June 30, 2000

The Daily Prospectus

Orthodoxy

by Gary Huckabay

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"No one ever got fired for buying IBM."

That one sentence, popular in corporate IT shops from about 1960 to 1990, spoke volumes to the problems American business faced during that period. The importance of information technology was growing rapidly and the understanding of the obstacles to successful use of IT in increasing efficiency was at least a generation behind the technology itself. Computers and computer services were extremely expensive investments, and failures were far more visible (and common) than successes.

As a result, purchasing agents and upper management became very risk-averse, and IBM was the inertia purchase, the industry standard product that everyone had heard of. Sure, the product gave only 5% of the promised efficiency increase, but hey, we went with the industry standard! It's not like we failed with some unproven, heretical partner with no track record.

Business, overall, has gotten somewhat better over the years at making this type of investment. But what about baseball? Has it gotten better at making investments, or, more to the point, at solving problems?

Oakland as the Model

Baseball runs about three, perhaps four decades behind the rest of industry when it comes to its methods and processes. (Yes, it's an assertion, but it's one I'm fairly comfortable with.) Oakland's Billy Beane has been held up by Baseball Prospectus and others as the shining example of the new breed of general manager, one who uses the scientific method and modern management techniques to run a club and run it exceptionally well. Mr. Beane has, with the help of a dedicated team of professionals, built an organization that understands what it takes to win and executes a well-crafted and feasible plan on a tight budget.

The A's success, which has been modest so far, is predicated largely on the run-creating ability of the patient, powerful hitter. The organization will not reward minor leaguers with promotion or awards unless they demonstrate the requisite plate discipline. And walks and power are cheaper than batting average, at least for now.

Baseball analysts have been crowing for years about the importance of on-base percentage and the inflated perception of batting average. Their positions have been demonstrated through literally dozens of studies about offense. The A's are early adopters of this knowledge, and are ahead of the curve in MLB because of it. They're winning games on a budget and building a culture in their minor-league system that has been a big part of their producing the best young talent in the league.

But is this advantage sustainable?

Probably not. The information which directed the A's behavior has now been proven by a club to be valuable, and other clubs will follow suit. Eventually, even clubs like the Cubs will emulate successful behavior, and will see the on-base-percentage-and-power light. Clubs like the A's and the Yankees have crossed the chasm from the lab to the field, and the rest of MLB will eventually follow. After all, that specific tactic now has a track record, and therefore, the risk of trying the same tactic and failing has been greatly reduced. With reduced risk, you can look forward to other clubs making similar moves in the future.

The Next Step

So how do you develop a sustainable advantage?

Assuming that all clubs are within an order of magnitude in terms of resources, the answer is the same as it is in other businesses: continuous innovation. Baseball has thousands of processes, from scouting early high-school talent to charting pitches during a game. In this myriad of processes, there are countless opportunities for clubs to take informed, prudent risks. Over time, as people inside and outside the game research these processes to death, you'll see some of the collective knowledge seep into the management practices of clubs. It won't happen quickly or evenly, and it will create all sorts of Chicken Little screeds (such as the one we're facing now with increased levels of offense and home runs), but it will happen, and in the long term, it'll be for the better.

One place you might see a change or two is in the management of pitchers. According to Don Fehr (and his predecessors) two things in baseball are always true--no one's making any money, and no one has enough starting pitching. This begs a pretty obvious question, ignoring the book that can be written about baseball finances: why does there have to be enough starting pitching?

Managing a pitching staff right now is a very difficult task. You've got 11 or 12 guys on a 25-man club, and usually 2-3 shuttle guys in the minors--the Joe Slusarskis of the world--who have to cover all your innings. A few of these guys will be injured and put on the disabled list. Others will be injured, but only enough to be put out of action for a few games. Still others will be completely ineffective, or worse yet, suffer a horrific injury that requires a 12-to-18 month rehab stint. Add in the unavoidable paradox of burning out your most valuable resources because of their effectiveness, and you've got a nightmare in terms of allocating your resources.

What could make this incredibly difficult task easier? Well, you could forsake a couple of the advantages that are now sought through tactical moves, and instead focus on gaining a long-term strategic edge. Currently, managers scramble both in games and with roster management to gain a platoon advantage. How many left-handed relievers have a job solely because they're left handed?

Imagine a situation in which the management of a club researches the usage patterns of its pitchers and builds a staff of guys who perform notably better on predictable workloads and rest. Instead of warming up Buddy Groom to get Barry Bonds out two hitters down the road, you leave Anthony Telford in, because Telford works best throwing two innings every third day. Sure, you may give up some platoon advantages, and you may lose some flexibility, but what if you shave .25 off the club ERA for the season, and reduce time lost due to injury by 25%?

The manager of the New Orleans Warbirds may go into the 2028 season with a pitching plan, and it might look something like this:

Will it work? It might, it might not. I don't know. Neither does anyone else, really. But can you imagine a manager doing this in today's climate? If it failed, the manager would roasted alive in the press and run out of town on a rail. But if the same manager failed with the same bunch of pitchers using traditional pitching management methods, that manager would probably hear things like "not enough talent," and would be put in the John McNamara hopper of retread managers available for hire.

There are a huge number of areas of potential improvement in the management of baseball clubs. Unfortunately, the price for failure is dear. There are 535 elected positions in the United States Congress, and only about 100 positions of decision-making authority in MLB when it comes to player personnel or management. There's also no shortage of people willing to fill them. Which means that the culture of risk-aversion and orthodoxy will be difficult to change.

Gary Huckabay can be reached at huckabay@baseballprospectus.com.

Gary Huckabay is an author of Baseball Prospectus. 
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