Have You Become Too Reliant on Star Performers?

Source: NBA.com

Tom Taiyi Yan and Elad Sherf wrote a brief article this week in the Wall Street Journal describing their fascinating new research regarding team over-reliance on superstars.  They cite a terrific study of National Basketball Association players.  Here's an excerpt:

To investigate how team dynamics worked, we started by looking outside the world of business—at basketball. In our study, published in Organization Science, we examined competitive teams in the National Basketball Association across more than 60,000 games, spanning 34 years. Leveraging motion-tracking-camera data, we examined how teams’ passing patterns and shot distributions changed after wins and losses.

We found that after winning, teams became more reliant on their star players. Teams passed the ball about 6% more to the stars, and their shot distribution skewed 15% more toward the big performers. Although doubling down is intuitive (“We want to exploit what worked before"), it ended up decreasing teams’ chances of winning the next game. The increased reliance on the star players made teams more predictable to the next opponent and easier to defend—and therefore less likely to win the game.

This tendency to stick with stars doesn’t just hold true in competitive sports. All teams—particularly ones in the business world—tend to double down on what has worked. And it is often a bad idea.

Perils of a Superstar CEO

Matt Palmquist writes this week for Strategy+Business about the fascinating new research conducted by Stanford University’s Elizabeth Blankespoor and Ed deHaan.  They examined the impact of CEO promotion.  By that, they mean the extent to which companies publicize their CEO in various ways, such as by providing quotes and access to journalists.   These scholars examined over one-half of a million press releases issued by 1,500 companies over a ten-year period.  What did they find?  Here's Palmquist's summary:

Large companies that actively promoted their chief executives in communications with journalists saw a more than threefold increase in the media coverage of their CEOs, the authors found. However, companies that went overboard in publicizing their chief executives eventually experienced a sharp decline in long-term performance, largely because their CEOs appeared so comfortable and entrenched in their role that they failed to seek novel solutions or think beyond the status quo... Those who push themselves into the limelight too aggressively may create unrealistic expectations in the minds of shareholders or become burdened by their own celebrity, unwilling to make risky or unconventional moves because of how highly they value their own reputation.

We all have heard the adage, "Don't believe your own press."  Well, now we have a study that confirms the perils of falling in love with all those splashy headlines.   Of course, the study does not provide the evidence of direct link between publicity and negative performance.  It offers a few hypotheses, as does Palmquist in his article about the research.  The comments above seem plausible.  CEOs can become entrenched and overly comfortable, fail to see new ideas, and become burdened with unrealistic expectations. 

Chasing Stars: Lessons from NFL Free Agency

In New England this morning, the gnashing of teeth and cries of agony can be heard in the streets.  The Patriots have let another star player leave via free agency.   Why can't the Patriots just pay the money!?!  Belichick and Kraft are too cheap.   You hear all these complaints.   However, several NFL writers have commented that signing high-priced free agents has been fool's gold for the most part in past years.  The Patriots fans do not want to hear that evidence. They want stars. 

Is there a lesson here for all business leaders?  Boris Groysberg has done fascinating research on the mobility of star performers.   He began his work by focusing on superstar Wall Street analysts.  He found that many firms pay top dollar to recruit away superstar analysts from competing firms.  In the end, many of those superstars experience a performance decline at their new firm.  Why?  Groysberg argues that we underestimate the extent to which that high performance was driven by the team around that superstar, the supporting organizational context, etc.   In other words, we attribute too much of their high performance to their internal abilities.  We underestimate external factors.  We also discount the difficulty of adapting to a new organizational system and structure.  Groysberg has argued that the same trap of chasing stars occurs in many fields.

Several years ago, he studied punters and wide receivers in the NFL.   He found that wide receivers experienced a decline in performance when they switched teams (above and beyond the normal decline associated with age).  Punters, on the other hand, did not suffer a performance decrease after switching teams. What's going on?  Groysberg and his colleagues argued that some positions involve much more interaction with fellow players.   A wide receiver's performance depends on the knowledge of a particular offensive system, experience within that system, time spent working with a particular quarterback, etc.  A punter's performance is not dependent on those around him to nearly the same degree.  Now think about other NFL positions.  Many of them are much more like the wide receiver than the punter.  Therefore, many players often have a hard time sustaining their high performance after switching teams via free agency.  Still, some positions may have less dependence on interaction with teammates, knowledge of a particular system, etc.  Coaches and general managers should be thinking about the "portability" of each position.

For business leaders, the question is:  Which stars in your firm have talent and skills that are more portable than others?  Think carefully about the work that these stars do.  Think about their position/role, not just their individual ability.  In which cases will one experience a performance decline when switching organizations?  For what types of positions will people be able to maintain high performance in a new system and with new colleagues?