Sunday, December 25, 2011

Jon Daniels - Part IV: Rangers' GM
Attacks a Diseconomy of Scale  

This is the final installment of the March, 2007 interview Jon Daniels did with me. He'd gotten his first G.M. job as the nexus of a team that had never gone to a World Series, and now with him in place, they've achieved enough excellence to get to two Series in a row.

This part deals with an issue more and more managers have to deal with in a globalized business world -- communicating effectively and keeping people on course and pulling together in a system where the work is distributed over more remote workplaces -- a Diseconomy of Scale that is both common and usually fatal.

And, btw, my arrogance knows few bounds...I suggested in this 2007 piece that it would be interesting to see how much difference his extremely bright approach would help achieve five years hence (that is, this season). I think I was pretty prescient, though DANIELS was he one with the focus, execution and relentlessness to bring the achievement home. He is to be congratulated again for both his leadership and his being such a great team-mate to his team-mates.

In Part III, Daniels explained how his first big initiative on getting the Texas Rangers' GM job was to push for better organizational cohesion through a couple of methods -- organization-wide meetings to integrate people who, while dependent on each other for success, didn't have opportunities to meet face to face, and personal notes to people on noteworthy occasions to reinforce their view of how the organization valued them.

NOTE: The first issue he addressed, face-to-face meetings, is a critical ingredient in large organizations and one, in a globalized world, is decreasingly present. From cohesion to clear communication to sharing of common mission/values, face-to-face interaction is close to indispensable for success, an issue I dependency on what I call "proximity". I won't elaborate on this here: I've written a lot about the failure to achieve Proximity and its costs here and here; I wrote an article recently for Redmond Magazine about the counter-example...how a creative software company, eProject, skillfully balances its choice to offshore some of its development against the need for Proximity.

He let me read one of the letters he was about to send out as an example.

{he let me take a minute to read the letter}

Jeff (MBB): I especially like the part where it says “Be creative, don’t hesitate to experiment”. You’ve worked outside of baseball, so you know how much more experimental baseball is than most lines of work. Business should be that way.

Jon Daniels (JD) : There’s no doubt about that. And even in Baseball, unless it’s really well-defined, explicit expectations, then people are hesitant.

A hypothetical example… you have a hitting coach in A ball. He’s got a top prospect there and you’ve been handed a program to use…these are our hitting drills and these are the things we do, and you have a prospect wh’s not responding. The coach knows he’s a top prospect, maybe he represents some top money, he’s in the Carolina or Midwest or the California League…kind of out on an island, and not connected to the big club. He’s thinking like “Yeah, yeah, these are the drills I’ve been given. I’m not going to mess with it. I’ve seen something, I’d like to try it, but I’m not going to be the one to stray from the program.

I’ve been encouraging these guys to try. I say, “you know our general belief system, you know what we’re about…don’t stray from that. But within the parameters defined, innovate. I say “You played this game a long time. You had a coach somewhere along the line who got through to you. What did that coach do? Are you trying those things? We hired you because you’re an intelligent guy – you’re not a robot. You want to try some new drills? Do it. You want to try something drastic? Call the farm director, call the coordinator. Let them know – let’s not get crazy, but at the same time, I’m going to hold you accountable if he doesn’t get better so if you’re seeing this isn’t working, he’s not responding…well, everybody responds to things differently.

One of the things I’ve really tried to drive home is don’t be afraid to try something different. I expect you to put your stamp on the organization.

MBB: “Everybody responds to something differently”. That’s another piece of consciousness that seems intrinsic to baseball but not so much beyond it – so much so in baseball, a lot of people take it for granted. But for someone managing a doughnut shop, for example, it should be the same principle. A manager of a customer service department, for example, might luck into a whole group of people who respond to the same practices and drills, but baseball knows a lot more about your principle than most lines of work.

I loved you making it explicit, too, in your letter. What kind of people do you send them to?

JD: This letter is going to everybody in the organization. The works.

It’s just a little thing to recognize we’re about to kick off this season. I try to personalize each one with a little note at the bottom, rather than just having copies.

And the message I’m stating is: everything we are facing is a competition – how are you going to help us win today. I want to empower them.

I haven’t been an area scout. When I talk with those guys, they think I’m joking, but I think I’d want to be an area scout one of these days… to me it’s one of the more exciting jobs in the game. Say you’re out in Idaho looking for players every day…you couldn’t be more removed from this thing. You might feel like “what am I really doing to help us win every day.” It’s the Fall, there’s no baseball going on…are you going to that basketball game, that football game, meeting that two-sport star. You can sit in the stands, hear what his friends are saying about him. That gives you and advantage…especially if you’re the only team there and there’s no Angels or Oakland scout there, you just beat them. So we’re really trying to empower these guys.

And we haven’t done it, but we’ve talked about a financial reward if a guy (you scouted) gets to the big leagues should that scout get something. During the draft a scout is going to fight for his guy over someone else, they all are; would it make sense to have the whole scouting department get something if you get a guy up to the Big Leagues. And how about development? We haven’t done anything there yet but we’re trying.

MBB: Have you heard of any organization trying to re-design traditional incentive systems around scouting and development?

JD: I think some have. I don’t have any details for you.

Anyway, That’s the biggest non-player/personnel impact I’ve tried to have. Stability, family, we’re in this together, Ranger Pride, and you’re part of something special. And it’s critical for me to spend time with people like our minor league coaches. Touch base with or amateur scouts have a phone call with them every once in a while.. This Winter I had Barbara, my assistant, put the name and cell phone number of somebody different in front of me every day, both Thad & I. One day it was an A-ball trainer, the next a Dominican scout, the next day a major league coach, a AA pitching coach. Whatever it was…somebody every day was getting a call. I’m just trying to connect the organization.

MBB: Management by calling around.

JD: I know I play a little harder when I have a personal relationship with the guy I’m working for. It’s “we care. How are you doing? How are the kids?”

MBB: That is a fantastic method.

His idea, not fully explored yet, that scouting and development should get an incentive bonus for the success of the individuals who went through their personal workflows, is one I've advocated for organizations beyond baseball for a long time. It's a little easier to implement in Baseball than beyond because Baseball takes measurement seriously and executes.  Most non-baseball organizations have little idea of the output of their staffers, and wouldn't do it if they knew how. But if H.R., in part as a department and in part as individuals, saw a significant part of their compensation depend more the on high performance of the people they recruit and get into the organization and a little less on avoiding error (what Daniels here put in his letter as "Be creative. Don't hesitate to experiment") and a lot less on just feeling like they're feeding a boiler -- they shovel it into the system and never see it again, I believe H.R. would perform better through immediate behavioral shifts and over time by attracting more entrepreneurially ambitious folk to the discipline. The mechanics of the system would be imperfect, as all compensation programs are, but I've built a few context-specific proposals, and it's not hard to come up with one that's significantly better than the status quo with less risk than the status quo has.

And the personal involvement he talks about is a vital advantage small organizations have over large ones which suffer the Diseconomy of Scale that comes when the executives at the top of the organization don't run into every staffer every day. Daniels is doing what's doable to address it.

He's top-flight to have noticed it makes a difference and even better in that he sets aside time to attack the limits scale imposes. It'll be fascinating to see what the Texas Rangers will doing in the 5th year of his regime, because it takes a while to turn around diseconomies of scale.

¿Why are you waiting on it?

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