August 28, 2014
Analyzing the Competitive Landscape
“Analyze process, not results.” With our most important strategic decisions behind us for this season, right now is a perfectly good time to take a look at our process. A part of “The Process” that often gets overlooked—that I know I have overlooked—is projecting the competitive landscape of our leagues. In a lot of articles, I discuss buyers and sellers, but in order to determine whether we are or will be a buyer or a seller, we first need to know where we currently and will stand. This seems pretty easy: take a look at the standings, see which teams have underperformed, overperformed, and performed as expected, take a guess at what they will do in the future, and there you have it. If it is a head to head league, you can take a look at future matchups, and if it is a rotisserie league you can take a look at the categories. Done and done.
The above was nearly my exact process for analyzing and projecting my leagues’ competitive landscapes. I would pay more attention to specific rankings if I was in the race for a title or playoff berth, but that was really it. As you guessed, this process did not work out very well. While it may seem harmless, the consequences of improperly projecting the competitive landscape can be very negative, especially in keeper leagues. This can cause us to sell when we actually had a chance to compete and buy when we really had no chances of winning. We know the consequences of poor projection, so let us take a look at the causes and what we can do to improve.
Causes for Subpar Competitive Landscape Projection:
Our minds tend to underestimate the amount of uncertainty that the future holds. On the other side of the coin, certainty makes us feel warm and fuzzy inside. It helps us overcome the fear of decision-making. It also leads to bad decisions about probabilistic futures. I have been a culprit of underestimating uncertainty in many of my leagues. I have made strategic decisions based on thoughts such as “Team Z should be rebuilding, they have no shot,” “Team Y is a lock to finish in the money,” and “no way can Team X catch team Team W.” Often these outcomes, which I feel confident will not happen, do happen. That would be fine, except that they happen more than I forecast them to happen. Given the above, my errors are not surprising. In order to improve our projections, we need to better understand and account for just how much uncertainty there is in our game.
2. Limited Resources
A real baseball team has an analytics department and projection systems to help project the competitive landscape. These projections are the starting point for almost every decision a baseball team makes. How much additional production do we need in order to win the division (with 90 percent certainty)? What is the cheapest way for me to add that production given my current players? Can I afford to trade away this prospect to a division rival? The answer to all these questions starts with projecting your players’ and your team’s future performance. The answers to these questions also depend on your projections for your competitors’ performances. Because we do not have the luxury of quant-jock interns and intricate computer program projections as fantasy owners, we are tempted to take a less rigorous than needed approach to such projections.
3. Too narrow a scope
Because of our limited resources, we make concessions. The concession we tend to make is to only focus on our own team. While we will not completely ignore our competitors, we tend to do a less than thorough job when projecting their performance. By only doing our due diligence on one team, we will have a poor estimation of what the future holds for our leagues.
4. Lack of fun
We want to do a good job projecting the competitive landscape, but it is difficult and not a fun exercise. Preparing for drafts, doing analysis for auctions, determining trade targets, negotiating, following the progress of minor leaguers, watching your players on MLB.TV, and picking up undervalued players on the wire are all fun. Reading about all these things on the internet and on twitter is also fun. Being human, we tend to spend more time and resources on the fun parts than the less fun parts. The issue here is really competition and our desire to win because winning is the most fun (besides maybe laughing really hard with friends or hanging out with a cat or eating something delicious, affordable, and undiscovered (you can almost taste the social currency accumulating with each bite)), but winning often requires undertaking tasks that are not fun. More succinctly, projecting the performance of our team and our league-mates is not fun in the short term and only potentially fun if it helps us win in the long term.
5. The truth can hurt
On top of all of this we have a tendency to avoid that which we do not want to hear. We especially want to avoid facing the fact that we were wrong. Once we make that first move to go for it or to sell, we tend to anchor on those sunk costs. By not thoroughly projecting the future of our league, we can “see what we want to see,” and continue to forge on with our now misguided plan.
All this said, we need to improve our process for projecting the competitive landscape of our leagues.
How to improve our process:
1. Add rigor
Figuring out how much uncertainty there is in your league should go beyond merely guessing. The rigor with which we search for undervalued players and draft day strategies should be applied to projecting the competitive landscape. The analysis should include each team in the league. Documenting the assumptions we make during this analysis will give us something to measure and improve upon. We most certainly will not get everything right, but we are most likely not trying to improve on a masterpiece. In other words, this is low-hanging fruit.
2. Add frequency
This might be more important than adding rigor. The most common in-season process for projecting team performance is following the standings. That is barely a process and it is certainly not a good one. For an example of such a poor process let us go back to an article of mine. Three weeks ago I wrote, “The first place team…had been entrenched in the top spot for about six weeks.” That is a fact, but it is not predictive and it is lazy analysis. By hitting refresh on our analysis and assumptions throughout the season we can improve our strategic decision-making come the trade deadline. This will make us shrewder buyers and sellers come the beginning of trading season and all the way through the deadline. Yes, it will take more effort, but it is this kind of effort that might be needed to stay or get ahead of our ever-improving competitors.
Jeff Quinton is an author of Baseball Prospectus.
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