I once worked in an organization where the senior managers thought they should motivate us, the team members. They decided to have a team competition, complete with prizes.

I was working on a difficult software problem with a colleague on another team. We both needed to jointly design our pieces of the product to make the entire product work.

After management announced the competition, he didn’t want to work with me. Why? There was prize money, worth hundreds of dollars to each person. He had a mortgage and three kids. That money made a big difference to him. I was still single. I would have stuck that money into either my savings or retirement fund, after buying something nice for myself.

Management motivated us, alright. But not to collaborate. They motivated us to stop working together. They motivated us to compete.

Our progress stopped.

My boss wanted to know what happened. I explained. I couldn’t fault my colleague. He wanted the money. It made a big difference for him. I would have appreciated the money, but not nearly as much as he would have. (Later, when I was paying for childcare, I understood how much of a difference that money made.)

I then had this conversation with my boss, ranting and raving the entire time:

“Look, do you want the best product or the best competition?”

“What?”

“You can’t have both. You can have a great product or you can have a great competition. Choose. Because once you put money on the table, where only one team gets the money, we won’t collaborate anymore.”

My boss got that “aha” look on his face. “Hold that thought,” he said.

The next day, management changed the competition. Now, it was about the teams who worked together to create the best product, not the one team who had the best idea. Still not so good, because all the teams on the program needed to collaborate. But better.

When I had my one-on-one with my boss, I explained that all the teams needed to collaborate. Were they really going to pay everyone a bonus?

My boss paled. They had not thought this through. “I’d better make sure we have the funds, right?”

People don’t work just for money. You need to pay people a reasonable salary. Remember what Dan Pink says in Drive: The Surprising Truth About What Motivates Us. People work for autonomy, mastery, and purpose. If you exchange the social contract of working for autonomy, mastery, and purpose for money, you’d better pay enough money. You also better repeat that money the next time. And, the next time. And, the next time.

That’s the topic of this month’s management myth: Management Myth 35: Friendly Competition Is Constructive.

Software product development is a team activity, full of learning. As soon as you make it a competition, you lose on the teamwork. You lose the learning. Nobody wins. There is no such thing as “friendly” competition.

Instead, if you go for collaboration, you can win.