Who’s in Your Headset?

We all know that better and better data is more available, and where to find it, on anything. Any lead in analytics that a team has in any industry will be found and erased. So, what’s the next frontier for finding an edge?

The circuit boards between our ears were already hardwired with so many biases before deep data. Imagine how much fun data scientists and behavioral economists are going to have studying the new gremlins flying out of our backs when buckets of more data are dumped on us, after midnight snacks of KNOWING we have better answers.

I think doubt is now undervalued.

There is no better laboratory for studying analytical edges colliding with animal instincts, with no time to second-guess either, than an American football game.

When it is 4th down and 3 yards to go near midfield, just before halftime in ANY business, how do you decide? You’re in the third quarter of your seasons of life, and a thick book of data and what-if scenarios shows that you should be able to retire. Do you go for it?

Analytics will never outsource gut-check time.

Let me introduce you to the voice we all need in our headset. John Harbaugh has historically good coaching instincts, access to the most cutting-edge analytical department, and he is supported by perhaps the best front office in the NFL.

But, it’s not him.

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John Harbaugh is not an “analytics guy.” He was biased with a tremendous DNA chain of football instincts. John was born in Toledo, where his father Jack was an assistant coach at Perrysburgh High School. Jack moved his family 17 times over 43 years, to coach football at 9 different colleges. Jack won all over, and raised two sons on a steady diet of old-school football.

Jack drove carpool for his young boys, John and Jim, and his last words before dropping them off at school were always the same: “Okay men, now grab your lunchboxes and attack this day with an enthusiasm unknown to mankind.” Jack’s two sons would later face off in a Super Bowl, the only dad who can say that.

But, it’s not him either.

John Harbaugh had every reason, and a Super Bowl ring, to believe he has the best answers and instincts. He found something better. He hired a partner to hold him accountable and make certain he used the best solutions.

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Harbaugh hired Daniel Stern, a behavioral economics graduate from Yale, to be the voice in his headset. Stern runs all the numbers real-time, during the game. Harbaugh wanted a partner to make certain he was being guided when it matters most, not studied before the game and analyzed after, like many teams. Stern is at a table with their set of rules designed to optimize their success rates in different scenarios. Organized does not get overwhelmed.

“We’re chasing everything that is going to give us an edge.” John Harbaugh

The sharpest edges from data in every business are being chased by everybody now, this part is no longer special. Harbaugh’s brilliance is hiding right after that quote. The most un-crowded trades may now be found in the fields of softer sciences. The time and humility to listen is in dwindling supply. The magic of chemistry from collaborations is not accounted for in any database.

“Process over outcome” has gotten too crowded in the age of analytics. In every industry you will now hear those three universally agreed upon words as the answer to most questions.

The best data to support (or choose) your process, might give birth to a new risk. If a process replaces curiosity, some rigid walls get built and it becomes difficult to hear outside.

The Power of Partnerships

“If you want to go fast, go alone. If you want to go far, go together.”-African Proverb

I have been thinking a lot about the potential from better answers building better processes, eliminating more questions every day. So, I do what I always do when I’m curious about a subject. I call somebody who knows a lot more than me. One of my favorite open minds on the planet belongs to Mike Lombardi. He won three Super Bowl rings. We talked about the business of football and investing, and how much fun our jobs are finding the overlaps and lessons from each. His mind and experiences transcend football, and I recommend his book Gridiron Genius for that reason.

I asked Lombardi about my belief that doubt could perversely be growing in value as a resource, when analytics provide clearer answers than ever. We talked about the secret weapons like Stern in headsets, on and off the field, and what makes those partnerships so special and why they are so rare.

Yeah, this is all football talk, but I am on the edge of my seat as a portfolio manager, business owner, and dad because the parallels are inescapable. (Lombardi's words from our talk are below, in bold.)

1. We talk a lot about confirmation bias, which may only grow now that data lets us know so much.

“Never begin with the end in mind. Biases in scouting are the main reason many NFL teams fail to make substantial progress in the standings from one season to the next.”

2. Could knowing “we have a process” be just as faulty as worrying only about outcomes?

“Everybody knows how to run their practices, but how the **** do you know for sure what you need to be practicing?”

“The best coaches want to peek around the corner, no different than Steve Jobs.”

3. Mike and I share a favorite quote that we talk about - “The secret to all victory lies in the organization of the non-obvious.”-Marcus Aurelius

“These teams that keep firing coaches…but it’s the organization that sucks.”

“We gotta ask ourselves, do we have a production or design problem?”

4. I ask why the most successful partnership that Lombardi was a part of worked so historically well.

“Bill truly wants to listen. He wants unbiased people to trust around him. Most coaches have no interest in listening to others. Bill would always ask me the same thing – tell me what I’m missing. He wants to self-scout immediately, not later, after the season.” (Bill Belichick owns 8 Super Bowl rings.)

So, grab your lunchboxes and “Let us attack this day with a relentless curiosity overlooked by those who know better.”

When I peek around the analytics corner, I see open-minds and trusted good old-fashioned partnerships increasing in value. The edge of curiosity and the humility to ask, may be a smaller minority in the age of big data. Know to listen.

@RyanKruegerROI