Tools of Ignorance

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Non-Strategies
Every baseball team has more or less the same goals: Win as often as possible and make as much money as possible. Each team will have a different amount of resources ($$$) that it can use to achieve these goals, but, alas, the goals are all still the same.

If all teams are trying to accomplish the same thing, then what makes them different? The resources, the players, the coaches, the scouting departments, the management, and the ownership are all things we analyze to find out why teams are more or less successful than others. But on a basic level, the means to accomplish these ends are more or less the same for all franchises: Have the best players, the best coaching staffs, the best scouts, and the best front office managers and staff. Each team also hopes to have the best strategy, but for a lot of teams “having the best strategy” seems to be to have the best players, coaches, scouts, front office persons, etc. The issue with employing this as a strategy is that it is probably not a strategy at all.

Say what? Roger Martin says what in the Harvard Business Review article “The First Question to Ask of Any Strategy” by noting that,

...if the opposite of your core strategy choices looks stupid, then every competitor is going to have more or less the exact same strategy as you. That means that you are likely to be indistinguishable from your competitors and the only way you will make a decent return is if the industry currently happens to be highly attractive structurally.

The opposite of not wanting to have the best players—wanting to have lesser players—looks stupid. Thus, these are non-strategies because everyone is employing them. Moreover, these non-strategies will only pay out when you have more resources than your competition or luck happens to hit. Now imagine going to your bosses or investors and saying that you plan to succeed through spending more than everyone else or through luck. A reasonable response from these hypothetical bosses and investors would be, “I am paying you/investing in you to do what?” The amazing thing is that many managers and CEOs are seemingly able to convince their bosses and investors that this non-strategy is a worthwhile strategy. Martin writes that “perhaps the two most popular 'strategies' are service excellence and operational effectiveness.” The point being that everyone wants to have service excellence and operational effectiveness. The more important point is that these two things are results of strategy rather than strategies themselves.

In today’s baseball world, service excellence and operational effectiveness (results used as non-strategies) are probably player development, scouting excellence, and utilizing analytics (with maybe sports science starting to sneak in there). Having the best player development is not a strategy. Having a strategy for having the best player development is, obviously, a strategy.

All of this is to say that to truly have a strategy that differentiates a team from its competition, a team must choose a strategy that could be argued against, a strategy that other teams might fear to try or that other teams might think is unwise. While this may seem easy, there are a few catches. First, many strategies are differentiators because they are bad. Successful differentiating strategies are inherently hard to find, because otherwise they would be employed by more teams and thus not be differentiating. Second, a “true” strategy, by Martin’s definition, involves risk in that it can be viewed as ill-conceived. This a catch because it means that the responsible party is easily identifiable should something go wrong. It means that by choosing a strategy that differentiates, one would also be choosing a little less job security.

Ben Cherington’s Job
Now maybe (probably) other general managers had differentiated strategies that were not as clearly visible as Ben Cherington’s for 2015, but no general manager was as public in explaining or leaving hints about it.

Several hundred people were at Saberseminar in August 2014. The keynote speaker that day was Mr. Cherington. He had just seen a team he assembled win the World Series in 2013, only to watch them freefall in 2014. Cherington had some ideas as to the cause for his team’s poor performance in 2014. For starters, his players did not perform up to their forecasted production; this is something he admitted happens, but noted that the 2014 Red Sox had a higher than expected number of players perform below those numbers and a lower than expected number of players perform above those numbers. He thought that they were unlucky in this regard and challenged his staff, as well as the audience, to find ways to help players more consistently hit higher end of their forecasts. The esteemed Ben Lindbergh covered this expertly a month of Sundays ago.

The next reason for the team’s underperformance that Cherington shared with the audience was the strike zone. More specifically, a largely inconsistent strike zone hurt his patient, strike zone-abiding hitters more than it did more free swinging teams (like the unexpected Royals).

It turned out, based on the Red Sox’s moves the proceeding offseason, that Cherington was not just explaining what went wrong to the audience that day; he was also explaining the philosophy that would guide his strategy for regaining success in 2015. If the umpires were going to call an inconsistent strike zone, then the Red Sox were going to add players that could hit both strikes and balls with proficiency. Welcome aboard, Pablo Sandoval and Hanley Ramirez. And if the strike zone was more malleable than ever, why not go out and pair some groundball pitchers with solid, maybe even great stuff with good framing catchers, instead of paying a premium for premium pitching or catching talent on the free agent or trade market? Welcome aboard, Wade Miley, Rick Porcello, Wade Miley, and Justin Masterson. Welcome to a starting role, Christian Vazquez.

Is this an oversimplification? Definitely, but it does not appear to be coincidence either. All this is to say that Cherington had an actual strategy. This is also to say that there is a good chance he lost his job for using this strategy (which we can say, with the benefit of hindsight, that he should not have employed).

He won a championship in 2013 and two years later they are bringing in Dave Dombrowski. Many a general manager has managed more disappointing teams to far lesser consequences than Cherington in Boston. But they did so by trying to get good players, couches, scouts, etc., not by trying something different.

Cherington’s case, while maybe unique in consequence, is not entirely unique. All general managers are criticized when their teams fail to meet expectation, regardless of whether they used a strategy or non-strategy. The most criticized failures, however, are ones in which actually strategies were employed. Alex Anthropolos, Jeff Luhnow, and A. J. Preller all serves as recent examples. Now sometimes these strategies are unsound and truly deserve the added criticism, but often the added criticism exists because the responsible party is obvious, because there is an easily identifiable cause. Additionally, choosing such a strategy can also be viewed as a “look at me” tactic, which does not help with the criticism.

This matters when analyzing strategies because potential backlash is a disincentive for front offices to choose differentiated strategies. Conversely, it incentivizes non-strategies. When front offices have to act sub-optimally in order to keep their jobs, markets get distorted. Much of our analysis of front offices involves deciding if their decisions are optimal or not. In doing such analysis we make assumptions, ones such as “markets are not distorted.” Based on these assumptions, we find findings. We declare that the Phillies should have traded Cole Hamels in the offseason because demand should be higher with more teams interested in his service—not to mention the risk of injury should they wait until the deadline to trade him.

The Cole Hamels Trade Market
The issue with this analysis is that they are doomed from their assumptions. The market was always distorted because front offices were not just deciding whether trading for Cole Hamels was worth the cost of acquisition, but they were also deciding if using an actual strategy (trading premium prospects for a slightly below market-rate, albeit top-line, pitcher) was worth the decreased job security.

Trading those prospects for Hamels at the deadline is less risky because teams have a better idea of both the playoff picture and what to expect from Hamels. GMs are more willing to trade for Hamels then because trading for Hamels then is less likely to cost them their jobs. Knowing that demand would thus be higher at the trade deadline, the Phillies seemingly correctly held onto Hamels and moved him at the deadline. Now, whether the risk of holding onto him was worth the reward of a higher return at the deadline is another factor, but not one about which we have enough information to judge (so we are going to give the benefit of the doubt to those with that information, the Phillies).

Waiting to see how the season plays out before “going for it” seems perfectly reasonable to us because it is normal behavior in today’s game. However, in theory, it is backwards. If the idea is to win and make money, one would think that getting a better player sooner rather than later would be optimal and that such a thought would be obvious. We are not analyzing theoretical decisions though; rather, we are analyzing people making decisions (while the weigh “people” factors). More interestingly, it only takes a couple teams acting with job security in mind to alter the optimal choice for another team because there are so few relevant agents (teams) that make up the demand in a trade market. So if we ever get the chance to wonder what Ruben Amaro, Jr. is thinking again, we should probably make sure to wonder what all his counterparts are thinking too.