Tom DeMarco, in his book “Slack” says “There is no such thing as ‘healthy competition’ in a knowledge organization; all internal competition is destructive.”
Tom DeMarco is a smart man, and I love the book “Slack”, so I hesitate to disagree. However, I believe DeMarco is looking at the organization through a very particular lens, once which misses some critical aspects. When I look through a lean product development lens, I see several times where internal competition can act as “Slack”.
Let’s use a thought experiment. Recall that since DeMarco is claiming his statement is universal, only one counterexample is necessary.
Software manufacturer MyCo has two very different, but both high risk, approaches to solving a customer problem. Unfortunately for MyCo, it’s not at all clear up front which of the approaches will be successful technically and/or successful at delivering the most value to the customer. However, they have determined that being early to market will be very profitable (in other words, their “cost of delay” is very high). One way to solve the problem, while not relying on internal competition, is for the company to allocate their resources to one of the approaches, and wait for the other one. If the first one works out, great (although it may not be as optimal as the other approach).
Instead, if MyCo decides to examine both approaches, they are setting up an internal competition. They have also provided a time buffer (i.e., slack) by exploring both options simultaneously. If only one approach is successful, then they will have the successful approach. If both approaches are successful, they can select the best one. And if neither one is successful, they have quickly eliminated this possibility and can move onto other things.
Whether or not it makes sense to set up this internal competition depends on the cost of exploring the options and the cost of delay. If the cost of delay is high (alternatively stated, if the benefits of being early to market are high) relative to the cost of exploring the options, then both should be explored simultaneously.
Thanks to @aJimHolmes and @alshalloway on Twitter for bringing up this topic, as well as Donald Reinertsen for providing the particular “lens” to look through.
UPDATE: This is a common issue with technocrats – people who believe that having a smart person in charge of things can improve results over a marketplace (or goods, ideas, or whatever). Just like DeMarco believes that smart managers should eliminate internal competition as wasteful, smart politicians often believe they should eliminate competition in the external marketplace as wasteful. It’s so intellectually appealing, but is only a vanity. F.A. Hayek expresses these concepts far better than I when he discusses the limitations of knowledge in society in “The Fatal Conceit”. Although he talks in terms of entire economies, I believe these thoughts apply (although to a lesser extent) in smaller societal units like organizations.