo. That sweatshirt with the corporate logo has a function to keep you warm, but you have to decide to put it on, be willing to publicize your affiliation, and want to appear the same as others in the organization who have chosen to wear the exact same sweatshirt. Therefore, these symbols—like the mascots of sports teams and flags and anthems of nations—enhance physical similarity and perceptions of unity.60 They also make groups seem more real as logos and other organizational paraphernalia serve as stand-ins for real group characteristics. That panda mascot has come to symbolize a “rare breed” of employee that always is willing to test the limits of the possible.

Sometimes common experiences take the form of doing things in unison such as marching in a band. Here, groups develop what William McNeil has called “muscular bonding.”⁶¹ The simple act of mutually doing activities in some choreographed form helps to solidify group identity. Activities in companies typically are more loosely structured; nevertheless, they are laid out in patterned sequences that employees follow at particular times together. Think of it as a pilgrimage: a time when a cohort of employees travels off-site to a mystical place (e.g., an all-expense paid trip to the Home Office) where they will find the answers they have been looking for and the previously unknown will be revealed. Or, these can be simple journeys such as an annual lunch with the CEO or more intensive and time-consuming affairs such as multiweek trainings that all employees attend during certain junctures in their careers.

If membership criteria are broad and ambiguous and the borders of a group are extremely porous, then the task of building a sense of community will be much harder. The familiar Marx Brothers quip that I wouldn’t want to belong to a group that would take me, applies. The implication is that a group that takes anyone is not special. Therefore, groups that are more selective and careful to hire based on certain attributes will cultivate a workplace of peers who value their place more highly among a cadre of others who are equally unique. Importantly, the distinctiveness of an in-group does not necessarily imply a lack of diversity. For example, racially diverse groups are as cooperative as homogenous groups. Superficial similarities and differences are trumped by the range of experiences and factors that bring people together and give them a sense of one. For an intriguing set of experiments that illustrates how rats develop an inclusionary sheath and widen the circle of belonging, see box 4.3.⁶²

Box 4.3
Widening the Circle

Rats, like people, can feel empathy and go to the aid of others in need. In fact, rats will forego a nice chunk of food to save another rat from drowning. But that all depends on who rats allow into their circle of friends. White rats raised with white rats only will save other white rats. However, white rats raised only with black rats will only save black rats. White or black rats raised with both white and black rats will save any rat. Once you get to know someone, you realize they are worth saving.

An employee once told us how she would see the CEO of Instructure, Josh Coates, sitting with employees early in the morning over coffee discussing the organization, their careers, and a miscellany of other concerns. At all-employee meetings at QBP (Quality Bicycle Products), executives, founder included, sit among the employees and do not sit in a cluster by themselves. Employees notice these things. These subtleties convey that while people have different responsibilities and relative importance to the business, no one is better than another as a person. Everyone is afforded equal respect. Therefore, the minimization of status (e.g., titles) and power differences (e.g., refer to employees as members or associates and managers as developers; executive open-door policies) is a way to emphasize inclusivity and belonging—that there are not many small groups, but one big one.

We live in an acronym-filled world. One of the things that distinguishes one group from another is the language they speak. When we go into companies for the first time, some of what we hear is not intelligible without translation. Only insiders, those who are members of the group and in the know, could possibly understand what their unique acronyms, such as GQC or LFR, mean. Language and codes are the operators of in-groups; if you want in, you need to learn the secret handshake and local dialect.

Symbols abound. Specifically, we are thinking of those that denote “members only.” These can be subtle, such as special entranceways, special employee discounts, or even the color of badges that are reserved for “employees only.” Collectively, these enhance the salience and benefits of belonging to a group. Relationships often begin with artifacts, activities, and symbols that designate union; for example, weddings, with special attire, vows, the ceremonial exchange of rings, and kiss to seal the deal. WD-40 does something akin to vows when it asks new employees to take the “maniac pledge.”63 These vows include taking responsibility for getting answers to questions in which employees do not know the answers, making decisions, and admitting to mistakes, called learning moments. The vows request that people promise to acquit themselves in particular ways as members of the team. And, then, consider the multitude of ways that companies metaphorically assimilate employees into the fold. For example, many years ago we were introduced to tool manufacturer American Saw & Mfg. who had new employees inscribe their names into blocks of wood that were then displayed on a Wall of Quality. Everyone’s names are displayed together on the Wall and the person gets his or her etched block when they retire. Similarly, the first thing you see when entering the offices of QBP is a series of serpentine bicycle chains mounted on the walls with 750 wallet-size portraits attached. The faces and names of every employee are neatly displayed in chronological order from their date of hire. With orderly spacing and artful consistency and precision, every employee is inextricably linked.

Many years ago, we had by far the best baseball team of ten- to twelve-year-olds and won a decisive game three in the title match. We did not, however, win the game. The rules clearly state that every player must play at least two innings and bat. And, Billy Cunningham did not bat. We lost the game and the championship by forfeit. It was a sad day, indeed, but not an unfair one. A bit of commotion ensued but once the clamor subsided the verdict was clear: we had lost the game. We lost because we all understood that we would compete by a set of rules that everyone had agreed to. The tacit agreement is this: if you are going to win, you will have to win in a certain way. Constructive competition involves the implicit recognition of an honor code among participants and observers. Specifically, mature play entails a catalogue of attitudes and attributes associated with sportspersonship: a commitment to one’s vocation; respect for rules, conventions, peers, and opponents; and a sense of fair play, grace in victory or defeat, and élan. The ability to remain calm and maintain focus under pressure, to tolerate petty injustices and bad calls, and to bounce back after stumbles, are part of a larger complex of extra-role and prosocial behaviors that give organizations a competitive edge. To see the opposite of sportspersonship on display, go to a little league baseball game in today’s era in which the behaviors of players and fans have become so abusive that leagues are finding it increasingly difficult to find umpires.64

Results of competitions can be disappointing; however, competition is important. Healthy competition is inextricably bound to learning, development, and achievement. It encourages engagement, mastery of a task, desire to achieve one’s best, teamwork, and critical thinking.⁶⁵ Therefore, for all our talk about cooperation, our intent never has been to dismiss the importance of competition. A company needs cooperation to succeed, yet it requires people to have exceptional personal goals to excel. The success of companies necessitates personal striving in conjunction with cooperation. That is, companies need people to cooperate and compete at the same time: they need coopetition.⁶⁶

One ally of healthy competition in organizations is creating a sense of abundance versus scarcity. In general, conditions of scarcity produce unfriendly competition and vice versa.⁶⁸ When executives, refer to scarcity and abundance mindsets, they are alluding to features of the environment that elicit greater or lesser harmful infighting among employees and greater or lesser cooperation. We have seen the concepts of scarcity and abundance most readily applied to the availability of jobs in companies and the ability of employees to advance in their careers. Through robust and flexible development, pay, and career programs, employers are able to accommodate employees’ interests and ambitions in plentiful ways, for example, through growth in disciplinary depth and provisions for special assignments, cross-training, and interdepartmental or functional career moves—and employees see that they have nothing to lose in another person’s success. A sense of abundance allows people to be generous with their time and expertise. The company offers an intricate lattice of possibilities versus placing people on narrow and straight career tracks. Consequently, competition induced by scarcity is tamed.

When few job opportunities are available, people who want the position must intensely compete for it. These circumstances usually encourage a glut of self-promotion, superficial cooperation, wasteful ingratiating activities, such as “face time” (worthless time spent in viewing range of a supervisor), and political drama: time killing diversions typically compensated for by grabbing hours out of one’s personal life. Even worse, studies have shown that rivalries within companies promote odious acts, such as unsporting behaviors, deception, and unethical tactics to win competitions.69 In fact, the desire to win and the associated preservation of self-worth and status supplant the tangible reward as the motive for performance, with deleterious results. First, losers in these career contests are over two times more likely than the average employee to quit the organization in the ensuing year. Second, scarcity and competition redirect individuals’ attention to differences between themselves and others, thereby pushing people apart; conversely, abundance and cooperation direct individuals’ attention to similarities among themselves and toward a regard for others’ needs and welfare.