Management by Baseball

Angus' First Law of Organizational Behavior:
All human systems tend to be self-amplifying

A couple of people I've spoken with in e-mail the last month asked about why I didn't have discussions here at MBB. The answer is two reasons: (1) I had it turned on for a two week trials and the signal to noise ratio was both as frustrating and putrid as a Ben Davis at-bat with the game on the line, (2) Thanks to the energetic and capable folk at MLB Center, I have a hosted place for people to talk Management By Baseball (link). A lot of people seem to nose around, few post, but the quality is very good. Case in point, the insight from Sandy Hemenway that launched this post.

Two weeks ago, I wrote on survivals, little shards of behavior or process that originally had good reasons for being that no longer had any value but that people followed because that's what you're supposed to do. That piece on survivals opened like this:

One of the most challenging human tendencies to overcome is also one of the most damaging to management success. That tendency is to rest on a presumption until it's outmoded, but act on it without questioning it.

You sneeze and an acquaintance or stranger says "Bless you" or "Gesundheit", a call-and-response devised centuries ago to prevent evil spirits (or the batting stance of Craig Counsell) from inhabiting your body. The father of American Anthropology Alfred Kroeber named these autonomic, unexamined behaviors "survivals". Like the useless buttons on the end of suit jacket sleeves that clothing makers almost always add, these are things that are done, unquestioned, with motivation invisible to the actor. They just do it because they do it. And they like to repeat these guidelines as advice to newcomers, perpetuating the wierdness.

I posted the entry over at the MLB Forum area, and I got an insightful comment from Sandy Hemenway. It uses fantasy baseball as the underlying example, but his point about Self-Fulfilling Prophecies happens in real baseball as well, as I'll explore later. Sandy said:

When I was just getting my feet in fantasy baseball, I jumped onto Sandbox, where Fantasy Point (rather than ROTO) is the entree served. While I fiddled around with the simple salary cap (hitters only) game, I read the Forums to try and glean tactics from those experienced before delving into an actual league with a draft. In doing so, the most oft-repeated mantra was "Pitching Wins!" This put me at a disadvantage heading into my first drafts, since my only experience was with the hitter-only salary cap game. I felt like I had a good grasp on the relative value of hitters, but was mostly flying blind in regards to pitchers.

So, when I drafted, I naturally went with my strength, and concentrated on hitters over pitchers. I EXPECTED to lose, and assumed my first year would just be a learning experience.

I won the league. Along the way I discovered the half-brother of the "survival" -- the self-fulfilling prophecy.

A side-effect I expect is common to many survivals is the SFP. In my above example, the reality was since EVERYONE believed "pitching wins", everyone drafted pitching hard and fast (especially in the early rounds). Since EVERYONE was doing it, the ultimate winner would (by default) claim, "see - I drafted pitching first, and I won my league". The fact that the 11 losers in the league did as well got more or less ignored.

Too often in business, I think MANY decisions end up becoming SFPs. You decide "X" is a solution -- if you succeed, you laud "X". If you fail, you look at the "unforeseen" circumstances that prevented "X" from behaving normally. It's a pity that more business leaders don't understand some basic Latin:

post hoc ergo proctor hoc: Greek for 'after the fact, therefore because of the fact' - occurs when a temporal relation between two events is assumed to prove that the first one caused the second one.

And let me add a point to Sandy's insight about the pitcher-centric drafting. Not only, as he says, did people believe they won because they drafted pitching first, it pushed the environment into a situation where, because everyone skilled was drafting pitching first, the team with the most successful pitching probably had the best chance of winning.

MONOCULTURAL BODIES
In a monocultural system where all competitors adhere to the same strategy, the one who executes the best at that approach (or has the best luck at it) is most likely to win. So it's a self-reinforcing process in the mold, mould really, of Angus' First Law. Over time, the faith builds up to religious proportions. Only an outsider more interested in experimentation than just winning will discover the self-fulfilling prophecy is a sensible idea that's ossified into automatic behavior.

The more monoculturally competitors attack their universal baseball/business problem, the more successful a different, equally (or perhaps not even quite as good) approach will favor a new competitor.

The very success of the Billy Beane/Moneyball theory rested on monocultural thinking by the overwhelming plurality of competitors. As others saw that success was possible with the DePodesta/Beane approach, the As shifted to rebalanced evaluation methods for acquiring players -- several drafts after the book's theories became widely known by the As antagonists, Oakland was still taking some of the model of players they did when the book as being written. But the Jeremy Brown/Kevin Youkilis types became more highly valued and therefore it opened up new opportunities for other kinds of valued players to slip to the As in later rounds.

BEYOND BASEBALL
When I worked at a big airplane manufacturer's computer products group, the outfit had a gatekeeper executive (I'll call him Bill Klem) who had come over from the airplane company's safety function.

Now, I am as opposed to buggy, crash-prone software as anyone in the business -- I'm an extremist. But Bill Klem was foam at the mouth rabid. In the aerospace business, zero defect/zero tolerance for defects is a strength (ask the crews of the Columbia or Challenger if I'm right). So it wasn't surprising Klem would blanch when he heard the computer-word "crash" spoken -- he just had to outlaw it.

But in the software business, especially in the development of complex software, certain kinds of defects are things end-users can ignore -- their consequences have work arounds or cause a one- or two second delay in screen display or print gratuitously a blank page at the end of a 21 page report. The challenge with debugging software, as so many of you already know, is that finding and repairing the defect that causes the blank page to print can be just as time-consuming and difficult as finding a serious flaw.

So while the group was trying to get out two new complex software offerings, Bill Klem was holding them up until they were zero defect like a commercial airliner would need to be. He crashed numerous deadlines but was intransigent. Quarters passed while competitors sold solutions to prospective customers. Finally upper management stepped in and forced a new team into the place of Klem's. The software shipped. It was very very high quality, with some minor bugs, but lost momentum and customer interest because it was so late to market.

Klem pointed out to anyone who would listen that it was the bugs that killed the products' chances for success. And that's the story that lives on. Last week, over a decade after I had even thought of Bill Klem, I ran into a old colleague and in talking he repeated the Klem version as gospel. Apparently, the company internalized that "lesson" and is still struggling with its own internal software because it over-values zero-defect code.

This fits Sandy's insight of selective post-facto description of causation.

BTW: The bugginess of commercial software is a self-fulfilling prophecy, too. Because the IT customers for most commercial software believe bugginess is a "normal" state of affairs, they are willing to buy and deply buggy software and wait for some updates or service packs to fix obvious problems. In turn, this emboldens software publishers to allow more major bugs into the systejms they sell as release-quality. Of course, if the bugs affect IT a lot, that's costly, and if they hose the executives, that's costly. But if they just inconvenience a wide swath of ordinary users, well, IT will go along with it because the lost productivity never shows up on their books -- and the self-amplifying model comes into play again. It probably takes more courage on the part of an IT department to refuse to buy buggy software than a service department can be expected to have.

It only takes a little ante and a willingness to perhaps implode publically to got against the self-fulfilling prophecies of competitors. In real baseball or real organizations outside it, it takes more courage to do it.

In reality, that's really a choice opportunity. Because the more courage it takes, the more uniform the adherence to the norm will be, the more value there is to be harvested in taking a different, well-thought-out strategy.

Think like Paul DePodesta or Sandy Hemenway and take a chance on an alternate strategy in facing a monocultural belief system.