Leadership, Strategy, and Championships

Like many other businesses, baseball has undergone a significant change in how it uses data to evaluate talent (see Moneyball).  As with all paradigm changes, this has encountered a fair amount of resistance, but now every team in the league uses some form of analytics to better understand their players’ strengths and weaknesses.

Sports teams in the U.S. are somewhat unusual in the business world in that success with the product (wins and losses) does not exclusively determine whether the franchise is viable.  This is due to a variety of factors, including shared revenue from national TV contracts, caps on salaries (with the notable exception of baseball), and the emotional bond that teams have built with their fans over many years that leads to consistent revenue from game attendance and the sale of merchandise.  For many years, the Boston Red Sox and the Chicago Cubs benefited most from the latter.  Now, both are also winning on the field after decades of futility.  What changed?

One could argue that the biggest factor for both teams was Theo Epstein.  Mr. Epstein became an executive with the Red Sox when they broke their championship drought in 2004.  He then moved on to the Cubs in 2011 in a similar role and they just won their first World Series in 108 years.  The cultures of the two teams were very different.  The Red Sox were forever chasing their rivals the New York Yankees and had some World Series heart breaks.  The Cubs were forever chasing a good time and were OK perpetually being bad on the field because they were making money.

Epstein made the case to both teams that they needed to spend their resources in different places (identify and invest in upcoming talent and less on purchasing experience), identify the most critical resource on the team (“Find Pitching” has been his mantra with the Cubs), and apply other resources more wisely (change the batters’ approaches to hitting).  He is not the first baseball executive to preach these things.  But baseball organizations are bigger than the 25 players on a major league team.  They are made up of managers, coaches, talent scouts, analysts, front office staff and hundreds of players competing to make the team in the minor leagues.  In that sense, changing a culture in a sports organization is not that different than doing it in other industries.  He managed to do it twice.

The lesson is one that we may know but sometimes fail to internalize: The best ideas need both good execution and the buy-in from the organization to be meaningful and successful.  Or, as was attributed to Peter Drucker, “Culture eats strategy for breakfast.”

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