Why Gamified Competition Fails at Work (And When It Actually Works)

A sales team slaps a leaderboard on the wall. For two weeks, performance spikes. By month three, half the team resents the top performer and the other half has stopped trying.

Sound familiar?

This is the paradox of gamified competition in the enterprise. When it works, it’s electric. When it fails, it poisons the culture it was supposed to improve.

Gartner predicted in 2012 that 80% of enterprise gamification initiatives would fail by 2014 due to poor design. That prediction proved accurate. The primary culprit? Companies forcing competitive game mechanics into situations that called for collaboration, mastery, or creativity instead.

Melissa Visintin put it bluntly: companies throw together competitive game elements without understanding whether competition is even the right mechanism for the job.

This post explores when competition actually helps in the workplace and when it destroys the very thing you’re trying to build.

⚡ Speed Run Notes

• Competition is not automatically motivating. In a workplace, leaderboards often undermine the collaboration companies were built to create, especially when employees are forced to compete on the wrong metric.
• The same mechanic can create opposite outcomes. Well-designed competition can raise effort in mastery situations, but the same setup can trigger burnout, envy, and disengagement when the stakes or audience are wrong.
• Octalysis explains the split. Healthy competition leans on growth, progress, and team pride, while toxic competition leans on pressure, fear, humiliation, and zero-sum status anxiety.
• Most enterprise failures come from copying sports logic into office work. Sales sprints can sometimes work, but creativity, learning, and high-trust collaboration usually need a different motivational design.
• The best workplace competition is usually indirect. Compete against a standard, a past personal best, or another team with shared identity, instead of turning coworkers into daily enemies.

Author Credibility: Yu-kai Chou

Yu-kai Chou created the Octalysis Framework after studying gamification since 2003 — years before the term entered mainstream vocabulary. As a Human-Systems Architect & Behavioral Designer, his framework has been applied by LEGO, Microsoft, Porsche, Coca-Cola, Salesforce, and MrBeast, impacting over 1.5 Billion Users.

Chou has taught the Octalysis methodology at Harvard, Stanford, Yale, Tesla, Google, BCG, and IDEO.

His work has been cited by Harvard, Stanford, MIT, Forbes, Wall Street Journal, Wired, US Department of Energy, NIST, NSF, NCBI, US Department of Education, ClinicalTrials.gov, and Google Scholar — with 3,700+ more academic publications. Explore his books here.

What Exactly Is Gamified Competition?

A Working Definition of Competition

Mario Herger from Enterprise-Gamification.com explored the nature of competition from a number of perspectives. Drawing from Wikipedia, he has defined it in terms of ecology and sociology as:

“a contest between individuals and entities for territory, a niche, or a location of resources, for resources and goods, for prestige, recognition, awards, mates, or group or social status, for leadership.”

Notice the emphasis on the individual (or entity), and the need to “contend” or “contest” for something; implying that there will be a winner, as well as a loser. Maybe many losers.

In the enterprise this implies that we will have people competing with other people within the company. OK, that seems reasonable. But Mario Herger points out that this is contrary to the essential meaning of the corporation; yes, the very nature of an enterprise. For corporations are formed to bring people together and pool their different strengths in a collaborative setting. The fundamental design of an effective corporation taps the talents of its constituents to build something greater than the component parts. And yes, even more competitive in the external environment – the marketplace, where it faces the challenges brought forth by the other companies.

So now, do we want to introduce an anti-collaborative element – competition among the internal players, and potentially reduce their effectiveness as corporate team members? Possibly for customer engagement, but only after thoughtful analysis indicates that the benefits outweigh the risks, and possible long term detriment to the employees and ultimately the enterprise.

In general, adding the additional stress of competition to the challenges that employees face on a daily basis will only result in a deteriorating situation with increased probability of burnout and uneven performance. Employees will become more motivated – to look for new opportunities elsewhere.

The Different Types of Competition

One perspective that we can view competition from is that of whether it can be deemed as healthy versus unhealthy. Mario Herger distinguishes between a “good” adaptive competitiveness and a “bad” maladaptive competitiveness by a set of specific characteristics.

Adaptive competitiveness has the following characteristics:

• Perseverance and determination to rise to the challenge, but bound by an abiding respect for the rules.
• The ability to feel real satisfaction at having put in a worthy effort, even if you lose.
• The fact that you don’t have to be best at everything, just in the domain you train for.
• Being able to deter or discourage gratification.
• Being marked by constant desire to strive for excellence, but not for the desperate concerns of rank.

Maladaptive competitiveness in contrast, is characterized by:

• Psychological insecurity and displaced urges.
• A person who cannot accept the losing part of competition.
• One who competes when others around are not competing.
• A person who has to be best at everything.
• One who doesn’t stop when the whistle blows.
• An individual who drags others into competition.
• One who will resort to cheating when he/she can’t win.

How Winners and Losers React

Now that we see that competition can be thought of in terms of adaptive and maladaptive forms, how do we view the players in these competitions? What are the common reactions that “players” have? Herger cites two Hungarian researchers – Marta Fulop and Mihaly Berkics. They found that there are four common reactions for winners and losers.

Winners typically can either show:

• Joy, expressed through gleeful enthusiasm.
• Satisfaction with one’s own competence.
• Denial of the win as way of social cautiousness. Those players would feel guilty and fearful of the losers’ reactions, like retaliation, so winners would mask their inner joy and not express it openly.
• Narcissistic self-enhancement, where the winners would feel a malicious superiority over the losers.

Losers typically can display:

• Balanced expression of sadness and disappointment, but with a graceful acceptance of the loss and a promise to be better the next time.
• Indifference, denial of loss, where they wouldn’t care; emotionally disinvested.
• Avoidance and self-devaluation, where the individual becomes their harshest critic. Often leading to extreme embarrassment, self-hatred, self-defined liability.
• Aggression towards the winner, overcome by envy, anger and hatred of the winner.
• The researchers found that the most common winning reactions were the first two – “joy” and “satisfaction”. Together they represented 75% of the reactions expressed by winners. In contrast, the most common reaction to losing was the first one: “sadness.”

A Little Neurophysiological Background

Another aspect of the competitive situation is that of human neurophysiology. Herger points out that there are underlying neurophysiological reasons for how well people deal with competition. He notes that some are hyper-competitive and thrive with competition, while others fail under stress scenarios, despite being knowledgeable and skilled. These distinctive groups are the “Warriors” and the “Worriers”, respectively. Warriors see every challenge as an opportunity to gain something, while worriers fear loss and won’t take a risk.

Humans plan, evaluate potential future outcomes, differentiate competing thoughts, and attempt to resolve conflicts in the prefrontal cortex region of the brain. The neurotransmitter that provides the chemical stimulus to this region is Dopamine, the proverbial “reward” transmitter. However, too much dopamine will lead to an overactive state or “overload”.

To moderate and reduce excessive amounts of Dopamine the body produces the enzyme Catechol-O-methyltransferase (COMT). There are two types of this COMT that act at different rates – one faster, the other slower. Among Europeans, 50% of the populace have both forms of the enzyme, while 25% have only the fast form and 25% have only the slow form.

As a result, the 75% that have the fast COMT can cope well with stress, while the 25% that don’t will overload faster. While the fast COMT individuals need stress to perform and tend to be good competitors, the slow COMT individuals overload and tend to not be good in competitions.

There is another factor that complicates the situation. Slow COMT subjects have been found to perform well in a mastery situation. A mastery situation is where there has been previous, extensive training for a particular scenario, such as in the case of a flight simulator. An example would be the case for pilots who have gone through hundreds of simulations involving crisis scenarios. They then tend to outperform the “fast COMT” subjects. In contrast, for learning situations, where new knowledge is acquired or creative solutions are needed, the stress level is similar for everyone. Here the “fast COMT” individuals will perform the best, while the “slow COMT” individuals will falter.

Noted Gender Differences

An interesting aspect of competition is the difference in how men and women approach it. In Richard Bartle’s Player Type matrix we find that the most competitive group, the killers account for less than 5% of all players, if the classification is based only on their dominant trait. That is, only being classified as a killer, socializer, achiever, or explorer. Somewhat surprisingly, of this small percentage of the population, essentially zero are women.

This doesn’t imply that women don’t compete, but that they compete differently. They just enter competitions with different considerations. Mario Herger points out several gender differences between how men and women approach competition.

When men compete, the following are observed:

• Men compete when there is any chance to win. Even a 10% chance.
• The highest achieving men in a group may make other, lower achieving men become depressed. They do not lift them up to higher achievements.
• Men work in groups.

When women compete, the following are observed:

• Women will compete when there is a high chance to win, because women are better judges of their own capabilities.
• The highest achieving women serve as “shining lights” for other women, they pull lower-achieving women up to new, higher levels of achievement.
• Women work in dyads, which discourage competition but emphasize relationship. Therefore, to enter a competition, women must have a good reason to sacrifice a relationship. When forced to do so, they feel miserable.
• During a menstrual cycle women tend to overload faster, because of already high dopamine levels.

Some Cultural Differences

Mario also expands on the fact that different cultures view competition differently. He points out that the typical “Employee of the Month” plaques that are so prevalent among the companies found in the US would seem odd, even strange in the more egalitarian societies found in such countries as the Netherlands, Germany, or Austria. Being an Austrian, he reveals that a company member receiving an “Employee of the Month” award would likely invite mockery and envy from others, so he wouldn’t want the exposure.

In another example of cultural differences influencing a competitive situation, Mario states that Russians would find these awards quite suspicious. They have had the “Hero of Socialist Labour” title in the past. And now these awards have returned. But everyone knows that these people were not really the heroes. They were just the hard line communists or party followers; people to avoid.

Asian cultures tend to prefer group harmony instead of promoting the individual. In general, competition would be counterproductive to group harmony, eroding its strengths. A compromise might be to acknowledge the works and achievements of some groups, but not specify a winner. Essentially naming the highest ranked teams, but without specific winners.

When Competition Works

Mario feels in some cases that competition has the potential to work. What situations would be more likely for competitive design to succeed?

Here is a short list of when competition works:

• In mastery situations
• In gain-oriented situations and attitudes
• When the Individual Zone of Optimal Functioning (IZOF) is respected
• When players care about the team

Competition does not work in:

• Learning situations
• Prevention-oriented situations and attitudes (unless not performing means losing points etc.)
• When teams are too harmonious
• When creativity is required
• When the competition is regarded as skewed

A well-designed game makes sure everyone is having fun, even in competition

In the corporate environment, motivation can be viewed as the process to engage employees and encourage them toward progress and achievement. To foster cooperation and collaboration, and in doing so, improve themselves and the company they work for.

Though game mechanics can be used to motivate employees and promote the behaviors that the company wants to see, each initiative should be well thought out and designed with the most effective elements. Arbitrary use of game elements modeled on competition may be useful for short term sales initiatives, but may be disruptive and anti-productive in the long term.

Instead of taking the zero-sum approach to try and motivate the best performers, we should consider strategies which bring individual strengths together to produce a more effective “corporate team”. That formula will always “out perform” the individualistic paradigm. It will help preserve and improve a positive corporate culture, support and encourage the development of talent and skills, and increase competitive strength where it really matters – outside, in the marketplace.

A gamification lesson from John Wooden, the man who knew his game

You may notice that the key characteristics of adaptive competition have much in common with the often quoted definition of success by John R. Wooden:

“Success is peace of mind which is a direct result of self-satisfaction in knowing you made the effort to become the best of which you are capable.”

A highly successful basketball coach, teacher, and corporate speaker, Coach Wooden was able to motivate many by focusing on self improvement, cooperation, and team concepts. Emphasizing that motivation is founded on a passion and love for the game, his teams were some of the most successful in the history of collegiate athletics.

The Octalysis Perspective: Why Most Competitive Gamification Fails

Everything Mario Herger describes above maps directly onto the Octalysis Framework. The reason most enterprise competition programs fail is that designers activate the wrong Core Drives without realizing it.

The Core Drives Behind Workplace Competition

Workplace competition primarily triggers three of the eight Core Drives:

Core Drive 2: Development & Accomplishment. This is the healthy engine of competition. When employees compete to master a skill or hit a personal best, the competition provides a feedback mechanism. You see your progress relative to peers, and that drives improvement. Adaptive competitiveness lives here.

Core Drive 5: Social Influence & Relatedness. Competition is a social act at its core. It creates envy (the desire to have what others have), social comparison, and either mentorship or rivalry. Leaderboards are the most common expression of CD5 in the enterprise, but they can just as easily trigger resentment as motivation.

Core Drive 8: Loss & Avoidance. This is where competition turns toxic. When employees compete because they fear losing their ranking, their bonus, or their standing, that’s fear-based motivation. It creates urgency in the short term but breeds resentment and burnout over time.

White Hat vs Black Hat Competition

In the Octalysis Framework, we distinguish between White Hat motivation (which makes people feel powerful, fulfilled, and in control) and Black Hat motivation (which creates urgency but makes people feel anxious and pressured).

Competition designed around mastery and growth (CD2) is White Hat. The employee thinks: “I’m getting better. I can see my improvement.” They feel good about themselves.

Competition designed around fear of losing (CD8) is Black Hat. The employee thinks: “If I don’t hit this number, I’m done.” They perform, but they hate it.

This is exactly why Gartner’s 80% failure prediction came true. Most enterprise gamification programs slapped badges and leaderboards onto everything without understanding that rank-based leaderboards activate CD5 + CD8 (Black Hat social pressure). They assumed that what works for a two-week sales sprint would work as a permanent culture feature. It doesn’t.

Black Hat competition is useful for short bursts with clear endpoints. Think of the Petronas Twin Towers in Malaysia: two construction consortiums (one Japanese, one Korean) racing to build their tower first. National pride (CD1: Epic Meaning), visible progress bars (CD2), and the shame of losing to a rival nation (CD8) pushed both teams to finish ahead of the six-year deadline. That worked because the project had a definitive end.

But when Black Hat competition becomes the permanent operating mode of a workplace, people burn out. When they quit, they feel relief, not regret. As I’ve often said: when people leave a Black Hat system, that’s usually the best day of their lives.

Designing Competition That Actually Works

If you must use competition in the enterprise, design it with these principles:

1. Compete against a standard, not each other. Coach Wooden’s definition of success is a Core Drive 2 framework. “Become the best you are capable of.” When employees measure themselves against their own past performance rather than their colleagues, you get the motivational benefits of competition without the social destruction.

2. Use team-based competition, not individual rankings. This shifts the dynamic from CD8 (fear of personal humiliation) to CD5 (group bonding and shared purpose). The Petronas Twin Towers example worked partly because entire consortiums competed, not individual workers.

3. Keep it time-limited. Black Hat competition has a place, but only in short bursts with a visible finish line. A month-long sales sprint with a clear end date? Fine. A permanent leaderboard that resets every Monday? That’s a burnout engine.

4. Make the “losers” feel progress. The most dangerous outcome of competition is the middle-of-the-pack employee who decides trying is pointless. Design your system so that even employees outside the top tier can see their own growth trajectory. That’s White Hat motivation protecting against Black Hat damage.

(Thanks to Jerry Fuqua for helping me tremendously on this Post.)

Related Reading

• The Octalysis Framework: Complete Gamification Framework
• When to Use White Hat Gamification Design
• When to Use Black Hat Gamification Design
• Why Most Leaderboards Fail (And How to Fix Yours in 5 Steps)
• Why Dopamine Addicts Make Terrible Life Choices
• Gamified Training in the Corporate Workplace
• Books by Yu-kai Chou

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