Imagine the poorest-performing company in an industry getting first dibs on promising business talent, or being able to trade that right away for some cold hard cash or some other tangible asset. Sounds ridiculous, doesnt it? But thats the way professional sports cartels try to ensure that the weakest link doesnt always remain that way.
Of course, it doesnt always work out that way. Take the NHL, which starts its annual draft tonight. Some teams and general managers continually draft poorly, despite the fact everyone can take advantage of the NHLs Central Scouting Service, which conveniently ranks players according to their position (goalies, defencmen and forwards). Peter Tingling, an assistant professor at Simon Fraser University in Vancouver, thinks he may know the reason why.
Scouts and GMs are focusing on the first and second round, says Tingling, who has analyzed 30 years worth of NHL draft data. GMs should think a little bit more about what they need, think a little bit more about the performance of their scouts and think about how theyre making their decisions. The scouting reports that we see are not real data, and that shouldnt be the way you make decisions.
Tingling, who is also founder and CEO of Octothorpe Software Corp., which makes systems designed to help execs make decisions, has found that nearly 60% of draft picks never play an NHL game, and one in five of those who do make it play less than 10 games. Whats worse, theres little difference between the performance of players drafted in rounds three through seven who play at least two years. In other words, the NHL draft is a crapshoot that few are taking a more scientific approach to.
Those teams that draft poorly do so at their peril, says Tingling. The consistently good San Jose Sharks and over-performing Buffalo Sabres are 2.5 times more effective at drafting than the Columbus Blue Jackets and Phoenix Coyotes, two perennial cellar-dwellers.
That said, even Tingling admits a good draft doesnt translate into championships. Good drafting is necessary, but its not going to get you the Cup, he says. However, bad drafting will lose you a lot of games.
Perhaps not surprisingly, Tingling believes business executives would do just as poorly if they had a draft. Theres far less science in drafting than youd expect, but theres far less science in decision-making in business than youd expect, he says. People think executives make decisions using science, and a lot of times they dont.
But gut feels shouldnt be completely discredited and replaced by analytics. For instance, Henry Fords decision to make cars wasnt based on data, because that kind of information wasnt available. However, Tingling says some managers have a nasty habit of finding data to support their decisions after the fact, something called decision-based evidence making, rather than analyzing the data beforehand. Whats interesting to me is when people choose not to look at the data, when people want to be intuitive managers, and in a lot of cases intuition doesnt work, says Tingling.
Not that anyone would ever admit that. People are very eager to shed light on their triumphant decisions and shy away from their bad ones. Take Lee Iacocca. Hes best known for saving Chrysler and helping design the Ford Mustang. But he was also the project manager for the Pinto ($2,000 for 2,000 pounds). Everybody tries to take credit for the Mustang, says Tingling. But I dont see anybody trying to put their fingerprints on the Pinto.
The same mindset appears in the NHL. GMs and scouts are quick to point out how smart they were in drafting players such as Rick Nash and Alexander Ovechkin, but nobody takes credit for first-round busts such as Alexandre Daigle and Greg Joly, never mind the thousands of players who never made the NHL at all.
But if youre watching the draft and want to figure out whos a thinking-persons GM, look for those who draft out of position and those who historically find hidden gems in the latter rounds. Theyre the ones thinking about what players they actually need and moving up or down to get them.
The first rounds are sort of like shopping at a jewelry storeof course youre going to see some diamonds. So will everyone else, says Tingling. The next rounds are like going to a garage sale. If you have a good eye, you can see what others might have missed. This is the sign of a smart GM and good scouts.