The Better Letter: An Empowered Critic

Leaders need good people who are willing to challenge them

I have loved baseball for as long as I can remember.

When I was grade school age, during the summer, I’d get up in the morning and go play baseball with the neighborhood kids. After lunch, about 20 of us would gather at the town field and play a full-sided game. In the evening, we’d either play or watch the scheduled Little League match-up. A quarter would buy a soda ($.15) and chips ($.10) at the snack stand.

In between, at a little after five o’clock, I’d wait at the end of my street, gloves and ball in hand, for my dad to get home from the steel mill. We only had one car and my mom needed it to get to work, so he got a ride to the plant. Every day he’d be dropped off at the end of our street. 

When he arrived, we’d walk home and head straight to the back yard to play catch, no matter how tired he was. It was the best part of my day.

Baseball is a game that allows time to stand still. It isn’t governed by a clock or – at least in those days – a time limit.

When I watch my San Diego Padres today, finally playing meaningful games in September for the first time in a decade, I (almost*) get the same feeling I did as a ten-year-old in my backyard.

This is my 25th season as a Padres fan – I became a Friar follower when we moved to San Diego in 1995. The Pads won the division in 1996 and had a great National League championship team in 1998 that lost to an all-time great Yankee team in the World Series. I saw Hall-of-Famers Tony Gwynn and Trevor Hoffman in their primes.

It has been all downhill from there.

We won division titles in 2005 and 2006, but only one post-season game. 

In 2007, we were hosed out of a post-season berth. Matt Holliday still hasn’t touched home plate.

And our last .500 season was 2010.

Until this summer.

Before this year, we had the best ballpark in baseball, the best beer, the best fan experience, the best broadcasters, and a lousy team.

In 2020, led by the most exciting player in baseball who is quickly becoming the best, 21-year-old Fernando Tatis, Jr., …

…the Padres are going to the post-season and have a real chance to do some damage. Only the hated Dodgers have a better record in the National League. It has been a long time coming. A key factor in how it came about is the focus of this week’s TBL.

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And watch some baseball this weekend. You’ll be glad you did.

_______________

* I miss my Dad.


An Empowered Critic

On August 6, 2014, my San Diego Padres announced the hiring of A.J. Preller as their new general manager, replacing the fired Josh Byrnes, now of the dreaded Dodgers. Preller made many dubious moves over his first (2014-2015) offseason in what came to be known as “Prellerpalooza.”

He traded Yasmani Grandal to the Los Angeles Dodgers for Matt Kemp and Tim Federowicz. He was part of a three-team trade for Wil Myers and Ryan Hanigan, giving up Trea Turner and Joe Ross. He traded prospects to the Braves for Justin Upton. He signed James Shields to a 4-year contract. He made several smaller moves as well, as he tried to launch the Padres into the playoff picture. He concluded the off-season by trading for Braves closer Craig Kimbrel just hours before the 2015 season opened.

It was an unmitigated disaster. 

Dave Cameron, a crazy-smart and highly regarded baseball analytics specialist (Billy Beane is a big fan), succinctly laid out the problems for FanGraphs.

“Of course, the net effect of all those moves was to put the organization in a far worse place than they’d been if they’d taken the boring approach, as the Kemp deal saddled them with a disaster of a contract for a mediocre player, the Myers deal cost them Trea Turner and Joe Ross, the Upton deal thinned out their farm system for a rental, and Kimbrel showed that even an elite closer doesn’t move the needle much on a bad team. The Padres stumbled to a 74-88 record, and without much in the way of prospects or a young core to build around, it became pretty clear that Preller was going to have to start over.”

The next off-season was much quieter but no better. Cameron, again: “the 2016 Padres roster looks an awful lot like the 2015 Padres roster. And that doesn’t make any sense.” He correctly saw that the team was “going to stink again” and crushed Preller for the inactivity: “Last winter, A.J. Preller couldn’t stop making trades, even ones that didn’t really make sense for his team. This winter, in one of the best times to be selling pitching in recent history, the Padres have yet to move one of the most obvious pieces of trade bait in the game.” Cameron piled on about Preller’s ethical shortcomings, too.

The Padres did sign Eric Hosmer to a big free-agent contract. Cameron, like most of the analytics community, wasn’t enamored, calling him the number one “free agent landmine.”

Meanwhile, A.J. got to work building a top organization and the best farm system in baseball. But, it didn’t seem to be panning out at the Major League level. Preller’s first five teams averaged just 70 wins and were pretty much out of the pennant race by the All-Star break. The trendline wasn’t good, either. Last year’s team finished 70-92.

In January of 2018, Cameron went to work for the Padres (and was subsequently promoted to special assistant to the GM). He became a “difference-maker” in the team’s push to get much better on the analytics front. The Padres were middle-of-the-pack in terms of analytics before Cameron’s arrival. 

Preller’s hiring of Cameron demonstrated both the GM’s willingness to entertain challenging opinions and increasingly to incorporate analytics into his scouting and development process.

As all fans are well aware, post-Moneyball, there has been an analytics revolution in baseball.

Even the Harvard Business Review is in on the action today: “baseball’s most successful franchises commit to acting on their data and analytics.” Today, the goal is Betterball.

Because so much MLB analytical work is proprietary, we can’t know the full extent of Cameron’s contribution, but we can infer it from the Padres’ big jump in the standings this season (granted, the sample size is small) and reports that Cameron pushed for the (tremendously successful) acquisitions of Rookie-of-the-Year favorite Jake Cronenworth and catcher Austin Nola, among others.

Baseball is particularly amenable to the use of statistical analysis because it offers large sample sizes, discrete individual-performance measures, and ease of identifying positive results. However, when humans are involved – and baseball is as human as can be – interpretation of the underlying data is highly complicated.

Great interpretation of difficult data sets, especially those involving human behavior, involves more sculpting than tracing. It requires great skill, imagination, and even a bit of whimsy as well as collaboration as to whether the various interpretive choices are acceptable (not to say the right) ones. That’s why we understand reality better with respect to the natural sciences than in the social sciences. As ever, information is cheap but meaning is expensive.

What we’re talking about is evidence-based baseball. It is akin to evidence-based investing, which I define as a relentless focus on what works, what doesn’t, and why. However, it is crucial to note that even the best practitioners of baseball analytics are still prone to the all-too-human foibles that plague us all. In related news, note that professional investors are as prone to these foibles as anyone else, too.

The crucial insight of Moneyball was a “Mungeresque” inversion. In baseball, a team wins by scoring more runs than its opponent. The epiphany was to invert the idea that runs and wins were achieved by hits to the radical notion that the key to winning is avoiding outs (bonus points to you if you’re now thinking about the Charley Ellis classic book on investing, Winning the Loser’s Game). That led Beane to “buy” on-base percentage cheaply because the “traditional baseball men” overvalued hits but undervalued OBP even though it doesn’t matter how a batter avoids making an out and reaches base. 

Therefore, the crucial lesson of Moneyball was that Beane was able to find value via underappreciated player assets (some assets are cheap for good reason) by way of an objective, disciplined, data-driven process. In other words, as Lewis explained, “it is about using statistical analysis to shift the odds [of winning] a bit in one’s favor” via market inefficiencies. 

As then-Assistant GM Paul DePodesta (he is now Chief Strategy Officer for the NFL’s Cleveland Browns) said, “You have to understand that for someone to become an Oakland A, he has to have something wrong with him. Because if he doesn’t have something wrong with him, he gets valued properly by the marketplace, and we can’t afford him anymore.” Accordingly, Beane sought out players that he could obtain cheaply because their actual (statistically verifiable) value was greater than their generally perceived value.

Of course, as with investing, on account of the success of the A’s, it didn’t take long for the trade to get crowded with other GMs driving up the price of OBP. The best current approach promotes human capital’s cultivation over its acquisition. Improving underdeveloped players is increasingly a better bet for teams than identifying undervalued ones. The better teams have reoriented their technologies and their cultures toward the facilitation of player development and improvement.

The bottom line is that baseball analysis has become far more objective, relevant, and useful. Most importantly, the data-driven approach works (if not as well as some might hope — there are other factors involved). Evidence-based baseball has won the war (and championships). It has even made its way into baseball broadcasting (finally).

As a matter of fact and belief, a smart baseball team will be committed to evidence-based baseball in the same way businesses in my world should be committed to evidence-based investing. Doing so requires being data-driven. Ideology alone is not enough. Being sold on a story isn’t enough. A good idea isn’t enough. The proper evaluation of baseball players and teams will be – must be – supported by the data. Reality must rule.

A.J. Preller’s hiring of Dave Cameron showed a commitment to a data-driven process and increased the Padres’ chances of success substantially. There is too much randomness and too much humanity involved to guarantee success, but the odds are very much improved.

But that wasn’t the most impressive aspect of what A.J. did. He made a smart hire (among others), and built a better analytics department, but that was only doing what everybody else was doing. The key thing is much more remarkable and rare.

Most MLB GMs, like most investors, even professional investors, are frequently motivated by hope, fear, greed, ego, recency, narrative, and ideology. We would all be far better off if our processes were reality-based and data-driven at every point. If only our human make-up didn’t make it so difficult for us to do that.

Daniel Kahneman, the world’s leading authority on human error, readily acknowledges making the same sorts of mistakes the rest of us do. “I never felt I was studying the stupidity of mankind in the third person. I always felt I was studying my own mistakes,” he said

I once asked Kahneman how best to overcome the biases that so vexingly beset us. After first allowing that he wasn’t optimistic overall, he suggested asking the best and smartest people we know to tear our ideas apart. In other words, his best advice was to “[s]low down, sleep on it, and ask your most brutal and least empathetic close friends for their advice.” 

We also need what Michael Mauboussin calls the “outside view.” It requires that we expand the reference class beyond our comfort zone and our personal experience. We need a much bigger sample size from which to acquire data. In essence, we need an empowered devil’s advocate who thinks differently.

Per Kahneman, organizations are more likely to succeed at overcoming bias than individuals. That’s partly on account of resources, and partly because self-criticism is so difficult. The best check on bad decision-making we have is when someone (or, when possible, an empowered team) we respect systematically sets out to find the right answer irrespective of who might think otherwise and is empowered to challenge conventional wisdom and the powers that be – to show us where and how we are wrong. Within organizations that means making sure that everyone can be challenged without fear of reprisal and that everyone (and especially anyone in charge) is accountable.*

A.J. Preller hired Dave Cameron, someone who had been a major critic and empowered him to keep up the challenge because they would all share the same goal: championships for the San Diego Padres.

It started with a telephone call and then a meeting. As Preller said, “We sat down, talked baseball, and it was awesome. I was like, ‘Yeah, this guy is really good.’ After we offered him a job, somebody said, ‘You know he’s killed the organization?’ I said, ‘I don’t care. He’s got a good feel.’”

That “I don’t care” is as refreshing as it is rare.

As Jeff Bezos of Amazon insightfully expresses it, people who are right a lot of the time are people who change their minds a lot. If we are going to make better decisions, we need a much broader perspective and we need to be constantly refining and updating our viewpoints. More than that, we need really talented people actively empowered to try to discover where we are going and where we have already gone wrong.

Like lots of Padres fans, I was skeptical of whether A.J. could get the job done. Success over one bizarre, 60-game schedule is no guarantee of future glory. But, Dave Cameron – the guy A.J. Preller hired and empowered even though he was different and thought differently, makes me think the odds are very much improved.

Whatever happens the rest of this season, this November, my annual “Wait ‘til next year” will be far more hopeful and promising than usual.

_______________

Ray Dalio claims to do this at Bridgewater Associates. Color me skeptical. While I’m sure leadership is comfortable providing “radical transparency” downward, I doubt it meaningfully flows in the other direction.


Totally Worth It

Roughly to paraphrase the Swiss theologian Karl Barth, Hell is being apart from God. As C.S. Lewis wrote in The Great Divorce, “All that are in Hell, choose it,” so God says to them, “Thy will be done.” In that way, Hell is having your own way and being stuck with it. Similarly, if we don’t find ways at least to mitigate our mental weaknesses and shortcomings we will be stuck in Hell. We will have our own way, sure, but we’ll continue to be stuck with it. 

Lawrence Welk billed it as a “modern Spiritual” (h/t John Fea). The original came out in 1970, the year I started high school. The song is decidedly not a Spiritual, modern or otherwise. And that’s not the only thing about it Mr. Welk didn’t get.

Check out this thread of fantastic comebacks. Zoom school is toughYes. The best thing I saw this week. The most interesting. The loveliest. The most delightful. The most impressive. The most powerful. The sweetest, unless it was this. The wildest. The nerdiest. The coolest, unless it was this. The most dystopian. The most disappointing. The most chilling. The jokes pretty much write themselves but it’s hardly a jokeThis should be a joke.


Benediction

This week’s benediction features Sister Wynona Carr singing “The Ball Game.” I guarantee you’ll start to tap your feet and will probably want to sing along.

Contact me via rpseawright [at] gmail [dot] com or on Twitter (@rpseawright). Don’t forget to subscribe and share.

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Thanks for reading.

Issue 30 (September 18, 2020)