February 3, 2016
Life at the Margins
The Case Against Hiring A Smart Person
Yesterday, the Dodgers announced that Greg Maddux, formerly of the Cubs, Braves, Dodgers, and Padres, and lately of the National Baseball Hall of Fame, will be joining the L.A. front office as a “Special Assistant” to the President of Baseball Operations. He’ll be joined in this capacity by Raúl Ibañez.
Maddux and Ibañez will, soon enough, join a dizzying collection of front office talent in the Chavez Ravine. A brief rundown, so we can get our bearings (feel free to skip ahead if you’re familiar with the particulars):
That’s a helluva C-suite lineup coming together out west. But is spending money on premier front office talent the wisest possible allocation of resources for Los Angeles? I’m not so sure that it is.
The generally accepted principle around BP is that dollars spent on front office talent are probably among the best dollars teams can spend anywhere. I agree with that. It’s plausible to say that Theo Epstein, at $3 million a year, is worth far more than whatever you can get on the free agent market for the same price, which last year was … LaTroy Hawkins.
So my beef isn’t with hiring Theo Epstein for many millions of dollars. I’m on board with that. Heck, pay Epstein $10 million or $15 million a year and I’m probably still on board with it, though I might need to think about it a little longer.
My problem is with hiring ten Theo Epsteins, and that’s what the Dodgers have done. That’s because part of the value of an Epstein (or a Zaidi, or a Friedman, or any of your Fill-in-the-Blank-Top-Executives) is that these transformational executives can lead and transform a team of more-junior partners to define and then achieve a vision for their organization.
It’s called transformational leadership, and one of the things about it is that it’s only really helpful when there’s fertile ground for transformation[i]. And one area of particularly infertile ground, in general, is when there exist multiple visions for the future of the organization:
Now, I can’t say for sure that “different leaders with competing visions” is a description that appropriately applies to the Dodgers’ front office, as it’s currently constructed. It’s possible that somewhere in that network of leaders in L.A.—including, of course, ownership—there’s the leader, and that person is currently transforming the Dodgers’ organization with the assistance and dutiful support of nine or 10 other guys who’ve previously been the leader somewhere else.
But the type of person who’s been the leader somewhere else often gets to that point because he or she is able to effectively articulate a vision for the organization, then share that vision with others. And because it’s their vision, it’s likely idiosyncratic, and born of the cumulative weight of their life and experiences. That’s a tough thing to share with others, and (one imagines) a tougher thing to give up.
But the ability to define and articulate that vision is also, I imagine, some rather large percentage of the value returned to teams who bring on transformational executives like Epstein, Friedman, and their ilk. And once it’s done, it can’t (or, really, shouldn’t, unless something has gone wrong) be done again, meaning that hiring two or more people who can do it—at the prices they command, at that level—doesn’t make a whole lot of sense to me.
Sure, the nine or 10 subordinate execs aren’t sitting around doing nothing. I’m sure they’re contributing something (likely in the form of relationships, and new ways of thinking about things), and probably that something is worth a fair bit of money. But their marginal value has got to be lower each time another top executive comes aboard. And in Los Angeles, that’s happened nine or 10 times.
And that suggests to me that perhaps a qualifier to the usual logic is needed: that dollars spent on front office talent are probably among the best dollars teams can spend anywhere, unless they’re spent excessively at the top of the market, and especially when they’re spent at the bottom of the market.
“Wait,” you say. “I get the first part, because that’s what you’ve been arguing this whole time (even if I don’t agree with it). But what about that second italicized clause?”
Here’s the thing. If I had $6 million to spend on executives, I’d spend $3 million of it to hire a Theo Epstein type, and the other $3 million to hire 50 of the best and brightest young guns straight out of grad school at $60,000 a pop. Think about what Mark Shapiro had in Cleveland in the 2000s: a clear organizational structure, with him at the top, and a bunch of future GMs below him buying into that vision, and wildly underpaid for their talent (because they were early in their career).
If you spend too heavily at the top of the executive market, in other words, you risk clouding your organization’s vision for the future, and that can actually have a negative impact on your team’s ability to succeed. Spending on front office talent at the bottom of the market, however, still gives you a wide pool of smart people upon whose ideas you can draw, but saves you a messy organizational chart and competition at the top of your organization. That, to me, seems like the smart way to go.
It’s not what Los Angeles has chosen to do. I think that might be a mistake. But hey, they have lots of money, and lots of smart people around to help them make those choices for them.
[i] There’s lots on this in the organizational psychology literature, but for a clear explanation of the principle, see “Transformation Leadership: When Is It Redundant?” by David Wyld, and associated citations.
[ii] “Transformational vs. Transactional Leadership Theories: Evidence in Literature,” by James Odumera and Ifeanyi Ogbonna.