I have had a couple experiences where groups were formally put in competition deliberately as part of a strategy to generate tension to increase creativity.
Case 1: The Chief of Staff of the Army deliberately assembled 3 different organizational design teams to independently (but not quite) develop radical new approaches to force structure (org design) in the early 1990s when the Cold War threat was over but a new clear threat had not yet emerged. He was going to reward the group that came up with the most radical yet feasible solutions. The rationale was that without the sense of competition to be "out of the box", the design groups would be more likely to make an incremental change to existing conditions, which is the normal approach. My assessment is that it actually worked because each group came up with at least one nutty but not impossible design, elements of which i have seen come true in some form in the last 15 years. Knowing there were other groups "out there" but without knowing their formal schemes lent fuel to our imagination
Case 2: The leadership reaction course is an Army experiential lab where groups are deliberately given difficult physical challenges with a few props and lots of cold water below to examine how groups perform under stress and with leadership roles being rotated. They are subjected to peer pressure from jeering onlookers while they try to solve an obstacle course. What makes it brutal is that there is a solution although penetrating the fog is often difficult. It's artificial in a way, but , as a technique of getting into the emotional domain with a real investment of your own ego, it works like a charm. People really come out of it humbler, which is a good thing. I don't know if that captures the spirit of what the text is describing, but its definitely memorable. I have gone through it 5 different times in various schools and it never fails to amuse and instruct.
Case 3: I have participated in some trading system competitions with groups of traders trying to generate trading rules to win valuable cash prizes etc, and i found these much more likely to devolve into anarchy and recrimination if not carefully supervised and debriefed for meaning and education.
In sum, I'd say the purpose and feedback loops require much attention before just launching into this technique in a commercial organization. It can have very negative effects on culture and collaboration (I am remembering the movie Glengarry Glen Ross and the healthy positive competition those guys enjoyed).
