Friday, July 16, 2004
People, even the highest paid analysts, have a heck of a time being able to describe the future because the future results in part from things that happen in its past, and at the same time is independent of the past in ways that mean you cannot project the past & have any reasonable hope of knowing the future.
It's a booger. To be decent at trends analysis, you have to fully understand the relationships and links between the metrics and the factors that made up the historical record. You have to be able to pull out factors-that-looked-important-to-the-result-but-weren't. You have to recognize dependecies that are likely to happen again. At the same time, you have to re-examine every presumption because it could have based on a fluke, on an ephemeral set of events that won't happen again.
It gives most managers headaches. So most managers just project the past into the future, providing themselves and their own managers a sense of stability, and they pretend that's going to work and if it doesn't work, they have the fallback CYA credo "How could I have known?". Worse, that thinking can be colored by the need to tell executive management something the C-level dudes demand to hear, Management By Wishful Thinking (MBWT).
"No-one" could have foreseen the black hole into which the Mariners slipped into this year. Well, except Bill James in early 1978, but back to that in a little bit.
The Mariners recent history has been chock-a-block with winning. With a big budget, good cash flow, and a team that combined players in their prime with a few older guys who were real anchors and the acquisition of some rôle players, the recipe was good enough to make them very successful during the regular season. In 2001, they had the second most successful regular season since "modern baseball" (since 1901) started, trailing only the 1906 Chicago Cubs in full-season win percent.
What was surprising was the Mariners were a pretty old team in 2001, with a mean average age for starters of 30.9 years old. Lots of studies have indicated strongly that baseball players peak at age 27 or 28 or 26. Bill James in the late 1970s described a model to analyse rosters by creating three clumps: young, prime and old. He found that most successful teams, especially one that sustained their winning ways, had a big pile of players in their prime years, and small ones balanced between young and old. The teams that started to age remediated that problem by purging older players and replacing them with younger ones. I'm lucky this week. I was looking for the Bill James text on it and it turns out that Rich Lederer at Rich's Weekend Baseball Beat is summarizing Bill James' Baseball Abstracts one by one. Here's a short summary of James' essay on the California Angels that year:
California Angels: When you acquire any player over 28, you are getting about 40% of a career--and that on the downhill slide. You can do that, perhaps, to fill a hole. But what happens when you try to build a whole team that way? Your replacement-rate goes out of sight. If you've got eight players on a downhill slide, two of them are going to slip and fall-either that, or you're defying the law of averages.
The 2001 Mariners were an extraordinarily old team for a team that successful. The 2002 M's needed to get younger; they almost did; they moved their average age to 30.3 (not bad because since everyone who stays on the roster is going to age a year during the year, that a total lack of action would have taken the roster to 31.9). That team got tired after July and had a solid season that wasn't good enough to make the playoffs. The alarm bells should have gone off to the front office. Time was passing this team by, and it was time to either shoot the moon or rebuild. The team did neither, which doesn't guarantee failure, but doesn't help chances for success, either. The 2003 Mariners' average age was 31.9, meaning they aged 1.6 years during that year. They amplified their challenge; like David Bowie they were "putting out the fire with gasoline", or trying anyway. In 2003, the Mariners again got tired after July and had a solid season that didn't get them into the playoffs.
THE FEEDBAG LOOP
Second year in a row the old team seemed fatigued. Third year in a row, they did nothing to get younger. They moved sideways. They had a few simple problems that could have been fixed (an aging left-handed 1st baseman who had lost his ability to hit for power and could no longer hit left-handed pitchers needed a right-handed platoon partner, for example) and addressed only one of them. In 2004, they have fallen off a cliff. Like a Clydesdale snorfling oats out of a feedbag, they weren't looking ahead, they were just in the moment, eyes focused on the end of their nose, not observing the event horizon they were about to fall below.
An event horizon is the precise term that describes it. Because all the pundits are acting like this meltdown "couldn't have been foreseen". In the the sense that (1) the exact degree to which it might happen was unknown, and (2) they might have had a solid season while pouring gasoline on the fire, the odds were that for a team that old, getting older wasn't likely to help and probabalistically, was likely to hurt their chances.
Very few trends are linear. Bake a yellow cake (not the kind the Iraqis weren't importing from Niger), for example. Follow the recipe, see results. Follow the recipe, but add an extra egg, see results. Repeat with two extra eggs, and so on. The one extra egg version is likely to be richer, yellower, and just as fluffy. The two-extra-egg version is going to to be even richer, yellower, and perhaps a little less fluffy. The three-extra egg version doesn't resemble a cake to a degree any greater than Kenny G resembles musical talent (and, I have to admit, failed to impress the really beautiful woman I had baked it for, although she was polite about it, that is, she tried to chew on the slab of baked-good that had the consistency of an Louis XIV-era Gummi-Bear). Their results are not linear -- like most effects, there's no straight-line return on eggness.
Small-minded people, especially those who are high-ranking executives, refuse to realize this inconvenient truth. I did some work once for a marketing-driven company about to go public. Their president wanted to enrich the earnings by cutting expenses, particularly cutting back on the company's large promotional/marketing budget (which was what drove sales). He cut by 10%, sales went down about 2%. So he cut another 20% and sales went down about 3%. So he made them cut another 20%, and sales dropped almost 22%.
The return wasn't a smooth line as he had learned in business school. Life doesn't throw us many purely linear trends. The past, while prologue, is almost never a roadmap to the present. When management is passive, things don't go South smoothly in a way that allows for a gentle adjustment.
More often, it's like the event horizon the Mariners fell into this year. Change, which is inevitable, requires pre-planning, paying attention to feedback, absorbing the lessons of the past while being prepared for variation.
The price of passivity is a quick drop below the event horizon, an "E" ticket ride like that taken by the 2004 Seattle Mariners.
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