Monday, May 29, 2006

Part I: Everything Stanford Business School Knows It Learned From Doug Melvin  

As I've written about before, baseball excels at balancing the need to optimize tactics at this very moment to achieve in the present, while concurrently testing the people and processes it will need to be competitive and achieving in the future. There are routine experiments all the time -- for example a youngish left-handed hitter who's only been used against right-handed pitchers being left in a blowout game against a left-handed pitcher. The young lefty struggles against portsider pitchers, and is less likely to succeed than some of the right-handed peers on the bench, but if management never uses the kid against lefties, how will the kid ever get better?

The forces that argue against letting the young batter swing in baseball ("he may never get good, so this is a waste of outs", "but what if we need more insurance runs", "Rubble really needs the appearances") are all real and legitimate. Which is why in business and government, there's paralysis around experimentation. Which leads us to Angus' Fourteenth Law of Organizational Dynamics:

In an unhealthy organization, if there's a good excuse not to do something, that something won't get done.

Which is not to say there has to be a good excuse, but the good excuse almost seals the non-deal. Passivity/the comfort of doing nothing different will almost always trump the needs of the future. The Redbird in the hand will always seem worth more than the nine in the bush. The neuralgia of nostalgia, like a t.v. station that shows nothing but Brady Bunch & Green Acres reruns, it's Organisational Entropy, the end of possible progress until the comfort of doing nothing is so outweighed by the discomfort of the status quo that radical action, untested, becomes imperative and without any serious data or organizational chill.

But baseball management totally rules in this balance. And one of its most adept practitioners is Doug Melvin, now general manager of the Milwaukee Brewers. He's so good at it, a couple of Stanford professors, having sat at his feet, have produced a remarkably useful book that parallels Melvin's fluid ability to execute on this balance.

One of the challenges major league teams face is the need for starters who are good enough, even in this lively-ball era, to last long enough into games that the manager has to only use the best reliever or two or three because the bottom of most bullpens is crammed with marginal performers you'd rather not have on the mound. Because it's been found that controlling young starters' pitch counts is essential to preserving most of their careers, minor league starters don't get the experience of pitching into many final innings to close out a game, a very useful (not mandatory) skill. If a player can't prepare to finish a game mentally or emotionally, it's less likely the player will be able to do it, and the less a player actually does close out a game, the less likely it it the player can get mentally and emotionally prepared. Further, minor league pitchers tracked as relievers tend not to know the useful analytical routines starters do about preparing for a game and starting it off (again, not essential if it turns out they aren't moved to the starter track).

Standard operating procedure in baseball has been to use minor league starters as starters. But Melvin imagined a way after the 2003 season to achieve the training without burning up young pitchers trying to get them into game-closing situations. According to a February, 2004 New York Times story by Murray Chass,

Pitching Experiment Debated

Now if you're really looking to reinvent the game, or at least conduct an intriguing pitching experiment, consider a plan percolating in the mind of the Milwaukee Brewers' general manager, Doug Melvin. He is in the early stages of a plan to have relief pitchers start some minor league games, then have starters come in beginning in the third inning.

"We want our starters to pitch important innings, the eighth and ninth, and not look for the bullpen," Melvin, a former minor league pitcher, said. "We want them to know it's their game. This is what we're developing them for. Some guys never see the ninth inning."

{SNIP}Melvin said he didn't see the disappearance of a closer under his plan, but the starter would at least have a better chance of pitching at the end of a game. "Even if the relievers give up runs early," Melvin said, "you have more time to come back than if a reliever gives up runs in the eighth and ninth."

A 1999 playoff game influenced Melvin's thinking. Pedro Martínez relieved for Boston in the fourth inning, with Cleveland ahead, 8-7, and held the Indians hitless for the final six innings in what became a 12-8 series-clinching Red Sox victory. "We might consider it for one of our teams at a lower level, for the fourth or fifth starters," Melvin said.

"The minors is the place to experiment," Melvin said. "It's just a matter of having enough nerve to do it."

Nerve. What baseball has in spades and business and government and academia, in limited supply. Notice how deft Melvin's attack is. It's not a sweeping Überplan that is meant to be mandated across the organization. One team, lower level minors, fourth and fifth starters. A controlled experiment, controlled by scope. If it works, you might (or might not) expand it, depending on the results and your analysis of how it might fit other contexts or not. And notice, too, Melvin understands that the minors are the best place to try experiment, not the big club in the heat of a pennant race. It's not binary, of course (experiment only in minors, never in majors), but this is very low risk.

But what are the sweet spots for experimentation and testing your non-baseball organization?

BEYOND BASEBALL Ideally, you should be moving your organization to a state of being able to experiment at almost anything almost all the time. That's the argument made by Melvin followers at Stanford, Jeffrey Pfeffer & Robert Sutton in their new book, Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-Based Management. Pfeffer (this one, not that one), was recently interviewed at TomPeters.Com as a "Cool Friend". These interviews are always well done because at least one of the interviewers, Tom Peters' hidden star Erik Hansen, is just a throttle-out great interviewer. He could eke an interview worth reading out of Don Frelling Zimmer. I believe you should make a habit of nosing around over at TomPeters.Com; it doesn't al apply to anything you might need to think about, but there's more lively management content there in any given week than anyplace else on the web and I get a few useful tidbits every time I visit.

The Pfeffer Cool Friends interview includes these Melvinized views (the bold text is the interviewer, and JP is Pfeffer).

You make a case for running a lot of little experiments. You give examples of a few internet companies doing it, which is easy at some level, because of all the metrics they can run. But I think some people think, "God, run experiments in my company? I didn't do so well in science in high school. Scientific method is beyond me." Do you think there's any possibility that that's what prevents people from really looking at evidence for why they're doing something?

JP: I think it could be one reason. But I also think there's a tendency in companies to believe that if it's worth doing, we ought to do it for everybody everywhere, all the time, and roll it out in a big Program with a capital "P." The mentality is, "If we're not convinced it's going to work, we might as well not do it anywhere." So you can see in these companies the endless debate, "Should we do A, or should we do B, or should we do C?" When the obvious thing to do is try A, B, and C in different places or at different times, and see which one works best.

Think about it, if medicine was practiced this way, you'd have people sitting around, having endless debates about whether some drug in theory ought to work or not, as opposed to doing trials. Look at the way airplanes are designed. You obviously start with theory and evidence about physics and engineering, but you also design, you build prototypes, or you now build prototypes on the computer. You put them through various exercises and you try different things. This is how architects now design buildings.

There's this idea of prototyping, which IDEO is famous for in the product development world. But I think the genius of IDEO is that they've actually carried it over into how they manage their company, too. It's something that everybody can do. You don't have to have a degree in statistics to try different stuff and see what stuff seems to work better.

One of your concluding items in the last chapter is the suggestion to think of your organization as basically an ongoing prototype. What does that mean?

JP: That means that you should never think that you're finished. It means that you should always be interested in continuous improvement, just like Toyota is. It means that you should always be trying out different things. I think Tom has talked about this for years, about not being content and set in your ways. Be willing to learn by trying different things as opposed to making organizational change some rare, earthquake-like event that occurs very infrequently with huge and oftentimes horrendous consequences; you ought to be trying different little things all the time to see what works, and how you can continuously get better.

I think of it as the equivalent of what a lot of human beings do with their self-help regimen, trying different things to supposedly lead a better life.

JP: That's exactly correct. It's certainly consistent with medical practice's idea of acting today on the basis of the best information you have. But you also presume that that information, although it is the best that you can do today, is not the best that you're going to be able to do tomorrow or the day after tomorrow. So you do the best you can at the moment, while keeping yourself open to learning.

One of the things that I think we see is that companies and their leaders are oftentimes extremely defensive. They're unwilling to admit that they've made mistakes. They're unwilling to admit that they have problems. If you're unwilling to admit that anything is wrong, or that anything is less than perfect, it's almost impossible to be into this mode of continually making things better.

Why is this negative reaction to making a mistake so ingrained in corporate America? God bless you if you should ever make a mistake and let anybody else know about it!

JP: Your statement is so important. People make mistakes all the time. So the question is not, "Do people make mistakes?" Human beings are fallible. You're obviously going to make mistakes. The only way to avoid making a mistake is to do nothing. The question becomes, "How fast are you going to recognize and learn from your mistakes?" In order to learn from your mistakes, you have to admit that you're fallible. In order to do that, you have to go back to the basic principle that W. Edwards Deming talked about a long time ago: You have to drive fear out of the organization.

People are afraid to tell the truth. People are afraid to admit mistakes, because they're afraid they're going to have career-ending or career-limiting consequences as a result.

I think you mention in the book that the best way to get a quick glimpse into an organization's dynamics is to look at what happens when people fail.

JP: That's exactly right. Going back to IDEO, which is an example, but it's not the only example, David Kelley [also a Cool Friend] has this model, "We like our people to fail early and fail often." Which he thinks is way better than failing once, failing at the end, and failing big. I mean, you do not want to be flying in an airplane and learn that it's been mis-designed for a certain level of turbulence.

I still remember years ago with Genentech, a wonderful company, the CEO said, "We're not having enough failures." Everybody looked at him like he was crazy. And he said, "Look, if you're doing advanced, state-of-the-art biotechnology stuff, and all your projects are working, you're not pushing the boundaries of your knowledge."

The whole interview is worthwhile, I think.

But in this excerpt Pfeffer does a perfect job of explaining the general case and theory behind Melvin's practice, as well as some of the reasons business is not as good at this as baseball. In baseball, even ordinary management talent has internalized the idea that the team is an on-going prototype, and in the hands of someone like Melvin its processes and people can evolve with reduced friction.

If only the rest of MBA-land was as enlightened as Melvin, Pfeffer and Sutton.

In the next part, I'll make some suggestions on how and where you might implement some experiments, Melvin-Pfeffer style

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