hundreds of companies in North America, Europe, and Asia, found 66.7 percent of business leaders felt culture provided their greatest source of competitive advantage. In addition, McKinsey & Company found that companies with effective organizational culture outperformed peers significantly. In fact, those companies with high-performing cultures delivered significant performance improvement, 300 percent higher annual returns to shareholders than companies with undefined cultures.
Suggesting culture as the most important ingredient to winning on and off the field poses some challenges. Culture is hard to define, let alone analyze, measure, and compare, and it is difficult for the media to report on culture. It is much easier to reference and compare performance data and statistics for insights. However, Real Madrid is not the only successful sports franchise to emphasize culture. In the February 22, 2015, issue of the Wall Street Journal, Brian Costa wrote an article titled “Baseball Champions’ CEO on Creating a Culture of Success: San Francisco Giant’s Larry Baer Emphasizes Cooperation and Character” about the San Francisco Giants franchise that won the MLB World Series in 2010, 2012, and 2014. Similarly, in a July 24, 2015 interview with KNBR sports talk radio in San Francisco, five-time NBA champion San Antonio Spurs coach Gregg Popovich said about winning championships:
Good fortune has something to do with it . . . It didn’t take a whole lot of genius to draft Tim Duncan . . . Like any successful franchise whether sports or business . . . whatever it might be . . . it’s about the people and the people you bring in . . . the character you build . . . the principles you live by . . . stick by in good times and in bad times . . . I think that camaraderie . . . that corporate knowledge is something that sustains us year after year . . . new people that come in . . . they get indoctrinated in the way we do things . . . The leaders [names some players] . . . they keep it going . . . [mentions players before them].44
The Spurs have at least three players earning less money than they could make playing for other teams, demonstrating that the players are willing to personally sacrifice financially for the team to accumulate more money to get other good players with similar values. The actions of these players suggest the incredible impact of organizational culture, and challenge the idea that the only way to attract and retain talent is pay higher compensation than the competition.45
It is more straightforward to try to hire data analysts to assemble a theoretically competitive team by selecting undervalued players based on analytics. Maybe our fascination with fantasy league sports has made us lose sight of the fact that, at the end of the day, a real team has to be able to afford these theoretically winning players, which requires loyal and supportive fans and sponsors. It’s also easy to forget that even the most talented superstars are real people from different backgrounds, at different stages in their lives and careers, who have to rely on one another and perform as expected, even when tired and injured after a long season, in actual high-pressure games, to win championships. What is the glue for this? Real Madrid believes it is culture.
Every winning culture has its own authentic personality and soul that can’t be invented or imposed. In organizations, culture is an invisible but powerful force that influences the behavior of the members of that group. Most often the values of the founder or owner or a legendary top executive are instilled in the organization and shape its culture.
Even the skeptics that I spoke with about culture as the major factor for long-term success admitted that maybe the pendulum swung too far toward data analytics or, possibly, now that everyone essentially has the same data analytics, its competitive advantage has diminished. In February 2016, John Henry, the primary owner of MLB’s Boston Red Sox, told reporters that a review of the organization, after a few years of disappointments on the field, led him to conclude, among other things, the Red Sox “perhaps overly relied on numbers” when it came to baseball decision making. He believes that there needed to be a change in philosophy defined by a shift in balance of attention from analytics to other areas, which he did not completely elaborate.46 The skeptics believe it is time to think about something else as the new frontier, such as culture or team chemistry or human judgment and behavior. Some teams’ data analysts are actually trying to identify and measure talents, attributes, and connective skills that make a team play much better than a group of talented individuals.47, 48
Culture is impossible to replicate. However, this book reveals ideas on the source of an organization’s culture, how to codify it, and how to support and reinforce the culture and align it with a business strategy and identity. McKinsey & Company found that less than 10 percent of organizations have a very clear and consistently applied culture. At the very least, this book aims to stimulate ideas and provide inspiration for any sports team or organization seeking to maximize performance. Data analytics is more commonplace than when it provided early adopters a competitive advantage. The next frontier in competitive advantage, culture and values, should be more sustainable because it is more complex, and much more difficult to copy and commoditize.
The day after Barkley’s rant, the often thought-provoking Keith Olbermann, then-host of ESPN’s late night show Olbermann, said, “Analytics not only won in the NBA, MLB, NFL, and NHL, analytics won so fast that most of the dinosaurs like Chuck [Barkley] don’t even realize the war is over, the asteroid has darkened their sky, and their understanding of the games they cover has been dismissed as superstition.”
Yet Barkley deserves credit for challenging what is now widely considered conventional wisdom. And there are reasons to challenge data analytics as the be-all and end-all. In soccer, for example, why are moneyball or soccernomics-fueled teams that rely largely on performance stats (for example, pass-completion percentage and scoring efficiency) to identify skilled but relatively cheap talent nowhere near as profitable or successful as Real Madrid? In a 2014 interview with Sean Ingle of The Guardian, Billy Beane conceded it is harder to implement moneyball in soccer because the game is more fluid and interdependent, which makes it more complicated to track and analyze.
A “moneyball disciple” was hired by the sabermetrics-loving Boston Red Sox owners after they bought the prestigious, but essentially bankrupt, Liverpool soccer team in the English Premier League in 2010 to find players with undervalued but useful—and, most important, measurable—skills. Liverpool thought the moneyball approach would maximize performance while minimizing the financial investment, but the team wound up losing tens of millions of dollars in 2011 and finished in eighth place. Since then, Liverpool has generally underperformed both on and off the field.
Tottenham in the English Premier League has also tried a moneyball-like strategy. In 2013–14, Tottenham used the £91 million ($120 million) from Gareth Bale’s transfer to Real Madrid to acquire seven new players. A year later Liverpool used the £65 million ($99 million) from Luis Suárez’s transfer to Barcelona to sign eight players, and loaned one of them to another team. Despite acquiring these fifteen new players, all selected for specific attributes revealed through statistical analysis—attributes that each team believed would collectively compensate for the loss of the star player and lead their respective teams to success—the teams have generally disappointed on the field. The “good” but not “great” players never seemed to blend together, and many have now been sold off.
Whether the negative experiences of Tottenham and Liverpool occurred because the application of data analytics to soccer is fundamentally flawed or because it was implemented poorly by people who were not as good at translating statistical data into predictions of future performance as they thought they were, or because of subsequent mismanagement of the newcomers, the results provide a warning that more may be required than data analytics, especially in sports like soccer that require players to be interdependent.
What is clear is that whether a moneyball-like strategy is used or not, most professional European soccer teams lose money, and a lot of it. Costs were so out of control, with teams spending vast sums for talent, that in 2010 UEFA imposed financial fair play (FFP) provisions prohibiting teams from repeatedly spending more than the revenues they generate. In May 2015, ten teams (including Inter
