09 Jul Why Sports Is a Great Proving Ground for Management Ideas
In nine months of cohosting and producing a sports analytics podcast, I’ve gained a fresh perspective on what makes organizations tick.
In sports, as in life, management matters. In fact, because of its focus on measurable outcomes and its demand for in-the-moment decision-making, sports brings many of the most critical issues in management into high relief. Sports provides a unique perspective on leadership, performance management, strategy, innovation, and, perhaps most of all, managing with data.
Having spent the past nine months cohosting (with MIT Sloan senior lecturer Ben Shields) MIT Sloan Management Review’s sports analytics podcast, Counterpoints, I’ve discovered firsthand just how much the issues that drive success on the field parallel those that drive success in business. If you haven’t had a chance to listen to the podcast or have assumed that it had no relevance to your life as a leader, I invite you to give it a try. You might be surprised by what you learn.
Here are five essential management practices illustrated through the lens of sports analytics and successful industry leaders, with links to the full episodes to learn more.
When we think of pioneering leaders in business — from Intel’s Andy Grove, who helped shape the drive for growth in Silicon Valley, to Meg Whitman, who helmed eBay through phenomenal growth in the turbulent dot-com era — it’s not difficult to name some of the people who have transformed organizations and forever changed the practice of management. The same can be said in sports. Mike Krzyzewski at Duke. The late Pat Summitt with the University of Tennessee Lady Vols. Gregg Popovich with the San Antonio Spurs.
As in business, a great leader in sports can help unlock a team’s greatness and play a crucial role in its success. In the episode “How Much Do Coaches Actually Matter?” we look at the question of whether coaches are always an X factor. The episode looks at recent dominant success stories — such as the Golden State Warriors’ string of championships in the NBA under coach Steve Kerr and the Patriots’ dynasty in the NFL with coach Bill Belichick — with guest research from experts at the University of Chicago, to answer the question of the day: How much do coaches really matter?
We rarely have the perfect context to make decisions about how to optimize performance. For example, we’re often tempted to put our best people on our most pressing issues or our biggest opportunities. But when we shift a top performer to a new challenge, we are also shifting them away from something else. How often do we take the time to fully consider the costs of our decisions with respect to optimizing performance?
Take the NBA’s recent trend toward “load management,” the practice of sitting key players on a preset schedule to keep them healthy and rested for what can be a long and grueling regular season, for example. When NBA superstars like Steph Curry, Joel Embiid, or Kawhi Leonard are given a planned night off, the impact of their absence isn’t just felt on the floor — it’s a financial issue as well. Whether it’s fans not getting what they believe they paid for, prices on the secondary ticket markets crumbling, or teams dealing with empty seats and depressed TV viewership, the consequences of a planned absence of a major star reverberate across the sport. But just how much is everyone losing when stars sit out — and which stars’ absences are creating the biggest holes in NBA pockets?
To get to the bottom of one of the biggest financial questions surrounding the NBA, we spoke to Scott Kaplan, who presented his paper detailing the financial ripple effects of NBA superstars at the 2019 Sloan Sports Analytics Conference, in the episode “The Economic Impact of Sitting NBA Superstars.”
Talent Recruitment and Management
As the saying goes, top talent costs top dollar. And if you believe the complementary adage that 80% of value is created by 20% of an organization’s people, the case to pay up for proven talent makes a whole lot of sense. Except for one problem: You can never be sure that past performance in one setting is a fair indicator of future performance in a different setting.
This is a lesson that baseball executives ought to have learned by now when it comes to free agency. Alas, the evidence suggests few have. Indeed, almost every team’s fans can point to a high-profile free-agent signing that fell flat. Sometimes the reasons for the player’s underperformance are clear — injuries, for example. But often, it’s harder to pinpoint the cause. In those cases, we tend to point to lack of effort as the culprit — what researchers call shirking.
According to Richard Paulsen, who presented his paper, “New Evidence in the Study of Shirking in Major League Baseball,” at the Sloan Sports Analytics Conference, “shirking occurs when an employee exerts effort … that is suboptimal in the eyes of the employer.” Of course, that doesn’t mean this is always an accurate assessment of the situation. Paulsen spoke with us about his research and his belief that the Phillies are going to regret at least one free-agent signing from this off-season in the episode “Buyer Beware! MLB Free Agents Underperform Their Contracts.”
In baseball, the infield shift refers to overloading defenders to the side of the field where a hitter routinely drives the ball. Supporters of the shift believe it’s a solid strategy — by blanketing the area of the field where the ball is more likely to go, teams should get outs more easily. Like many strategic questions in business, when to deploy the shift is a game of numbers. It depends on the likelihood of the batter to hit the ball one direction or the other, given his tendencies and the circumstances on the field. It’s analytical thinking in all its glory.