Friday, October 31, 2003

Lessons From Paul Richards
Part I: More with More  

The Baltimore Sun is doing a retrospective series on Oriole baseball, and their recent piece on Paul Richards, while by no means scratching the surface of the guy's management acumen, is a good read and replete with some fun details.

Before he petered out, Richards built a strong organization in Chicago and then turned Baltimore into a long-term very competitive franchise, both in the 1950s. He did this by combining a determinedly experimental mind and the cojones to try out his ideas without regard to how others might feel and without spending serious time worrying about whether it might be what my buddy Dave Perkins calls a CLM (Career-Limiting Move). As many of you already know, most big organizations punish managers' experimental innovation; if a manager faces a situation and uses the standard operating procedure and it fails, it's not her fault. If her peer tries an experimental innovation in an identical situation, it's her failure and the organization will stick it to her as a career-long tar baby. So to implement changes in most big organizations, you have to care more about results than career enhancement. Paul Richards was the poster boy for that.

COOL PAUL RICHARDS FACT: He has the best & most appropriate middle name of anyone in major league history. For a guy with a razor-sharp mind and aggressive goal-oriented operational persona, he was lucky to have the middle name Rapier.

There are a lot of great and good management lessons from Richards, but one of them was featured in the Sun article so I'll elaborate on it today. He realized that sometimes executive management can have a strategic approach that's both a proven failure, and at the same time unquestioned as a course to follow.

When Richards came to the Orioles in 1955, they were long-term league sad-sacks recently moved from St. Louis where they'd played as the Browns. The Browns were poor enough to need to move. Except for a pennant during WWII (when all the rosters were wacky and peppered with guys who would have been lucky to play if a war hadn't siphoned off a lot of prime talent), it had been decades since the franchise fielded competitive teams in back-to-back years. Ownership thought of themselves as stewards of bad baseball that had to be bad because you didn't have a lot of money to spend. So the teams were bad, attendance was weaker than it would have been with stronger teams (St. Louis and Baltimore were, and St. Louis still is, incredibly strong hotbeds of baseball interest & knowledge per-capita). As a team accountant recounted to Sun reporter John Eisenberg:

The franchise had been a dispirited, penny-pinching loser in St. Louis and was on its way to losing 100 games in its first season in Baltimore when Richards was hired in a dual role, replacing Jimmy Dykes as manager and Arthur Ehlers as general manager.

"We had operated very conservatively that ['54] season," Hamper [the accountant] said. "The mind-set was clubs like the Yankees and Red Sox had the big bucks, and we were not in that category." The Orioles owners and club president Clarence Miles were neophytes who had pledged to spend "whatever it takes" to win, but they didn't know where or how much to invest.

Richards showed them. As the major leagues' first manager/GM since John McGraw, who ran the New York Giants from 1902 to 1932, he took liberal advantage of his unchecked authority to deal and spend. "Overnight, we went from a conservative organization to a very aggressive and, in some respects, reckless organization," Hamper said. "It was a complete change in philosophy and a nightmare for those of us on the financial side, but the end result was the mentality that we were competitive and weren't going to back off."

The article mentioned that lot of Richards' experiments didn't work out, but what later came to be known as The Oriole Way, a mix of strategy & tactics that were only neutralized by widespread imitation, was Richards' formulation.

This happens in business, too. Economies evolve quickly and big organizations don't.

Frequently a company that was a success in a specific economic and cultural milieu comes to believe it was successful because it is, itself, successful. But it's not. It's successful in that environment. In the early market for microcomputers dedicated to business uses, IBM became very successful in both margin & in sales volume. They thought of themselves as unbeatable. But their success was a combination of image (most non-computer-savvy finance people...the ones cutting purchase orders...thought of IBM as computers the way most people think of Jello as the entire cornucopia of gelatin-based dessert substances.). When companies started offering imitations for less, imitations with extra features for the same or less, they made small inroads. When people got used to desktop computers, the mystique evaporated as quickly as a World Series rally hinging on an Alfonso Soriano at-bat. It wasn't that IBM was, as an organization, a success in microcomputers, it was that they were a success in that environment.

The reverse can be true, too. A company, like Radio Shack, that learns to compete on price and selection, can miss out on high-margin opportunities because they are constrained, like the St. Louis Browns/pre-Richards Baltimore Orioles, into thinking they are a low-cost reseller of stuff made in Red China. Another example: My partner & I used to have a lot of building insulators as clients. They tended to have niches based on types of customers, not types of jobs that required specific supplies, equipment and expertise. Many of them wouldn't compete outside their self-prescribed list of job types, and when things went bad in their niche (warehouses, old homes for retrofit, recent homes for upgrades, for example) they couldn't see that the other jobs were potential work, too.

Frequently the response of an environment to pressure or resources you apply is not linear. Sometimes you need a critical mass to achieve your goal...run a few ads, no response; run twice as many, no response; run twice again as many, some response; run the same number again, flood of buyers. A lot of models work like that example. Which is not an argument, btw, to just throw money at things and hope it works out.

Richards changed the mind-set of Oriole executive management and created a long-term powerhouse, in part by getting them to see themselves in a broader light and to see that they could do More With More. Is your organization's "leadership" missing opportunities to see themselves in a different strategic position. Could they, for example, do More With More and possibly succeed where they have been trying to do more with less and falling consistently short?

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