Collaborate or compete? That's a core strategic question for organizations seeking margins and market share. When are they better off energetically competing against their rivals? When are they wisest to collaborate and cooperate? That strategic question is even more important for the internal IT marketplace. CIOs have to determine what will better drive desirable results: more collaboration within their IT shops or encouraging smarter competition. The "correct" answer, of course, is "both." Good luck.

Unfortunately, most CIOs focus far less on the productive role of competition versus collaboration than on the design and deployment of productive process. Our legitimate concerns about process undermine rigorous thought and action around when getting people to compete and getting them to collaborate makes the most sense. Too much of either can kill. As Paracelsus, the 16th century Swiss alchemist, keenly observed: "The dose makes the poison." What's the right dosage? What's the right mix?

These issues snapped to mind at US CIO's CIO 100 Symposium in San Diego, during a session on innovation that I participated in with Capital One CIO Gregor Bailar and others. Bailar, inspired by an internal competition run by CBS Marketwatch to encourage creative mash-ups, imported the idea to his IT shop. The first time he ran the competition, he got far fewer entries than expected.

Now it's not that Bailar doesn't encourage or support Web 2.0-oriented innovation. Capital One is as innovative a shop as you'll find. The organizational reality is that sometimes internal competitions productively tap an existing well of frustration and perceived opportunity. But if the target audience hasn't yet perceived the potential opportunity, they may treat such competitions as just gimmicky distractions.

This is a powerful and (relatively) innovative diagnostic. Run an internal competition around mash-ups, interfaces, tech support or some other IT-empowered business issue and see what kind of response you get. The size of the prize and quality of recognition have to make sense, but you'll be amazed at what does—and doesn't—pop up. I was.

Indeed, you'll find the conversation surrounding prize size, recognition and rewards speaks volumes about your shop's competition culture. Will a token dinner for two and an enterprise attaboy from the CIO motivate people? Or do you need cold, hard cash? Are you looking for breakthrough ideas from a brilliant programmer? Or would you rather have entries from programming pairs or trios? Do you want lots of entries? Or do you want the "right" ones?

These aren't rhetorical questions. The way you design a competition—particularly its rewards—reveals your own values as a leader. To the extent you recognize, reward and celebrate individual achievement, you may tacitly discourage collaboration. To the extent you pit teams against one another to come up with solutions, you discourage sharing and cooperation. And if competition in any form is seen as irrelevant to innovation, creativity and productivity, you're running an IT shop that's ignoring one of the greatest spurs to ingenuity known to history.