Management by Baseball

One of my most esteemed colleagues ever is Phillip Gordon. He has the uncommon combination of vision and delivery (a minority of managers have either). He has a fairly new weblog, Technology Translations, and he kindly consented to write an MBB piece for me. It has less baseball in it than most of my entries, but it's such an honor for me to have him on my blog, I'm not worried about it. This draws from MIS courses he teaches at Mills Graduate School of Business in Oakland, California.

 

Innovation V. Improvisation -- Phillip Gordon

Innovation is the new consultant bandwagon, and like so many other consultant bandwagons, is something they all talk about but no one defines, because, of course, when they sell you "innovation methodologies," or "creative thinking," they can claim that whatever results is innovation.

But there is a lot to learn about innovation in the real world, from baseball, for example: what it is, how to do it. In fact, as my colleague Jeff Angus points out, baseball has "The Book" which indicates to managers and players how and when and to what degree they might be flexible; that is, how and when to innovate. In baseball, "The Book" is not a manual…it's tacit, stochastic heuristics. So it's general rules that, if applied universally, don't guarantee success, but if applied with context and investment in the future in mind, yield what you need.

It has become extremely important for companies to be perceived as innovative, however defined.

What was once central to corporations - price, quality, and much of the… analytical work associated with knowledge - is fast being shipped off to lower-paid, highly trained Chinese and Indians… Increasingly, the new core competence is creativity… It's about creativity, imagination, and, above all, innovation. Get Creative!: How to build innovative companies, Bruce Nussbaum, BusinessWeek, 1 Aug 2005

For example, from the CSAA 2005 Annual Report: For many years it [innovation] was something that, frankly, CSAA wasn't so comfortable with. While we could always be counted on for stability, too often we valued caution more than progress - and innovation was something others did. Today we know better. Paula F. Downey, President

For example, from an ad in the 29 May 2006 BusinessWeek: Less than a year ago, Ford Motor Company rededicated itself to American innovation. And by delivering truly innovative products… we're doing just that. Bill Ford, Chairman and CEO

So let's first define innovation, and then talk a bit about one kind of innovation that doesn't require consultants or methodologies.

What is "Innovation?"

The dictionary says, "A new idea, method, or device." The anthropologist who built the groundwork for that discipline's study of innovation, Homer G. Barnett, added a useful distinction in his critical work, Innovation: The Basis of Cultural Change, defined it as "the essence of change... lies in the restructuring of the parts so that a new pattern results, a pattern the distinctness of which cannot be characterized merely in terms of an increase or decrease in the number of its component elements".

It doesn't always mean a new or changed product; it can also mean a new or changed service,

Services now account for around three-quarters of value and employment in the advanced economies, and innovation is increasingly central to the performance of these services in public and private sectors. Service Innovation: Organizational responses to technological opportunities and market imperatives, Joe Tidd and F.M. Hull (Imperial College Press, 2003)

or a new or changed process (method), including whole new types of businesses.

For example, the Toyota production system led to performance advantages of around two to one over other car makers in terms of quality and productivity. Managing Innovation: Integrating Technical, Market and Organizational Change, J. Tidd, J. Bessant and K. Pavitt (Wiley, 2005)

It doesn't always mean something new; it can also mean changing something that already exists.

For example, in the 1970s Xerox lost about half its market share in copiers to a new generation of smaller machines, which were innovative in the application of existing copier technology. Managing Innovation

It isn't always something created by the person, group, or company; it can be something bought or introduced from outside.

Much process innovation is about configuring and adapting what has been developed elsewhere and applying it - for example… adopting world class manufacturing (and increasingly service) practice. Managing Innovation

It doesn't always mean adding something; it can also mean taking something away.

…[airlines] have been slipping another row or two of seats into coach by exploiting stronger, lighter materials developed by seat manufacturers that allow for slimmer seatbacks. The thinner seats theoretically could be used to give passengers more legroom but, in practice, the airlines have been keeping the amount of space between rows the same, to accommodate additional rows. One Day, That Economy Ticket May Buy You a Place to Stand, By Christopher Elliott, NY Times 25 Apr 2006

It isn't always successful; most innovations fail, in baseball, in nature, in society, and in business.

As our understanding of the history of technology increases, it becomes clear that a new device merely opens a door; it does not compel one to enter. The acceptance or rejection of an invention, or the extent to which its implications are realized if it is accepted, depends quite as much upon the condition of a society, and upon the imagination of its leaders, as upon the nature of the technological item itself. Medieval Technology & Social Change, Lynn White, Jr. (Oxford, 1962)

It isn't always the "best" or even "better," and in some cases, it may even make things worse. Microcomputers couldn't do what mainframes did, but they were vastly cheaper to buy and to operate. PCs couldn't do what mainframes or minicomputers did, but they were vastly cheaper to buy and to operate.

It may not be useful until other innovations are available, a systemic innovation as opposed to an autonomous innovation.

…some innovations are fundamentally systemic - that is, their benefits can be realized only in conjunction with related, complementary innovations. To profit from instant photography, Polaroid needed to develop both new film technology and new camera technology. Similarly, lean manufacturing is a systemic innovation because it requires interrelated changes in product design, supplier management, information technology, and so on. When Is Virtual Virtuous?, Henry W. Chesbrough and David J. Teece, Harvard Business Review, Aug 2002, pg. 3

It isn't always radical, leading to a degree of change that many companies, or even whole industries, cannot adopt or adjust to; instead, it can be incremental, leading to a degree of change that may be more easily adopted, within a company or across an industry.

Most organizations are good at incremental innovation and exploitation as they build and develop existing knowledge and capabilities. They are less successful at creating the conditions for radical innovation. Innovation In Organizations From A Complex Adaptive Systems Perspective, Ysanne Carlisle and Elizabeth McMillan, paper presented at Complexity, Science and Society Conference Sep2005, University of Liverpool

It isn't always the work of an isolated genius, or "two guys in a garage;" it can also be the result of "small world" networks, or of deliberate, structured efforts by groups or companies to "manage" innovation.

…tracing the history of key innovations in art, science, and politics in ancient Western and Eastern worlds [shows only two who] fit the loner model, a finding supported by historians and cultural sociologists who have shown in great detail that the creativity of many key figures… all abided by the same pattern of being embedded in a network of artists or scientists who shared ideas and acted as both critics and fans for each other… Collaboration and Creativity: The Small World Problem, Brian Uzzi and Jarrett Spiro, Am J Sociology 111, no. 2 (Sep2005), pg. 448

In fact, even if it starts as the work of one person, an entrepreneur, the development, spread, and adoption of innovation is a process embedded in a social and cultural context, a process that can foster and encourage, or hinder, innovation and its spread and adoption.

Innovations can grow wild, springing up weed-like despite unfavorable circumstances, but they can also be cultivated, blossoming in greater abundance under favorable conditions. When a Thousand Flowers Bloom: Structural, Collective, and Social Conditions for Innovation in Organization, Rosabeth Moss Kanter, Research in Organizational Behavior, 10 (1988)

Improvisation

So it seems that innovation doesn't have to involve expensive high technology or lead to changing business as we know it forever, and doesn't even have to make you uncomfortable.

In fact, innovation can involve improvisation, variations on a theme within a set of governing rules. Baseball, football, cooking, and jazz are examples of improvisation.

Baseball Improvisation
Take Doug Melvin, general manager of the Milwaukee Brewers. He improvised with pitchers, changing the mentality that starters "start" a game, and relievers finish a game. Instead, relievers start a game and then starters come in during the critical late innings. Not a revolution, just an improvisation.

Take Mike Hargrove, manager of the Seattle Mariners. Their pitchers had a terrible start to the season, so Hargrove called several standard mass team meetings where he outlined strategies and players didn't respond. So he improvised with one-on-one meetings, where he laid out the same principles as before. But this time, it worked.

Or most significant, take Billy Beane, general manager of the Oakland A's. Hobbled by lack of cash, he improvised the entire theme of a baseball team by putting together a set of "rejects," focusing on critical stats ignored by everyone else.

Beyond Baseball
Now some people may think, well improvisation is OK for baseball managers, chefs, or jazz musicians, because they're all expert professionals. But I'm just a (fill in the blank with a business function). Well, yes, but you are a business professional. You understand the set of rules, and you've been successful following them. And improvisation is something that any business and business person can do, because you do it every day, often without thinking about it or realizing that is what you're doing.

Business people make decisions every day under pressure with insufficient information. You should use a standardized process to make any decision in life or in business; that will increase the probability you will make the right decision.

The Eight P's: Proper prior planning and preparation prevents piss-poor performance. (A military training maxim).

...combine what was original and daring in conception with what was patient and minute in execution... Little Dorrit, Charles Dickens (Oxford U. Press, 1979)

What happens when you apply a standardized process under pressure with insufficient information?

[Studies of firefighters and other high-pressure decision-makers by cognitive psychologist Gary Klein have shown] that they almost never lay out a set of options before acting. Instead, they spend most of their time trying to understand what's going on… Once they have that, the decision-making process [tends to be] based largely on intuitive analogies to past experience. Cutting through the Fog of War, M. Mitchell Waldrop, Business 2.0, Feb 2002

Sounds like a definition of improvisation, right?

And if you need more evidence, consider that the vast majority of product and service innovations are incremental, another way of saying that they are variations on a theme, improvisations.

Let's agree that innovation is important, and not just because consultants or magazine writers say so. And we can understand what it is, and it isn’t rocket science.  And we can understand how to do it, because as managers it is something we do every day: follow rules of thumb in order to make judgments quickly and efficiently. 

In other words, improvise to stay alive: in a pennant race, in battle, or in business.