Humans are naturally hardwired to engage in comparison. And while Teddy Roosevelt famously said “Comparison is the Thief of Joy”, the phenomenon has also been shown to increase both effort and performance.
For example, after studying nearly 3,000 soccer matches, Gavin Kilduff, Professor at NYU’s Stern School of Business, found that when playing against their rivals, athletes were nearly twice as likely to earn a yellow or red card. Similarly, local running clubs show that people tend to run faster if their rival is racing on the same day.
Setting up internal, self-managed teams and promoting friendly competition can enhance an organization’s productivity and effort. A good example of this is a wholesale grocer called C&S Wholesalers in New England. In the late 1980s, C&S wholesalers was facing higher demand and struggling to meet the throughput needs of its growing customers. The company was set up as a traditional warehousing operation where operators would report to a shift supervisor who would report to a manager, etc.
However, realizing that something needed to change, Rick Cohen, CEO of C&S decided to re-organize reporting structures and incentives. He allowed warehouse operators to self-organize into self-managed teams. The teams of 5-10 operators would be given points based on the throughput of their forklift operations at the warehouse. They’d lose points for things like safety incidents or damage to goods. The more points they accumulated, the higher their hourly wage.
After the rollout of the new structure, highly productivity teams self-organized and used the competition as a driver against their peers. The high performers took pride in being known as the $30/hour teams, and they only accepted new team members that shared in their goals.
The outcome: total warehouse throughput increased by 40%, with a decrease in safety incidents and a decrease in damage to goods. After implementing self-managed teams across multiple warehouses, Rick Cohen became one of the wealthiest people in New England, with a net worth of $19B.
Regardless of your company-type, consider the use of self-managed teams. The increase in autonomy allows employees to organize their work, innovate quickly, and align based on shared-individual goals.
As always - if you’re interested in speaking about industrial software, or are building a company in the space, please reach out at my email below.
Mark Tomasovic
mtomasovic@energizecap.com