Collaborate\nor compete? Thats a core strategic question for organizations seeking\nmargins and market share. When are they better off energetically\ncompeting against their rivals? When are they wisest to collaborate and\ncooperate? That strategic question is even more important for the\ninternal IT marketplace. CIOs have to determine what will better drive\ndesirable results: more collaboration within their IT shops or\nencouraging smarter competition. The correct answer, of course, is\nboth. Good luck.Unfortunately, most CIOs focus\nfar less on the productive role of competition versus collaboration\nthan on the design and deployment of productive process. Our legitimate\nconcerns about process undermine rigorous thought and action around\nwhen getting people to compete and getting them to collaborate makes\nthe most sense. Too much of either can kill: As Paracelsus, the 16th\ncentury Swiss alchemist keenly observed, The dose makes the poison.\nWhats the right dosage? Whats the right mix?These\nissues snapped to mind at this magazines CIO 100 Symposium in San\nDiego, during a session on innovation that I participated in with\nCapital One CIO Gregor Bailar and others. Bailar, inspired by an\ninternal competition run by CBS Marketwatch to encourage creative\nmash-ups, imported the idea to his IT shop. The first time he ran the\ncompetition, he got far fewer entries than expected.Now\nits not that Bailar doesnt encourage or support Web 2.0oriented\ninnovation. Capital One is as innovative a shop as youll find. The\norganizational reality is that sometimes internal competitions\nproductively tap an existing well of frustration and perceived\nopportunity. But if the target audience hasnt yet perceived the\npotential opportunity, they may treat such competitions as just\ngimmicky distractions.This is a powerful and\n(relatively) innovative diagnostic. Run an internal competition around\nmash-ups, interfaces, tech support or some other IT-empowered business\nissue and see what kind of response you get. The size of the prize and\nquality of recognition have to make sense, but youll be amazed at what\ndoesand doesntpop up. I was.Indeed, youll find\nthe conversation surrounding prize size, recognition and rewards speaks\nvolumes about your shops competition culture. Will a token dinner for\ntwo and an enterprise attaboy from the CIO motivate people? Or do you\nneed cold, hard cash? Are you looking for breakthrough ideas from a\nbrilliant programmer? Or would you rather have entries from programming\npairs or trios? Do you want lots of entries? Or do you want the right\nones?These arent rhetorical questions. The way you design a\ncompetitionparticularly its rewardsreveals your own values as a\nleader. To the extent you recognize, reward and celebrate individual\nachievement, you may tacitly discourage collaboration. To the extent\nyou pit teams against one another to come up with solutions, you\ndiscourage sharing and cooperation. And if competition in any form is\nseen as irrelevant to innovation, creativity and productivity, youre\nrunning an IT shop thats ignoring one of the greatest spurs to\ningenuity known to history.CIOs worldwide are\nimpaled on the schizophrenic horns of a leadership dilemma. IT\norganizations desperately need the efficiencies and innovations that\ninternal competition can surface. Yet they have to promote greater\nknowledge sharing and collaboration to encourage greater efficiencies\nin innovation communication and alignment. So which is the better\ninvestment: rivalry or cooperation?Even though Ive\nwritten books about collaboration, my moneys on rivalry as the medium\nand method that deserves greater investment and ingenuity from CIOs.\nWhile competition shouldnt be a dominant driver of your internal IT\nculture, it needs to be more than a spice: It has to be an essential\ningredient. Yes, competition for the sake of competition is dumbbut so\nis collaboration for the sake of collaboration. You need to begin by\nlearning how your existing IT culture defines the contours of its\ncollaboration versus cooperation landscape.While\nthe answers arent easy, the path to finding them is. Look at the three\nmost common success stories your organization tells when its\nreviewing past accomplishments. Then review the three most common\nabysmal failure tales your people tell. Heres the trick: Dont look\nfor the heroes, villains, best practices or dumbest decisions. Instead,\nexamine the competitive versus collaborative dynamics of each project.\nWhat role did competition and rivalry play in the successes and the\nfailures? How did cooperation and sharing add value or induce paralysis?Youre\nguaranteed to discover your IT shops comfort zones around rivalry and\ncooperation. Sometimes, feeling uncomfortable about competition is\nwonderful; other times, it signals the wrong kind of fear. Sometimes,\ncollaborative, cooperative relationships indicate a well-run\norganization; then again, they can signal self-indulgent complacency.\nYou need to know this.At one global professional\nservices firm, the CIO realized that office rivalry between regions had\npassed the point of diminishing returns. There was literally no\nincentive for offices to share best practicesor any meaningful\ninformationat all. Not a single success story had anything to do with\ncross-office collaboration. In fact, because the offices were actually\nranked against one another, collaboration was effectively discouraged.\nEffecting a change in incentives and culture proved easy. An outside\nconsultancy recommended the straightforward remedy\nof making 20 percent of the regional CIOs bonus contingent upon\ndemonstrable knowledge sharing and cost-savings between the units. The\nunits were also ranked on how collaborative they were.By\ncontrast, another professional services firm IT shop was so collegial\nand collaborative that it passive-aggressively killed efforts to\nintroduce IT innovations that would upset the existing comity. The IT\npeople did a better job of collaborating with each other than with\ntheir internal clients. The clients came second. The result? The\nconsultants bypassed IT and bootlegged budgeted IT innovations on their\nown. The CIO was ultimately asked to leave, and a non-IT partner was\nput in charge. A few of the surviving IT employees are unhappier, but\nthe bulk of their internal clients are not. Internal competition\nenergized both IT and its users.Leadership means defining and\ndesigning the kind of marketplace thats best for your IT shop and\nenterprise. And it means having the courage to compete and collaborate\nand inspiring your people to do the same.Michael\nSchrage is codirector of the MIT Media Labs eMarkets Initiative. He\ncan be reached at firstname.lastname@example.org.\nWant to comment on this article? Go to the online version at\nwww.cio.com\/031507.