A couple of weeks ago I had the opportunity to participate in a negotiation course with many business school students.
In a particular class, we were divided into 4-5 people groups for a game.

The game

The instructions were quite simple: all the groups were part of the same company, but each of them had the possibility to make their own decisions. We could choose to produce either Oranges or Apples. At the end of each round,

• If every group chooses to sell Oranges, each of them “wins” 1M.
• If every group chooses to sell Apples, each of them loses 3M.
• If only one group chooses Apples and the rest Oranges, the one selling Apples wins 4M, and the rest lose 1.5M.
• In any other case, the ones selling Apples win 2M and the rest lose 1.5M.

The only rule (by then) was “different teams cannot talk to each other”.

We did 6 rounds. At the end of each round, we calculated the earnings of each group.

First round: What to do?

During the first round, everyone did what seemed to be the logical choice: we all chose Oranges. Hence each team won 1M. You know, everyone wins, everyone’s happy.
But what happens when rules start changing?

Second round: Bonus for "the winner”

Right before the second round started, the instructor introduced a new rule: the "winning team” will have a monetary bonus.

With this bonus in mind, something weird happened: two groups chose Oranges again, but the remaining two groups chose Apples.

At the end of the round, the scoreboard was different: two teams had a whole lot more Ms, while the others were in negative numbers.

Weird.

Third round: Negotiation

For the third round, we were invited to send one person from each team to a negotiation table, so the teams could talk between them.

After this small talk between negotiators, ours came back and said to us "We all agreed to choose Oranges, but I think they lie. Let’s choose Apples instead".

We ended up choosing Apples (not without fighting: why would we say we're choosing Oranges and lie?), but we were not the only ones: in the end, only one team chose Oranges.

Everyone started whooping out loud: "you are all liars!".

Fourth and beyond: The broken trust

In every following round, things went downhill: some of us tried to explain that the only way to dodge the spiralling down was everyone choosing Oranges, but most of the people in the room agreed they "needed to win", so they'd end up choosing Apples instead.

It didn't go any better in the negotiating rounds, despite they reminded us all the teams were part of the same company -- everyone was obsessed with "the bonus", and nobody trusted the other teams.

Of course, every team ended up in the red, but even after announcing that the company went bankrupt, the not-so-losing-team kept asking about their bonuses.

So, What went wrong?

Why everyone chose Apples, even knowing that the only way everyone would win was choosing Oranges?

The first problem that I see is having a "cash prize" as an incentive.
As Dan Pink eloquently explains in his TED talk, incentives are good for some tasks, but they are super bad for others -- such as ours. It ended up narrowing people's vision, forcing them to make decisions based on their own team benefit, instead of thinking company-wise (they couldn’t see the forest for the trees).

That decision was terrible. We broke the trust between teams, and that is the worst case scenario in a company. If teams can't trust each other, how are they supposed to collaborate? How would they delegate tasks?

And it’s not just about teams, but also the people -- how could person A work with person B, knowing that person B is in the team that took advantage of the situation leveraging (and at the expense of) the other teams?

There is no way that would work.

How we do it

Here at 10Pines we've built a trust-based company ecosystem -- we trust that everyone is doing their best in whatever they're doing.

For example, we have a time-tracking system: we don't have to physically check in and out for time control, we log our working hours in the time-tracking system instead. No control. We trust our colleagues, so why make things more difficult/uncomfortable for everyone?

Another example -and this one is actually related with the story-, we trust our colleagues so much we have an open-numbers policy: all the figures in 10Pines are there for everyone to see -- even more, we have a monthly meeting where we actively show and review those numbers.

We trust people well enough for sharing sensitive information.

I've been thinking a lot about this. If we are making the right decisions, it’s because:

1. We have all the information available for making decisions, and we provide several spaces for circulating that information. Informed people make better choices.
2. We trust people -- not naively, though. We are picky with whom we hire, we invest a lot of time trying to spread our culture to new crafters, and we firmly believe that "When in Rome, do as the Romans do" it's not just a catchy phrase.

Trust and transparency are key for more efficient decision making.

So, do you trust your colleagues well enough to share sensitive information?