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Beane Stock, Part IV – Leading the Team

If only we could choose a leader from an entire hill of Beanes. Sadly, a more apt metaphor is having to choose from a desert – hard to wade through, at times uncomfortable, few ‘oasis’ leaders to be found, and many are just a mirage.

What makes Billy Beane a great leader? First of all, he is confident, but doesn’t have an ego. When we spoke, any time I complimented him, he blushed a little and immediately gave credit to others. But make no mistake, he trusts himself and is confident in his convictions. When talking about his management style, his facial expression is a combination of a smirk and a twinkle: “It’s just logical,” he explains.

Well, he’s right. There are a few critical factors – knowing them and how they all fit together needs to be understood. First of all, a leader must be clear about the desired results. I see too many that have a short-sided view – financial results only. Of course financial results are critical to the organization. In baseball, there is the need for financial health, or profit. But there needs to be the balance between the needs of the customer, and in baseball that is a winning team. Obviously, there is a strong connection between the two – a winning team brings paying fans to the stadium.

The next is the leader’s need to be aware of the impact of their actions and to know his or her own strengths and weaknesses. For example, Beane does not watch the games as they are being played. He knows that they are exciting and emotional and does NOT want to make decisions based on emotions. He likes data and the relationship to results. And while he really likes metrics and analytics, he’s not an expert. He knows that, so he hires the experts. This is a critical attribute of far too few leaders: Beane surrounds himself with those who have talents in areas where he doesn’t. Too many leaders are intimidated by this and hire those who are not as talented or just like them.

Finally, Beane will solicit input and benchmark others (see my last blog) to learn and gain insight, but then he makes his decisions. He is unafraid of challenging convention and he has his team’s back. He got rid off the perceived all-stars, took the chance to develop talent, fired “trusted” advisors, and redesigned how he managed the team. He knew when to adhere to the commonly used processes and where to redesign them to support achieving the team’s and the club’s results.

As Billy inspires us to follow in his footsteps and rethink the way we manage for results, he’s building the hill of Beanes. It’s up to us to climb up and enjoy the view.

Beane Stock, Part III – ROIs vs. RBIs

Beane knows beans about bean counting. Just ask him. While I believe him to be completely present in any conversation, he especially lights up when you talk about something even more exciting than his baseball club the Oakland A’s – metrics.

When it comes to the subject, he’s kind of a junkie. He can talk analytics with a twinkle in his eye and hold his own with any subject matter expert. Billy’s deep knowledge of the baseball industry and his keen business sense – which he downplays as simple logic – give him the ability to see the importance and significance of metrics in multiple situations.

Take for instance player performance measurements. According to Beane, when it comes to trading players he explains, “You’re basically paying for past performance.” Paying for future performance is the ultimate situation, but getting it right is tricky, because of the number of variables. Beane admires Arsene Wenger, the head coach of the English football (soccer) team Arsenal. Like Beane, Wenger is not afraid to break with conventional approaches.

The similarities between Beane and Wenger are quite amazing. They both:

1.   Had a brief stint as a player in their respective sports;

2.   Appreciate implementing discipline into their management styles and their players;

3.   Prefer to invest and develop young players rather than pay for experienced successful ones;

4.   Have been heavily criticized for breaking with traditional approaches; and,

5.   Have been very successful.

From a measurement standpoint, Beane suspects that they both also evaluate players using innovative statistics with a focus on both short-term and long-term results. Despite not knowing the specifics of Wenger’s measurement system, “the way he makes decisions leads you to believe he’s using objective data to resist the noise that surrounds those decisions.” Beane’s statistical approach was referred to as sabermetrics – a specialized analysis of baseball through objective evidence, especially baseball statistics that measure in-game activity. The term comes from the acronym SABR which stands for the Society of American Baseball Research.

And noise is a good way to describe the approaches to measurement in most organizations. Everyone has measures and is encouraged each year to add or change them. I liken measurement systems to governments – adding and changing laws is the normal course of action. But rarely are laws removed. What I see all too often is a plethora of measures, with the false sense that “the more we measure the more aware we are of our performance.”

Sadly, it’s security through abundance that only translates to confusion and cherry-picking the measures that are understood or attainable. Beane has the foresight (again, he calls it logic) to focus on results in two camps:

1.   What do the A’s need to achieve as a ball club and viable, sustainable business?

2.   What will keep the A’s fans coming to the ballpark?

Notice that the fan related measure is the most important, as it enables the business metric. The fan related metric: winning games. The business related metric: cash flow. Notice that both are about the final results. Now, there are many metrics that enable the results, but the focus is on the results.

Too many organizations focus on the supporting measures and senior leadership becomes frustrated because the results aren’t there. Think about the department measures. Is there a clear line of sight as to how they support the final metrics? It is almost always the case of the vital few and the trivial many.

Can you break through the noise? Absolutely. Start with a focus on customer and business measures related to the results that are desired. Focus on these and determine the measure that will enable achieving the results. Tie the organization together through the results measures. Throw out any remaining measures that don’t relate, are outdated, or are not used. Manage with a results focus and you’ll be knocking it out of the park.

Beane Stock, Part II: Oakland’s 3 A’s – Attitude, Aptitude, and Action

Billy Beane created a superstar team without hiring a single proven superstar. In fact, he essentially did the opposite. What exactly did he do? Let’s start by taking a look at the situation he faced when he took over the Oakland Athletics (A’s). He had superstar players on his roster, a terrible team record, and almost zero cash flow. If he benchmarked other baseball teams, he might have been tempted to look for other key players. And he did – just not in the typical way.

 

Let’s start with the team record. It was terrible – one of the worst in the league. Beane spent his first few days talking with his staff to try and understand how the results could be so bad with mega-star names like McGwire and Giambi. The advice he received was that he didn’t have enough heroes to carry the team to the results he sought.

 

Beane then looked at the funds he had available to make the changes he needed – but the cash simply wasn’t there. Despite what conventional wisdom told him, it wasn’t logical to spend money he didn’t have to secure more superstars to carry him through. He actually took the time to stop. And think. And act on a logical, albeit unusual, approach.

 

First he evaluated where the money was going. Costs were reviewed with spectacular scrutiny, from salaries to soda. While smaller items like refreshments were cut or reevaluated, Beane also addressed the larger percentage of costs – salaries. He had to choose between cutting low salary players and even support staff in order to afford the superstars. He took a step back and thought about what the team needed. The more he thought about it, the more he kept coming back to the same theme: the A’s were functioning as a team in name only. They needed to believe in themselves as a whole and not allow the efforts of a few to carry the rest.

 

Beane needed to bring the team together as a team. He needed to create a new attitude without sacrificing the aptitude of being able to deliver results. Beane followed his instincts, faced his critics, let the superstars go. He hired a low cost combination of rookies and proven players who had strong performance in specific areas, who had been overlooked or written-off for a variety of reasons.  The strategy: diverse nuggets of talent could be pooled into a whole that was greater than its individual parts, and Beane could provide the polish through training and coaching.

 

Attitude was also key, but not always easy to assess. He drew upon his own experiences of being rejected and channeled those disappointments toward determination. He visited those that had been let go, never taken, or out due to injury. He found discouraged players that, given a chance, would give it everything they had to be part of something bigger than themselves – to be part of a winning team. Players who knew that if the team came first, the individual accolades would follow. This was what Beane wanted, and what the team needed–and it paid off for the fans with a successful turnaround.

 

Compare this bold approach to recruitment in most organizations. Typically there are job descriptions, an associated amount of minimum skills and/or experience, and a salary range. Not altogether different from what Beane faced–the same way of evaluating, recruiting, and even compensating. But what if there was a paradigm shift in thought towards attitude and aptitude recruitment, coupled with bold leadership action? Many of my clients have tried it, with such a level of success that they view it as a competitive advantage. How did they do it?

 

First they realized that relying on a few superstars wasn’t sustainable. Then, they looked at job descriptions and identified those skills that could be developed or taught in-house, as compared to attributes or experiences that the organization could not provide. For example: To fill an accounting position a company can teach an employee their Accounts Receivable process (instead of requiring A/R experience) but can’t give them a CPA certification. Next they institutionalized the approach with new pay structures, and finally, bold leadership gave the green light to try the new approach or process.

 

Beane persevered through an enormous amount of criticism. But he stayed true to his players by giving them the training and coaching they needed, and he remained true to himself in believing that his strategy would work. He took what was, in essence, a mature product, applied innovation based upon logic, redesigned the process of building a team, and provided the top-level leadership to bring the initiative to conclusion.  As a result, the team performance improved, the fans came back to the ballpark, and his bottom line finances turned around. He proved that attitude and aptitude, combined with committed action, covered all his bases.

Beane Stock – Hero Worship

I had dinner recently with an extraordinary man – charming, humble, sharp-witted, intelligent, and very engaging. He was played by some guy named Brad Pitt in a movie. Of course I’m being (somewhat) tongue in cheek as I gush about Billy Beane, the man personified in the hit movie and best selling book Moneyball by Michael Lewis. I enjoyed our conversation so much, that I will likely turn this into a series of blogs, all under the main title of Beane Stock. I thought this was particularly appropriate, considering his rising value in my eyes.

We chatted about many things, but there were some nuggets that were simply superb. Let’s start with the topic of heroes. Beane recalled his club, the Oakland Athletics (A’s), being at the bottom of the league with critical cash flow issues, stemming from high player costs and overhead. It was the late 1990’s and he needed to get creative and make some tough business decisions, including trading Mark McGwire (Big Mac). A little baseball history: McGwire was drafted by the A’s in the first round of the 1984 amateur draft. In 1987 he was the unanimous choice for AL Rookie of the Year, was a significant contributor to the A’s appearance in both the 1988 World Series and their victory in the 1989 World Championship against the San Francisco Giants. He holds the best at bats per home run ratio in baseball history (Babe Ruth is second). Despite injuries and a decline in performance, he remained an A’s icon.

When McGwire was traded to St. Louis, a storm erupted. The media, his management, and many of his contemporaries told him he would destroy the A’s and their performance. Beane saw it differently.  “We were in last place – how could we become ‘laster’? “ he chuckled. He went on to say: “Fans don’t come to the games because they are loyal to an individual player. They keep coming out to the ball park because their team is performing well.”

There it is. The bold statement that all organizations need to hear and embrace. Of course individual skills and unique talents should be leveraged, acknowledged, and appropriately celebrated. But an over-reliance on these individuals and their moments of greatness is not sustainable. Keeping an eye on the end result (the ball, if you will) and aligning everyone to that result, is what is key. That alignment builds an infrastructure of reliance rather than betting on chance. Think about if Beane counted on only McGwire to secure a win. The minute McGwire has an off day or an injury, the game win is at risk. Ensuring all players contribute to the win, leveraging their individual talents, is key.

The hardest part? Emotions. Heroes evoke feelings of inspiration and awe. They make us feel good. Billy Beane describes himself as a very emotional guy. Which is why they accurately depicted him in the movie as not watching the games. He explained that it’s too easy to get caught up in the emotions and make bad decisions. With a results focus, discipline, guts, and the ability to ignore what everyone else was saying and doing, Billy Beane created greatness for the enterprise. And that’s not something he’s willing to trade.

Technology in Space

Technology is neither good nor bad – it is simply an enabler of our intentions and actions. When our actions and technology come together, the results can be unbelievably powerful. As a few examples, contemplate what we’ve learned and discovered as a result of our space program – greatly advancing our knowledge about medicine, biology, technology, and manufacturing as well as learning about space itself. I find it all fascinating, as I’ve been interested in cosmos, space flight and astronauts since my younger days as a Tang drinking kid.

My childhood fascination with astronauts was rekindled recently when I had an opportunity to participate in a videoconference with NASA Astronaut Kevin Ford from his perch as Commander of Expedition 34 in the International Space Station. While I have read many articles about what NASA is doing, there was something intriguing and captivating about witnessing firsthand a conversation – not with someone across the state, across the country, or across an ocean – but talking to an astronaut while he was orbiting thousands of miles above the Earth.  This was a technological feat unheard of little more than a generation ago.

Technology has changed our lives forever. And it will continue to change and evolve. It has created the opportunity to communicate instantly, in many different forms, with people we know and don’t know. And still there is something enchanting about the simplicity of having a face-to-face conversation with another human being. I had a memorable experience with Commander Ford because I had the benefit of a back to basics form of conversation, all thanks to the latest technology.

How we utilize technology in our organizations needs to strike the same balance. Understanding why and how something works, having firsthand knowledge of the context in which it is applied, knowing the pitfalls and pathways of the operations, and even being able to see the reactions or emotions behind those involved helps to convert information into knowledge. That’s why it is to the detriment of a timetable, the budget, and results if technology is implemented without recognizing the value of examining the process first.

For anyone who has been through an ERP system implementation, think back and contemplate the difference in timetable, implementation, adoption, and budget if an end-to-end process redesign happened first. Sadly, most of those leading the effort have neither the insight nor the support from their leadership to take the time and effort and pay attention to the process first, then the technology.

Commander Ford gave us a fascinating insight into the world above us, while providing a great opportunity to exam the way we work in the world around us.

Going Postal

I’m thinking of sponsoring a contest to rename the Postal Service, since its latest announcement of service cutbacks suggests that “Service” is no longer part of the core mission. Sadly, these misguided efforts are a day late and several billion dollars short.

As you may know, I’ve been featured in a number of national media outlets including Fox Business News, and BusinessWeek discussing  the US Postal Service’s Keystone Kops approach to a turn-around. The USPS has stumbled on the cliff’s edge of financial default multiple times — and they aren’t learning from their mistakes. There are some fundamental issues the USPS simply isn’t dealing with appropriately.

First of all, I have some reason to be sympathetic to their plight. It’s hard enough to answer to one leader but when you are answering to Congress, you essentially have 535 CEO’s who could argue the day of the week. As an example, some post office locations serving no more than than 2 people per day walking through their doors can’t be shuttered, because those offices are in a Congressional district, allowing politics to trump common sense.  Also, the pre-payment of the retiree health benefits has really strapped the USPS, causing a near default of $11.1 billion. So, leadership, culture, governance, and infrastructure are clearly problems.

On the other hand, the USPS can’t blame everything on infrastructure challenges and email killing their business. This is an organization paying more than 1,000 people over the age of 80 workman’s compensation.

Other postal organizations have found ways to leverage the email in their favor or have found new ways to meet customer needs.

My friends at Canada Post will tell you it can be done (and they’re making money). I almost fell over when I read that the Postmaster General has employed a full time employee who goes to businesses trying to convince them not to email things like invoices. You have to have some pretty thick skin to be laughed at every day. And lastly, let’s not forget the USPS doesn’t pay taxes and has a monopoly on first class mail.

Their plan: raise rates on stamps and cut services (Saturday delivery). Translation: ignore the customer. Raising the price of stamps 2 cents barely covers the losses for one quarter. They have customer surveys with some excellent data, including the consumer looking for postal outlets with their grocery stores. Why are separate buildings needed? They have confused a customer (the consumer) and a stakeholder (Congress) and are only listening to the latter. The GAO recently reported that the USPS is pursuing 55 separate initiatives to raise revenue.  To mix metaphors, it’s the equivalent of throwing a Hail Mary bowl of spaghetti at the wall hoping that billions of dollars worth will stick.  Good luck with that.

A redesign and a Results Focused Management approach could turn them around. A focus on customer and stakeholder, new measures of success, and an aligned infrastructure would make a huge difference. Yes, they need some help from Congress. But they also have the ability to put a stamp on their own success.

Political Campaigns, Zealots, and Process

I’m always so excited for the beginning of the New Year. There is something about the calendar change that says, “Do over”. Everyone seems to have more energy and enthusiasm; there is goal setting and commitments to meeting these goals. It’s refreshing. There were times in October and early November when I didn’t think we’d ever get here.

During the election, the mood seemed quite different. If you watched it play out, everyone experienced a point of jubilation and a point of head shaking at some moment throughout the campaign. And then there were the pundits – whether on a national level or local level, everyone had an opinion. As the general public watched one thing was certain: regardless of which side of the aisle you support, no one likes a zealot.

Implementing, managing, and advocating for process is no different from a political campaign.  There are lots of opinions and lots of approaches to achieve the desired results. The catch is being clear on these results and designing for them. For many in the election, the decision was based on a single topic. Imagine if a process in your organization only focused on a single measurement rather than also consider the end result? What kind of mess would that leave you in? Well, isn’t that what managing by department goals does?

And of course – the advocates. As I have always told my students and clients, don’t be a zealot. As we saw in the media before the election, the zealots are seen as extremists. Instead, I want you to be passionate about your organization, with the knowledge that process can get you further toward achieving the game-changing results you deserve.

Shark Tank

Do you watch Shark Tank (abc.go.com/shows/shark-tank)? It’s one of my favorite shows and I recently had the privilege of participating in something similar. Dr. JoAnn Gora, President of Ball State University (www.ballstate.edu) asked me to be a judge as part of the Entrepreneurial Program at the Miller College of Business. Ball State’s undergraduate entrepreneurship program consistently ranks among the nation’s top 10 entrepreneurship programs, according to U.S. News & World Report. It was ranked eighth in 2007, and the graduate entrepreneurship program ranked 26th in U.S. News & World Report’s 2007 list of top graduate programs offered by business schools. Each year the college invites a panel of CEOs and entrepreneurs to judge the students’ business plans. Each student must present to a panel of four judges and answer questions. Here’s the catch: If all four judges don’t agree that the plan is comprehensive and well thought out, the student doesn’t graduate! The evaluation day, called E-Day but nicknamed the “Spine Sweat” by the student participants, takes place five days before graduation. Talk about preparing for real life! All the judges agree to be mentors for the following year if the students are interested. I’m proud to say that both students who came before my panel passed. What’s amazing about this program is that they make sure the students are invested in their business. They are teaching them to be leaders, doers, innovators, visionaries, and workers all at the same time. And they recognize that it is about the process of bringing great ideas to practical application – start to finish, idea to implementation.

Based on my experience, this type of competition is important because it creates the opportunity to understand why having a good idea and/or expertise in one area (or department) is only a fraction of a successful business. It takes skill to design an operation to meet the needs of both the customer and the business. It introduces the students to areas where they are not comfortable, where perhaps they are lacking skill, and affords them the chance to make leadership decisions about being thorough and bridging those gaps. It’s a valuable lesson about holistic alignment and how sometimes passion and the marketplace don’t agree. It takes a hypothetical business plan and removes it from just an academic exercise to a real-world application. So maybe not exactly Shark Tank, but definitely Reality Check.