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Published on: December 30, 2015
When winning is everything
Deepak Malhotra1, Gillian Ku, J Keith Murnighan
1Harvard Business School, Boston, USA. dmalhotra@hbs.edu
Harvard Business Review
|June 12, 2008
Summary
Competitive arousal, an emotional state in business, can lead to poor decisions. Managers can mitigate this by identifying and addressing key drivers like intense rivalry, time pressure, and public scrutiny.
Area of Science:
- Business Strategy
- Organizational Behavior
- Decision Science
Background:
- Intense competition can trigger emotional responses in executives.
- This emotional state, termed competitive arousal, often results in detrimental decision-making.
- Understanding the triggers of competitive arousal is crucial for effective management.
Purpose of the Study:
- To identify the primary drivers of competitive arousal in managerial decision-making.
- To explore strategies for mitigating the negative impacts of competitive arousal.
- To provide insights into preventing destructive competitive behaviors.
Main Methods:
- Analysis of case studies, including Boston Scientific and Paramount.
- Examination of research on auction dynamics and bidding situations.
- Identification of key factors contributing to competitive arousal.
Main Results:
- Three main drivers of competitive arousal were identified: intense rivalry (especially one-on-one), time pressure, and being in the spotlight (audience presence).
- These factors, individually and combined, significantly impair managerial decision-making, leading to business failures.
- Competitive arousal can lead to a "win-at-all-costs" mentality.
Conclusions:
- Managers can prevent competitive arousal by anticipating harmful competitive dynamics and restructuring deal-making processes.
- Strategies include limiting roles in intense rivalry, reducing time pressure, and diffusing the spotlight.
- Focusing on contests with a real advantage and stepping back from costly competitions is key to success.
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