In April of 2016 I had the opportunity to go see Tom Ricketts, CEO of Inland Capital and owner of the Chicago Cubs, speak at a CFA Society of Chicago event. As a finance nerd, and Cubs fan, I was very excited, and his talk did not disappoint. And even though he was talking about the Cubs, I was surprised after rereading my notes at how his comments could be translated to the building of any organization. In particular, I took away three main lessons.
1) Lay out the vision
Tom came to the stage to talk specifically about how he came into the Cubs organization and approached the task of building a winning team. He said the first thing they did was to outline the mission – communicating to the whole organization, the city, and the fans, what they were about, and what they were working towards. This vision came out as follows.
1) Win the World Series
2) Improve and Maintain Wrigley
3) Be a Good Neighbor
He said that it was important for everyone who had a stake in the organization to know why they were doing everything they were doing. Everything they did was to achieve one of the three above aims.
2) Process over results
When Mr. Ricketts hired Theo Epstein to be General Manager of the team, they announced that the team would undergo a rebuilding. For sports fans, we know that means “The team is going to suck for a while”. The Cubs, though, were in desperate need. Their farm system (to develop young talent) was one of the worst in the league and their players were old and expensive. The executives started putting together a process on how to do everything – the “Cubs Way” – which explained how to scout talent, develop players, and even work on contracts.
As predicted the team foundered for the next few years. However, it was the adherence to the process that was important at that point. While it was painful for the fans (and probably the team as well) it was faith in that process that would produce results down the line.
Today, in July 2016, it’s hard to argue with those results. Beyond having the best record in baseball, the Cubs also have the highest rated farm system. With such a strong stable of young talent in their pipeline, they are projected to be a good team for a while to come.
Hearing this I was reminded of a great Aristotle quote: “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
3) Take a lot of swings
In baseball, like a lot of things in life, winning is tough. It requires a steady discipline, hard work, talent, and also, luck. For instance, the key to winning the World Series in baseball is to simply make it to the play-offs as much as possible. What many people do not realize is that after the grind of a long regular season, a series in the baseball play-offs is essentially a coin-flip. Mr. Ricketts pointed out in his talk that wins in the regular season are almost totally non-correlated to wins in the play-offs. The R-squared (percentage of influence of one variable over the other) was an astonishing .03! That means a team’s wins during the regular season only explained 3% of their wins in the play-offs. This was eye-opening to me. It also made me think of the parallel in real life.
Too often we think that if we are not successful in something, that it was because we weren’t good enough. The fact is that luck plays a large role in occurs in the world, and the biggest predictor of your success is going to be the number of swings you take. Do the work, get a seat at the table, and take your best shot. If you swing and miss, then swing again. Rinse and repeat.
Until next time…
“But I’ve brought a big bat. I’m all ready you see. Now my troubles are going to have trouble with me.” – Dr. Seuss