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February 26, 2006

Trusting the Triple-A Team

Bill James, eminent chronicler of all things baseball and beyond, once made the point that major league teams over-value major league experience. (Major league baseball teams all have a network of affiliated teams in the minor leagues, from short-season Single A up to AAA, the level right below the majors. The major league team moves players up from and down to the AAA team as it sees fit.) When evaluating players, they view major league success as something that cannot be predicted from minor league success; some players "have it" and some players don't, and you can't tell which is which until you try. What this means is that teams who need a player at a certain position (because of injury, trade, free agent departure, etc) will tend to look for someone who has already "proven" themselves at the major league level, instead of to their own minor league system.

Meaning, let's say your catcher gets hurt. Obviously your AAA team has a #1 catcher, and your AA team has a #1 catcher, etc. But teams will instead look around the majors for a catcher they can trade for, OR choose a player in the minors who has already been in the major leagues (famous players will retire in the majors, but less famous ones often wind up in AAA or AA for a while before they decide to hang up their spikes).

What Bill James showed was that you can actually make reasonable predictions about someone's major league success based on their minor league record, once you adjust for the better pitching and defence they will face, the (usually) larger parks they will hit in, etc. Sure some people flame out in the majors, but major-leaguers also have unexpected bad seasons. James's point was that teams should look hard at their AAA players because it is likely that they can do almost as good a job as a "proven" major leaguer, and (important point) do it for much less money.

For an example of this, take the Seattle Mariners. Please. The Mariners, still emerging from the dark days of Lou Piniella, have an organizational aversion to believing in the ability of their AAA players. They keep chasing after declining journeymen on the wrong side of age 30. Finally, last year, the team was so terrible that in desperation they called up a bunch of guys from AAA, and lo and behold some of them were pretty good. Of course the team didn't learn their lesson; in the off-season they went after more "experience", and this upcoming season would be poised to lose 162 games, if it weren't for Kansas City being in the league.

The explanation is often couched in terms of the experienced players "knowing what it takes to win". Meaning that a kid in AAA, who presumably has been a star from Little League, through high school, and then in college or the low minors...never figured out how to win in all that time. "Oh wait, you have to score MORE runs than the other team? Dang!" The real explanation is that it is much easier to defend your choise when it goes wrong. "Sure Scott Spiezio is 97 and has no knees...but he won a World Series with the Angels! Honest!"

Since we were in Whistler last week, we had a closer view of the national hand-wringing over the failure of the men's hockey team to win a medal. Much has been made of the selection process for the team, which also favored "experience" (previous internatonal play) over up-and-coming talent. Money wasn't an issue in this case, but the feeling was that with the bigger ice and compressed schedule, the young guns might have had more energy to keep up with the flying Finns (and Swedes, Russians, etc). I can understand valuing experience in a sport like figure skating where there is a brief stress-filled performance, but when playing 6 hockey games in 8 days, nobody would be a newbie for long.

Anyway I was thinking about all this and it occurred to me that Microsoft might be suffering from a bit of the same problem. Meaning, when looking to replace a vice president (let's say), we look much more closely at current VPs in the company, or people at VP rank outside the company, than we do at current General Managers (who are one level below VPs). And similarly with replacing GMs with PUMs, etc. It's the same thing as with baseball teams; it may be more expensive to do it this way, but it's easier to picture someone succeeding if they already have elsewhere, and it's easier to defend your choice if something goes wrong. But that doesn't mean it's the right thing to do.

Now, Microsoft in the past certainly has an admirable record of promoting from within. Most of the current crop of VPs and GMs started out as rank-and-file employees. But this could be an artifact of growing from 2,000 to 60,000 employees in the last 20 years, and growing from 3 VPs (or thereabouts) to 120 in the same time frame. Now that the company is growing more slowly, we can pick and choose whether to go for the "experience" or bring up someone from AAA. A quick look at the Mariners (and the Canadian men's hockey team) might be instructive here.

Posted by AdamBa at February 26, 2006 10:36 PM

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