Business Insight Zone

Here’s a simple business idea — for yourself or your company — that I took from the world of baseball.

Consider a mythical big-league general manager, call him John Doe, who needs to rebuild his cellar-dwelling team. One of Doe’s earliest steps is to evaluate every single player on his rosters, from the big-league team all the way down through the minors. There are many gradations of value and value-for-money, but at a simplified level, players will fall into four broad categories, based on two simple questions:

1. Is this player useful to us now?
2. Will this player likely be useful when we’re back in contention a few years from now?

Let’s consider four players from Doe’s perspective.

Armendariz is your aging veteran at third base. Solid player, solid guy, signed to a reasonable contract. You’ll use him for as long as it makes sense, but you don’t expect him to be manning third base on your pennant-winning team five years from now. You keep him in place and make a note that you’ll need a long-term solution at third base.

Baker’s injuries have caught up with him. He’s past thirty, he doesn’t hit for power anymore, and his gimpy knees won’t let him run well in the outfield. He’s given good service to the club, but you have better options at the plate and in the field, especially given how much salary Baker would want if he were to stick around. You let Baker go, knowing that you can find someone else — a youngster, a minor-league veteran — to fill his role on the cheap for now.

Chadwick is the least of your problems. A natural centerfielder, the kid is the best athlete on the team at the ripe old age of 22, and he’s only getting better. He should be leading the charge to the pennant five years from now, playing centerfield and batting in the middle of the order every day. Sign him to a long-term contract, ink him into the lineup indefinitely, and hope he avoids injury.

Domingo is a pure raw talent. Great fastball, hard worker, and the makings of a world-class curveball, but he’s only 19 years old and needs lots of polish before he’ll be able to pitch effectively in the big leagues. You bring him along slowly in the minor leagues, help him avoid injury, and let him learn how to pitch. Five years from now, he might be starting Game 2 of the World Series for you. Meanwhile, you’ll need a pitcher to fill that spot on the big-league roster.

Applying this approach to your own work

The parallel may be obvious: for every asset you have, you rate whether it’s useful now and useful later.

Depending on whether you’re managing a whole company, a department, a team, or just yourself, these assets could include

• capital goods — factories, machinery, servers, etc.
• talented people
• intellectual property
• skillsets
• operating procedures or habits
• cash
• brands
• . . .

Make a list of your “roster” of assets. Go through them one by one, thinking ahead to when you win your “pennant” — whether that means taking the top spot in your industry, advancing to the C-level in your own career, or whatever.

Factory X may be useful to you now, yet clearly not have the headroom to be useful to you when you’re going toe to toe with General Electric. Habit Y may be actively impeding your ability to get things done now, much less later. Brand Z may be just an idea on the drawing board now, but a potential Hall of Famer for you in the future. You get the idea.

Mind you, this doesn’t tell you how to get from here to there. Many of the best teams in baseball rebuild through every possible avenue: trades, free agency, smart scouting and drafting, foreign signings, you name it. Many of the best companies do the same, cultivating some assets inside the organization, acquiring others from outside as needed. That’s where things like good judgment come into play.

Meanwhile, though, thinking like a general manager can help you to address the conundrum that Jack Welch has said is the central problem that makes business management so hard in the first place: balancing the short term against the long term.

How can you think like a general manager in your work?

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Photo by Lia, used under a Creative Commons license.

Category: Management, The business of sports