Tag Archives: internal competition

The one with the $20 auction

OK so it wasn’t strictly $20 it was 100 Yuan but you’ll get the point…

Professor Max Bazerman is a very well credentialed man.  He is Jesse Isidor Straus Professor of Business Administration at the Harvard Business School. His areas of expertise include decision making, ethics and negotiation and he has a publication list that would make even John Grisham blush.

Professor Brazerman’s first lecture on the MBA programme begins with the $20 auction where students can bid to win $20. Of course the bidding starts at $1 and can only go up in whole number increments so you’d figure the most it ever sells for is $20, right? Wrong. It has been sold, I believe, for as high a sum as $204 which having an expertise in ethics the good Professor donates to charity.

If you are anything like me you are likely sat reading this thinking “I’d never fall for anything like that” and you are probably right… but lots of people do and it’s for that reason that I’ve used this mechanic is several workshops including one which I ran today in Guangzhou, China. The workshop looks at amongst other things the nature of internal competition in organizations and how often the drive to succeed in the internal competition distracts from that ALL so important factor…the external competition.

Between my colleagues and I, we have run this workshop several times and I believe our record is somewhere in the region of £80 (and we usually use fake money) but the device is a good one for making the point about how otherwise sensible rational people make often strange decisions in the name of winning.

So this morning I duly got 100 Yuan (about £10) out of my wallet and popped it in an envelope to use at the appropriate moment. When the moment arrived in the workshop a strange thing happened – the auction didn’t work and despite my baiting and goading I only managed to get the team up to 20 Yuan (I had started the bidding at 10!) and was asked the following question:

“Why would we compete with each other? If we nominate one person and all share their costs, can we all share the prize?”

My initial reaction was a forced smile and a response in the affirmative whilst preparing to try and make the learning point without the auction having worked and then I stopped and thought, ‘is this cultural rather than just a group of bright sparks?”. Now I don’t know the answer but it’s been bouncing around in my head ever since.

I wrote a post last week (whilst working in Hong Kong) which shared the Hall’s cultural contexts and a feature of a high context culture (like China) is that identity is rooted in the collective as opposed to low context cultures like the US and the UK where identity is rooted in the individual. Now whether this is due to cultural context, political context or just the foresight of a few bright individuals seeing right through my plan I’m not sure. However, the idea that a group of relatively junior people in our Guangzhou office paid the equivalent of $4 in the $20 auction has made my day, especially when you look at the cost of the MBA programme at Harvard!


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