Management by Baseball

In the last entry, we covered a lot of ground with North America's finest and most successful manager, San Diego Padres president Sandy Alderson. He described an entire roster of his techniques that managers in any field can use to make their organizations adapt more successfully. In this entry, I'll share some of his insights about innovation (a key way to adapt to, or to initiate, change) and I'll explain what managerial attitudes he has make for a successful innovator. 

While it's indisputable that Alderson is North America's finest manager, I suspect that in the area I'm covering here, innovation, he has equals. Alderson, however, is one of the very marquee innovators who has worked out in the open, with initiatives' mechanics and results visible to the observations of millions. This is a case where Baseball's transparency and accurate statistical results make process something we can actually apply as an instructive example. 

APPLIED CREATIVITY ORIGINATES FROM A STRUCTURED FOUNDATION
If you can compete successfully in Baseball with its crushing zero-sum arena, you can compete in any field. Unlike your own endeavor, wins and losses are fixed - there are a limited number of wins to go around. 

What attitude did Alderson bring to the Oakland Athletics when he was G.M. and later President? The A's had had former Montréal Expo manager Karl Kuehl on their staff as head of player development during their first period of blistering dominance under Alderson's stewardship (1988-90). Kuehl applies and teaches a system of mental techniques for improving performance, very unlike standard practices, explained in a couple of books he's written. Kuehl hadn't been good enough as a field manager to continue in that role, but even with that specific failure, Alderson was willing to give the man's innovations a try. 

"Kuehl is an odd bird - he's a tough disciplined guy, but he's extremely forward-thinking, open to new ideas and the implementation of new ideas," Alderson explained. 

There are two important attitudes here that make innovation possible and a commonsensical fact that's worth remembering. First, while a lot of people mistakenly believe that creativity comes from lack of structure, that kind of environment usually leads to mere chaos. Organizationally, creativity almost always comes from a foundation of disciplined ways of testing, then observing, measuring and then analyzing results to shape the next tests. For success, one still needs willingness to change that structure in controlled ways one can test and observe results, but structure and discipline (the discipline to reject the status quo even when it' comfortable) are requirements. 

"And Kuehl is how we brought Rick Peterson in," Alderson added. 

LET'S TAKE A SHOT & SEE WHAT HAPPENS
Kuehl was recruited away from the A's by the Toronto Blue Jays to work in their front office. But they didn't have the will to incorporate his techniques and the A's got him back, bringing along with him a coach he met there, baseball's (now) most innovative successful pitching coach Rick Peterson. Peterson is an unusual individual, relentless about both devising new stats and analyzing them and about working with what he calls "the heart and soul" of each of his pitcher-students. 

"Rick is an odd cat with new ideas. When we hired Rick, we said, 'Let's take a shot and see what happens'," Sandy said. 

So there's the second attitude one needs to be successful - an open and reasonably optimistic view that acknowledges not every attempt is going to be a homer but that you can't know what's going to work or not until you take a couple of swings. Alderson unleashed Peterson on the A's pitching, and they incorporated the Peterson innovations. Importantly, Alderson repeated the method he'd been successful with in his implementation of the initiative to shorten games when he worked at MLB headquarters: He deployed it to the minor leagues as well as the Majors. This created a lot more chance of acceptance of the non-standard ideas, because pitchers didn't so much have to change over from one process to another as much as they got to grow up with them. 

USEFULLY CREATIVE PEOPLE ENLIST OTHER USEFULLY CREATIVE PEOPLE
Peterson's principles revolutionized A's pitching, the most important factor in their on-field success from 2000-3. Alderson's experiment, Rick Peterson, continues to innovate, never allowing the successful status quo interfere with efforts to improve, though now he's doing it for the New York Mets. But there's the illustration of the commonsensical fact: 

Usefully creative people recruit other usefully creative people. 

Just as Alderson recognized Kuehl's usefulness and didn't let the eccentric methods overshadow the practical value, Kuehl understood Peterson might make a significant contribution with his own original methods. Usefully creative people are a dispersed tribe and in most organizations they are isolated; when they run into each other, they tend to clump, conspire, collaborate, synthesize with each other. 

Healthy organizations don't just allow usefully creative people to act, they use them to scout and recruit other contributors. One of the usefully creative recruits that came into Oakland was Paul DePodesta who later, as the assistant GM, designed and delivered the research that was the hero of Michael Lewis' book Moneyball. 

DePodesta was hired to be GM in the Los Angeles Dodgers, built a team that immediately squeaked into the playoffs, only to have the owners pull a capricious brain spasm and lay him off. The Dodgers' loss was the Padres' gain; Alderson, by then with the San Diegans, snapped up his former talent for his new organization. 

And there's the extension of the commonsensical fact: Once you find that rare useful creative talent, apply it whenever you can. 

INNOVATION: NOT AN EVENT, BUT A WAY OF LIFE
In a competitive line of work like baseball, innovation is not a single event, but an ongoing effort. By the time the book Moneyball came out, describing the Athletics' affection for relatively inexpensive batters who took a lot of walks and relatively inexpensive pitchers who didn't give up many, the A's had moved on to newer ways. 

Opening the kimono to their secret recipe didn't cost them anything because they were on to the next initiative and competitors were chasing methods the A's had already evolved beyond. In Japanese industry, this is such a common practice, they have a word for it: kaizen. The revelations in Moneyball actually helped the A's competitiveness. That's because when other team owners read the book, many leaned on their own front offices to emulate the deeds (managing walks) but not the intent (finding an undervalued approach and optimizing against it temporarily) of what Oakland had done. And managing walks lost its special value because so many teams pursuing that kind of talent forced the price of it up. 

Alderson understands a key factor in managing the innovative organization: You have to fight the urge to "do your job" as opposed to keeping your eye on the overall mission, and fight the urge to simplify your work by thinking about staff as "the workers" instead of a team of different professionals, each with their own strengths and limitations. 

"It's what I found out when I worked at Major League Baseball and I worked with the umpires, who were unionized: You can manage the Union or you can manage the staff. What I try to do is manage the staff, because they are the ones doing the work," Alderson said. "When I say manage the union, I'm talking about the hierarchy, the union's rules and issues. You can't ignore those issues, but what is your focus going to be? The focus has got to be trying to get the best performance out of the group of 68 individuals who are unionized. You have to take that into account and respect it, but you can't forget that's not your primary purpose. You've got to manage the staff to the benefit of the game, the mission." 

It would have been easy and normal for Alderson to view his work with umpires as the tasks in his job description, things like negotiating wages and working conditions with their union, campaigning for new processes to manage game time and enforcing the rule book's strike zone. It would have been easier for him still to try to launch all his change through the union, a single point of contact. In fact, that would have been the North American standard practice, not just for union issues but everything. Have a vision, consolidate authority, and offload/outsource/offshore/delegate the actual work of delivering the mission. Just keep core processes in-house and outsource the commodity processes that, as commodities, don't make much difference, that is, are undifferentiated, and therefore don't add/have significant value.

NOTE: Whenever you hear an offshore boiler room on the end of your customer service phone call, you're hearing this standard operating practice in action. Every time you hear that (customer service outsourced to another organization) ask yourself the key question, "How much actual (not lip-service) importance does this manufacturer/service-provider/vendor believe the customers have if they outsource the service to those customers?". The answer, of course is that every large company that outsources customer service views "the customer", that is, you, as a commodity, as undifferentiated, not a core concern to them. There are no exceptions to this, sadly. 

Instead of following the standard management practice, he realized, he needed to deal with the 68 individuals. Using the union as a go-between, while less effort on his part if he was just going through the motions, would make it much harder to get the result he was trying to achieve because the pressure would be diffused and the ability to tune the message for each ump erased. And it was particularly important to make the messages clear because on both of MLB's initiatives with the umpires, trimming game times and making the individualized strike zones more uniform, compromise wasn't going to do the trick. 

UNDERSTAND A COMPROMISE CAN'T ALWAYS WORK
For either to work, reaching the goal was worth a lot but getting half- or three-quarters of the way to a solution wasn't going to be worth much at all. But not all efforts are the same. Like most managers, Alderson had other projects while at MLB headquarters that involved execution where only compromise would work. 

"With so many of the initiatives and issues, the All-Star Games, World Baseball Classic, the Olympics, advertising on uniforms, you have to balance 'baseball as entertainment' against 'the experience as the entertainment'," Alderson pointed out. While some fans come to the park for the game itself, others come to be seen, or to experience the park, the shopping, the walking around, or bask in the excitement of animated speedboat racing on the scoreboard or participate in "the wave". In every one of these projects, success means balancing both groups of fans' desires, a series of delicate compromises. 

Without the core baseball fans, the steady foundation to attendance, which is indispensable to business stability and generational continuity, the franchises can't expect to continue. But without the folk who come for the other entertainment, it's impossible to build high attendance that helps a team keep up with the pack. 

As I said, innovation is not an event, it's a process. It's not a single solution, it's an open-eyed design process. It's not a rigid plan, it's a series of experiments where you take a shot and see what happens. And it's not a concept or some theorist's blather, it's only real when put into practice. Sandy Alderson is one of the few executives in North America who's mastered all of that and can deliver Innovation in practice decade after decade.