Management by Baseball

In the last entry, I started covering the conversation Texas Rangers' general manager Jon Daniels had with me in March, 2007. In this segment (more to follow later), Daniels talks about the process of making decisions. Specifically the interplay of managing resources, here an apparent excess capacity of good relief arms.

Most managers beyond baseball have a hard time knowing what to do with excess capacity, especially how to choose among what look to be equal options. I asked Daniels about what he might do to resolve the apparent surplus.

MBB: Let me get away from a chronological approach here for a bit.

There was a story recently about relief pitching. Apparently you have this bullpen that other people think is strong enough that you should be trading some of those arms. And your response was something like, “We’re keeping an inventory of others’ interest”. 
So I’d like to get your insights on decision-making in general from this example. If the time comes that you’re going to trade, how will you go about deciding who in your bullpen you are most open to trading?

There seem to be a number of possible ways to anchor a decision. You want to keep the widest range of “looks”; last year you seemed to have a wide number of looks out of your pen. Choosing who you keep or let go might be based on pure ability…who’s the “best”. There’s who might offer you the best return. Or would you base it on what you can get back. Or something I haven’t thought of.

JD: It’s a little bit of all of the above. That might seem like a cop-out.

MBB: Do you try to anchor it on something though?

JD: It’s really a balance of two factors. It’s building the best bullpen we can right now, and measuring what the return is, even if that means giving up one of your seven best guys. 

After my experiences in the last couple of years – I think in this game, we have a tendency to overthink sometimes – I do anyway, try to get too cute. Will I consider trying to do something with one of our best seven guys? Sure. I’ll never just say “no” to any offer – I’ve got to consider everything, weigh all our options. At the same time, I put a lot more emphasis on putting our best club out there, protect our depth. We do have some guys with options. It’s inevitable we’ll need more than the seven relievers we have right now. I’ll put more emphasis on our own needs. Unless the return for one of our best seven is overwhelming to the point where it’s a deal you couldn’t turn down.

So Daniels' model (which should be your own, too, in most cases) he's going to balance the present against the future. He gives a slight extra nod to the present "I put a lot more emphasis on putting our best club out there", but without ignoring the future "It’s inevitable we’ll need more than the seven relievers we have right now". But this is not an absolute. If Daniels gets a return he couldn't ever match with present value, he'd go for the "overwhelming" return.

The balance of present against future is specific to the 2007 Rangers, and for them, today is a little more important, But as with all baseball organizations, both are taken into consideration -- you have to win today, and you have to win in the future..

At the same time he knows, he's prepared himself for the idea, that in spite of his initial setting (leaning towards the present against the future) there's some level of return at which , because if its magnitude, he can shift his balance to garner the better part of a deal.

BEYOND BASEBALL
Beyond Baseball you should internalise this Daniels method. 

Balance the present and the future...you have to win today and win tomorrow. Know if your organization/workgroup needs to emphasize one a little more than the other in the current context. Be prepared to be flexible, to slide along the now/future spectrum if an opportunity that's so juicy comes along it just outweighs your current balance objective.

A reader asked me last week if I had any idea why the Texas Rangers had been able to make it into the World Series two years in a row, and if it has anything to do with their management. It certainly does, I believe. When Jon Daniels was selected as G.M. five years ago, he was very young, but already very, very astute. He had been generous with his time and we spoke for a long while about his background in and Beyond Baseball, and his approach for building a franchise that had been in the middle of the pack for performance. I'm going to reprint the results of that interview piece-by-piece, because I think you'll be able to see what he was doing that led to this level of success.

In the 40% of management jobs that require a significant element of domain-specific craft to achieve excellence, it's normal, and usually necessary to have one or more identifiable mentors.

That doesn't mean there aren't successful self-made managers in these positions. The self-made, in fact, can be the most brilliant innovators (someone had to invent the Baseball GM job as it exists, in this case Ed Barrow, and he was, by definition, self-made as a GM). But running without inetrnalised standards leads more often to underperformance, and that underperformance is usually a result of the self-made nature of the manager, the using up of cycles/energy/ergs/torque trying things the standards "know" are no- or low-return. I read a circa 1983 study that confirmed this logic -- it found the managers who scored in the highest and lowest quintiles in independence were disproportionately represented in the least-successful and most-successful achievement quintiles. (I've been looking to find that old study now for about a decade with no luck -- all leads welcomed).

A Baseball GM with one of the most interesting backgrounds generously gave me a ton of his time this Spring. Jon Daniels of the Texas Rangers is usually thought of as being inexperienced because he is young, and generally regarded as the youngest person ever to get a Major League team's GM job. While his ascent was rapid, that thought is off-kilter for a couple of reasons. The first is, he'd taken on diverse responsibilities in multiple organizations.

The bigger one is, he had activist mentoring in systems from a team of people who trained under a management leader who actively mentored (that is, made a serious point of it, deliberately carving out time and resources to see that it was done), and who delegated and built of a team of talented people who would take on that deliberate mentoring model and apply it.

The mentor is John Hart, who built the management that grew the Cleveland Indians into the 1990s powerhouse they became, and produced innovators who played and play significant roles in the development of other franchises' competitive theories and action: Oakland, Arizona, Colorado, San Diego, the Los Angeles Dodgers of Los Angeles, Boston and of course, even after several years, Cleveland itself.

Beyond Baseball, this approach, selfless on the surface, can lead to great results, if not always recognition. More about that later. Here's the beginning of an interview that will end up being a multi-parter, thanks to Daniels' generosity in sharing his insights and time.

Jeff Angus (MBB): Jon, you were brought into the Rangers organization by John Hart. So many roads in today’s baseball management lead from his regime in Cleveland. Was that an important part of your decision to come to the Rangers? 

Jon Daniels (JD): (laughs) That would imply I had a lot of options. 

MBB: You were working in Colorado… 

JD: …yes, and Dan (O’Dowd) had offered me a chance to stay on there as an intern. It was right after 911, my family was in New York and I had been long-distance with my wife (then my girlfriend) for quite a while. There were a number of reasons I didn’t stay in Colorado. The lure, the idea of working for John was very attractive. I had worked in Colorado, so I had specifically worked with Dan and Josh (Byrnes) who had spent a good amount of time with him in Cleveland. And they have had a great deal of success, as well as others from there – Paul DePodesta, Mark Shapiro, Ben Charrington, Ruben Amaro Junior, Bud Black. 

A lot of quality people started under John. He’s a critical person in my career development. He’s one of the most dynamic and engaging personalities you’re going to find. I have told John my only regret is that I didn’t get to work with him when he was building Cleveland…there are so many great stories that came out of there. I’ve learned a tremendous amount from John. 

MBB: Cleveland was the most important innovator from that time. 

JD: Well, there are a few different trees. You’ve got the Pat Gillick tree, to some extent the Dave Dombrowski tree…the John Schuerholz tree. 

MBB: I consider the Pat Gillick tree comes from, as the Schuerholz one does, from Baltimore. John, I think, worked for Harry Dalton, who was his mentor. 

JD: Pat’s tree is really dynamic from the standpoint of scouting. You’ve got Gord Ash, you don’t necessarily have a ton of front office types, but you do have a ton of scouting types. 

MBB: True. 

JD: You have Don Welke and Bobby Mattick, Al LaMacchia, even some more recent guys…Logan White worked with Pat. He was a cross-checker in Baltimore. Some guys in Seattle…Ken Madeja who’s now a special assistant over there. He drafted John Smoltz, Derek Lowe, JJ Putz, Ryan Feierabend...he’s got a tremendous track record. There’s no doubt that’s it’s a great thing on your resume that you learned under John. 

MBB: When you came here and started working for him, what were the most important things you learned from him? 

JD: Well, everyone in the game now wears a label. You’re a “stat guy” or a “scout guy” or “new school” or “old school”. You’re a “this” or a “that”. John, having played a little, having managed in the minor leagues, he’s easily accepted into the old school ranks. Very easily accepted into the scouting ranks and the on-field culture. But some of John’s strongest relationships in the game are with the Mark Shapiros and Chris Antonettis…Paul DePodesta, Josh Byrnes and me, who didn’t play professionally and guys who are labeled the stat guys. 

John embraces it all, he wants all the information: medical, make-up, on-field, off-field, statistical, objective, subjective and that’s an ethic I’ve really tried to embrace. From my background, what used to come more naturally is looking at things objectively…statistics. That’s why I’ve surrounded myself with guys like John and Don Welke, Jay Robertson, Mel Didier, Gary Rajsich on down the line. Ron Washington…he wasn’t the kind of guy the industry expected me to hire with my background. 

It’s critical for me to get information from every possible direction. John Schuerholz had a great quote…I’m going to butcher it… “He with the best and most information wins”. 

That’s true. 

{SNIP, for now}

Key lessons here.

1. Winners embrace everything. That's not saying every component is equal -- but no shred of potentially useful knowledge is to be ignored up front. Winners further balance their weightings of various forms of knowledge in response to context.
2. Embracing everything is not a contained strategy in itself. There are a number of ways to act off of an embrace-everything strategy -- Daniels points out several trees and branches off a tree. As managers who've been mentored work with it, they tweak the rules or make some new ones. That intellectual process is precisely parallel to cultural evolution of other domains. Daniels may end up making a branch or entire new tree of his own (Jon thinks Schuerholz has started his own tree). 
3. Note how people-centric his knowledge/apprenticeship is. A couple of these names come up multiple times. In a The Talent Is The Product endeavor, that is, a value-added and not a commodity one, people are not only the key (immediate) production asset, but the key long-term growth (capture, organization, refinement & dissemination of knowledge) asset, too.
4. ...and this is less clear from this interview than what I've gotten from other Hart protégés...taking personal credit is less important to successful players in this kind of management environment that making sure the things for which credit could be taken get delivered and shared.

In the next part of the interview, we'll talk about multi-factor decision trees and on how you make (or avoid making) a big splash on starting a new job.

Making a prediction on significant events that have significant unknowns that play into the outcome, and you're likely to be made a fool. Beyond Baseball you see this a lot, most often in the corporate world, more often than not in corporate social structures where the system doesn't hold people accountable.

Virtually all organizations need to apply analysis to strategy. The most transparent billion-dollar endeavor is Baseball, so Baseball makes for some pretty clear examples of strategic planning and allocating resources from the results.

Major league baseball teams, with rare exceptions, use advance scouts to capture and analyze data about upcoming opponents. The scouts summarize this into information that their team uses to plan for immediate series, as well as keep it archived as part of a baseline of information for later tussles.

For teams that are likely to make it into the playoffs, this effort starts being more critical around mid-September. In most years, it's becoming obvious which opponents are the most likely. This'll sound like a big "duh", but playoff-bound (or still-playoff hopeful) teams have access to a limited pool of skilled advance scouts, so allocate them to the games/teams stochastically: They neither choose a single-most likely opponent and put all their resources into one (a deterministic approach), nor do they allocate an equal fraction to every single team that hasn't yet been eliminated (a random approach). With their stochastic approach, they are most likely to pay some attention to all possible opponents, but invest proportionally more in scouting most likely opponents (tweaked by how much they've been playing against them recently and have on hand immediate intel) . 

Well, yes, that is a big "duh", but in the corporate world, this tends not to work as elegantly. There's an entire field of study on this, and some useful, applicable research, such as the paper "Detecting Regime Shifts: The Psychology of Under- and Over-Reaction" by Cade Massey & George Wu, available here. Over- and under-investment in allocating analysis is a daunting problem in corporate social structures, because of Angus' First Law of Organizational Behavior: in general in corporate systems, accumulated leadership tends to be individuals who diminish accountability (something Baseball can't allow).

If the probabilities are murky because there are a lot of uncertainties operating or if the events are based on a small number of binary outcomes, or both (for example, any October best of 5- or 7-game baseball series; think, for example, of the 1995 Cleveland Indians, the strongest team of the previous 20 years, getting shredded in the Series that year by a perfectly-fine-but-not-exceptional Atlanta Braves team) corporate analysts tend to "freeze up". The risk becomes high of choosing incorrectly, and more often than not in the corporate world, leadership's cognition will devolve into MBWT (Management By Wishful Thinking) as an energy-conservation tack -- that is, why invest a lot of intellectual effort when the outcome is uncertain -- just go with your gut...and your gut is driven by hopes and wishes.

KURKJIAN'S KRAPPY KOGNITION
You won't see a lot of this in Baseball management. But there was a howler last week when, thanks to fate and relentless baseball practice, both the American League's and National League's wild card teams, and therefore all four playoff set-ups, were in flux going into the 162nd (last) game of the season. So there's a great example of it around Baseball.

One of the most experienced and bright Baseball pundits, ESPN's Tim Kurkjian, talked about going into the last day of the regular season, with the extraordinarily strong finish of the Tampa Bay Devil Rays  (behind by 9 wins for the wild card with 26 games to play) tied for the wild card with the Boston Red Sox in the A.L., and the Struggling Atlanta Braves tied for the same pseudo-honor with the surging St. Louis Cardinals. 

Neither league's wild card contenders were playing against each other, so the results of four different games would decide the regular-season outcome. If in either league both contenders had the same game outcome (a win or a loss), they would have to play a one-game head-to-head tiebreaker, but if one league contender lost while the other won, that would be the decider.

In all four games, the contender's opponent had zero "incentive" to win, except as a spoiler, so Kurkjian's assumed they'd be easy pickings, that all four contenders would win. And in the corporate world, or even in other endeavors that are less competitive than Baseball, say the NFL, that might be probable. In Baseball, though, Jocketty's Law applies: Whatever doesn't make you stronger, kills you.

Really, though, what the pundit was hoping for was that all four contenders would win so there could be an additional day of intense, winner-take-all baseball. Not a bad hope...it would have been fun, but the odds were against it

The Red Sox faced their division's "doormat", the Baltimore Orioles, so Kurkjian was probably as safe in choosing that outcome as in any of the four contests. But there were two factors he chose to ignore: Baltimore was playing at home where they had been 5-4 against the Sox during the season (certainly not roadkill), and O's manager Buck Showalter's relentless determination to squeeze every possible gain/win out of every moment/game. He didn't exactly ignore a third factor, the Sox' 17-27 play since August 10th, but he dismissed it as ephemeral. The O's refused to play dead, and came back in the 9th inning with some serious heroics.

Kurkjian didn't under-rate the quality of the Devil Rays' opponents, the New York Yankees, but he did grossly underestimate two factors that affected the Yanks' determination to win. First, the Gothamites were already in the playoffs, meaning if they lost to the Devil Rays and the Tampa team faced them later in the championship series, their opponent would have a psychological advantage, perhaps not massive, but in a system where whatever doesn't make you stronger kills you, not to be ignored. Second, the Yankees, from both a pride and profit position, practically prefer playing the Red Sox (a legendary rivalry with both richer revenues and blood lust at stake). So the Yankees weren't going to roll over, even if they weren't going to compromise their playoff chances by squandering their best starting pitcher or reliever in the effort. The Yankees put away the Devil Rays early but Joe Maddon's relentless and loose squad came back and won it in 12 innings.

In the National League games, he did the same, presuming the Braves' 11-19 record since August 24th was a short-lived swoon and that they would rise to the occasion. The Braves were certainly an appealing and skilled team, but they were playing the team with the best record in Baseball, the 101-61 Philadelphia Phillies (and you don't get to 100 wins without playing every pitch for keeps). The Phils, further, had the same incentive the Yankees had; the need to win for psychological advantage in case the Braves would make it into the championship series against them. The Phils wouldn't lie down and they beat the Braves in 13 innings.

It was certainly the most exciting last day of regular season baseball in my lifetime, with four games that absolutely counted, three of which were decided in the 9th or later inning.

But in his MBWT, the pundit ignored completely the Baseball precept he absolutely has every reason to know and internalize: Jocketty's Law.

The next time you have to engage in strategic planning, don't fall into Kurkjian Kraziness. Do what analysis you can do, and be prepared that with a lot of competitive uncertainty, you could be wrong. Just because the outcome is fuzzy, do not allow yourself to surrender to Management By Wishful Thinking because it's much easier than serious analysis.