Management by Baseball

Men willingly believe what they wish --
Julius "Death to Gallic Things" Caesar

If an organization faces the important (or even routine) decisions they face with a Management By Wishful Thinking (MBWT) approach, it is destined to suffer. And, as Mariners Wheelhouse blogger Stephen Nelson noted to me in a message this week, if you allow several MBWT-based decisions to cascade (that is, you try to erase the toxic effects of one MBWT decision by making another with the same technique) the toxicity compounds like credit card debt, and eventually the management effort to remediate the waste (overhead) is greater than any effort left available to do something positive (work).

I've written about MBWT before a couple of times, including in this entry. It's common in baseball, and is actually worth pursuing there in small doses when either (a) the team has no resources and options, or (b) has nothing at risk if the optimistic possibility fails to deliver. That is, you don't want to make an MBWT free agent signing for big bucks for a guy who is going to be your clean-up hitter if he's to be the only right-handed power on your team, but you might take a risk on a low-priced swing man (a long reliever who tends to pitch less important innings and can start occasionally when the starting staff is beat up) as the San Diego Padres did this year with the once-very-good Ismael Valdes.

In this off-season, the Seattle Mariners did a classic toxic waste swap. The deal was inspired because they had traded for Jeff Cirillo after the 2001 season in a deal that had a powerful element of wishful thinking in it. He was a fine fielding third baseman who had had a decent batting average and some line-drive doubles power, the kind of hitter that is usually not hurt as much by the Mariners' home park. They had signed him after two bad years but paid him a salary high enough that if the optimistic thinking around his performance didn't actually materialise, his contract would be a tar baby -- his value would be too low to trade him because no one would want to take on the blubbericious contract. Sadly, Cirillo continued to degrade at the plate to the point he became a Milli Vanilli batter -- he appeared to go through the motions, but he produced nothing.

Strong organizations face a failed MBWT decision that fails with a hard-headed approach. The hardest-headed approach would have been to cut him and eat his $6 million salary. Teams rarely do this. The fallback position is to find a team that wants to take a flyer and do cost-sharing, that is, pay a bunch of his salary so that the risk of taking the MBWT failure is lower. Another, equal fallback position is to do a toxic-waste swap, finding a team that had parallel afflictions and hoping that you might be able to squeeze value out of the roster-plaque that they couldn't. Your trading partner, of course, is wishing for the same thing.

The M's took on the worst overpaid back-up catcher in the majors, a good and accomplished bench player and the worst starting pitcher with a nine-year career, Kevin Jarvis. If you look at his career, it's a tribute to MBWT, and a miracle that any team would pay him the big bucks he gets in his contract, but not just one, but several teams have taken him on as a project and failed. His on-field performance is so consistently sub-mediocre it's redolent of Boom-Boom Beck, the most legendary long-career roster plaque ever. The very best year of his previous 9 in the league, that is, the absolute top of what you can reasonably hope for out of Jarvis is a PRO+ of 100 (that is, the exact major league average). That year for Jarvis was four years ago when he was 30 y.o. and uninjured. The highest upside one could draw to here realistically would be mop-up man, a role there are, as Steve Nelson noted, a whole bunch of $300K guys around to fill and actually benefit from.

To sweeten the deal for the Padres, the Mariners threw in about $4.8 MM cash and a minor leaguer who might end up being a useful player.

The Padres turned two MBWT contracts into one bigger one and got cash. The Mariners turned one MBWT contract into two and paid 60% more cash out than the annual salary of their best hitter, Edgar Martinez.

This is what Steve Nelson referred to as the cascading effects of compounding one MBWT into multiple ones.

BUT WAIT THERE'S MORE...

The thing that can sometimes surprise you in a toxic-waste swap is the guy you get can have a good Spring training line and you might find a team desperate enough to take him on. But when Jarvis had an extremely-terrible Spring, (4 games, 15.2 innings, yeilding 19 hits and 7 walks and an ERA of over 8.00), there was nothing left to do but waive him (send him down to the minors and hope someone would claim him and his albatross of a salary on the way) and when no one claimed him, let him pitch in the minors where he could experience success.

The MBWT that failed in Spring training persisted with another instance, though. They let him be their mop-up man in April. While he pitched well enough in five games, he pitched them out of three games they were in (by pitched them out of games, I mean when he came in they were behind but had either momentum or short leads to overcome or both, and by the time he was finished they had neither). The M's, by the time they cut him, had worked themselves into a 6-13 hole. Not his fault, but he did seal the coffin on at least three games they were in and did manage to get his 2004 ERA down to 8.31..

Why did they keep him around in April? MBWT again. They kept hoping he'd have enough good outings that some team would take a flyer on him. They had so much money invested in him (he's getting paid 40% more than Edgar Martinez) they just kept hoping they could salvage something. But having already let the Cirillo acquisition MBWT segue into the Cirillo purge MBWT, they re-compounded it with this April MBWT.

Does this mean the Mariners are necessarily a bad organization? No. They are explicit in not running the team to win pennants, but to turn a profit, so their goals are more to field a "good enough" team than a very good one. To some degree, their ticket sales have suffered from thei less than successful season start, but it's not radically affecting their Goal. They generate a ton of cash, so the cash they threw into the Cirillo deal, while it could have been better spent elsewhere won't markedly affect the bottom line. The overpaid back-up catcher is being their back-up in Tacoma, their AAA team, and hitting well enough to be a minor league back-up. And they did get a wonderful pinch-hitter

But not biting the bullet on the Cirillo deal meant they "fixed" it by acquiring two problems while shelling out more cash than the salary of their best hitter. The only positive is that the good bench player has been a good bench player for them, something they needed very desperately.

BEYOND BASEBALL

MBWT is much less likely to work out outside baseball, though it's almost a common.

I did a marketing consult for a computer company (let's call them Staleco) that had strength in a line of products the customers loved, but that were considered too staid and prone to become commodities by the investors the company was trying to attract. Staleco acquired a small firm that did software in a very different market the MBWT investors thought would be hot because they read it in the financial press (a notoriously awful way to learn about upcoming technologies -- the financial press stends to be technically unsophisticated, with the sole exception of Stephen Manes' column in Forbes -- and to get past the editors, most trends stories have to have been fed to the journal by stockbrokers with an agenda.).

The new software didn't sell well. The investors said Staleco needed a broader line to be first to market and successfully seal off competitors. So they shifted resources off their strength to (MBWT) beef up their offerings in the new area. Of course, they had to hire programming talent and redesign all their marketing materials, a bonanza for consultants and vendors.

They started to fade in their main market. They redoubled their efforts to sell the new line. Only one problem: there wasn't a market yet for the new category. The products were popular with cultists and early adopters, but it was merely a shadow of a dream of a market. The investors believed the executive management team was to blame so they had a series of demoralizing rolling purges reminiscent of Stalinist Russia, and replaced the old Staleco team with expensive, pedigreed execs they believed (MBWT) would turn the company around.

Staleco lasted about another eighteen months. The new product line is long dead. While it had some growth, it never was a proftiable segment for anyone. The old basis for Staleco's success limps on with a small crew of folk who had been with the company for a long time, ekeing out a minimalist existence when, had Staleco just stayed with that line, they might have been about the same size today and perhaps even a little more profitable than they were when they started their MBWT pinball, frenetically bouncing from one hope-based brain spasm to the next.

Have you seen this kind of cascading MBWT chain? Or do you work in an organization that while, like most, it can make a big MBWT blunder, it can also suck it up and be realistic in its clean-up decision-making?