Wednesday, October 08, 2003

Part II -- 3 Knowns of Innovation:
In Which the Bosox Meet Deming  

Innovation is a process that turns surprises into (generally) unknowable trends.

Yesterday, I discussed the recent Cincy Enquirer story about the Reds' future direction as a response to recently-publicized innovations. the three "knowns" of innovation. Today, the second "known".

Knowable #2: Halfway Innovation Is More Likely to Half-Drown You Than Half Rescue You

Yesterday, I discussed context, and how both important and difficult it is to master context in innovation. For example, Theo Epstein, the first-year G.M. of the Boston Red Sox made an early-season initiative to overcome one of the costliest challenges facing most teams: bullpen construction. Most franchises aim in the last couple of decades to construct a bullpen with highly-prescribed roles: a cheap garbage-time mop-up guy or two, a cheap long man for 3+ inning stints, a couple of pricy guys that will pitch in the 7th and 8th inning of not-totally-decided games, and super-expensive "closer" for just the 9th inning to protect leads in close games.

This prescription is not a "bad" thing. It evolved over time for convenience, and gives the manager and players comfort. It simplifies the field manager's decision-making (if it's the 7th of a close game, I use Alfonseca). It's emotionally easier for the guys in the 'pen (I know my role here, no surprises, I know when to perk up and when I can relax because I'm not going to be called-upon). But relief pitchers are the most inconsistent year-to-year performers in the majors. Small sample sizes and use only in the most torrid crucibles make for physical and mental stress and a difficulty in having enough data to accurately judge the guy. So people tend to overpay for one guy in the bullpen and scrimp on several others to pay for it. Use a guy as a "closer", and if he's successful, he's soon priced out of your ability to pay for him. If he's not successful, he still costs half a ton (Can you say Joe Table? Can you say $4,200,000?)

The Epstein Model, borrowed from sabermetricians' discussions over the year, presumes there are several kinds of relievers (lefty, righty, fireballers, junkballers, good pickoff move guys, fast workers, odd delivery guys, etc.) and that in any individual game situation you want to be able to choose a pitcher on the match-up (batter, park, need a groundball, fast runner on first, etc.) and it's best if you choose from a talented stable with complementry aptitudes. No pricey closer, no bargain-basement slop guys. Slightly lower salary. So the Red Sox went into the season trying to implement this model to overcome a big, ugly known money-waster.

Didn't work as well as the team thought it should. The context was wrong, according to Epstein, He tried the experiment with the hand he had been dealt and a couple of changes. Not enough changes, he later said...the bullpen he had to try the innovation with was staffed with the wrong guys. Fatal, because the field manager, Grady Little, publically dissed the innovation (remember, the old model evolved for convenience, and nobody is happy giving up convenience, especially for results that are no better than before). It took almost half the season for Boston to come up with the combo Epstein thought would work, and it worked beter than average when he got there. If he keeps working at it over the off-season, he can probably get the context (the specifics of talent, manager buy-in, pitcher acquiesence, practice at using the Model) closer.

Outside of baseball, these half-innovations are equally problematic for the same reasons. Try to convert a maquiladora sweatshop into an ISO 9000 quality machine? The talent and objectives don't mesh. Try to evolve a high-margin, value-add creativity-drenched network handware and software company into a Radio Shack-clone producing low-margin commodities (as Dave Barry would say, I'm not making this up)? The culture and the talent and the customers and the products don't mesh with the venture guys' boring wet dream of a stock-price killing.

Deming's post-WWII design for making over industry worked in Japan because it took into account the culture, people's perceptions and behaviors. He was also advantaged because Japanese industry had been bombed back into the stone age, so he was building from scratch, unlike Theo Epstein who had a roster and contractual arrangements. American executives trying to implement Deming-like initiatives have immense context challenges.

TIP: Sometimes you can innovate from scratch, but if you can't, then during the half-way-there stretch, your performance may be no better, or even worse, than it was before you started, and may stay that way until you get the context tuned.

Next time, more about Knowable #2...why there are no giraffes with four-foot long necks and why that may cripple the Reds' rebuilding.

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