Zero Sum vs Positive Sum Soccer

Those who believe pro/rel cannot work in the U.S. have a zero sum view of soccer.

They believe that soccer has to be grown to a certain point before pro/rel can take place and that point is undefined and never quite within reach.

They don’t understand that pro/rel creates positive sum soccer that causes growth in the game. By blocking pro/rel, they are restricting soccer’s growth to the point that they will never feel like pro/rel would work.

It’s a bit like saying that I’m not going to let my toddler eat as much as an adult until he’s as big as adult, otherwise he’s just not ready. What would that do? Starve him of the very energy and nourishment he needs to become as big as an adult.

Near the beginning of organized soccer in England, which later spread around the world via FIFA, a way to organize soccer accidentally emerged that created positive sum soccer, which promotion/relegation is a big part, but not the only part.

I don’t believe there was a lot of intention for that. At the beginning, there weren’t vested interests and there was much less resistance to doing what seemed to make common sense and was fair.

As lots of clubs popped up and formed into leagues, pro/rel emerged as a common sense and fair way to smerge the leagues together so that the clubs could find their way to an appropriate level of competition.

It’s common sense because it sees the competition as between clubs or teams, where it should be.

It’s fair, because it lets teams earn their spot in the league structure by how well they play.

Pro/rel is common to youth and amateur soccer leagues across the U.S., including at the indoor facility where I play twice weekly.

The folks stuck in the zero sum box of soccer is they don’t understand that their mindset is the very thing holding the growth of the game back by keeping out the very thing that has proven around the world to grow it.

Fair question: How does it do that?

It opens up positive feedback loops that incentivizes more soccer from the top to the bottom, even at the grassroots.

Let’s start at the top. Pro/rel shifts the business unit from a league to a club, which lowers the barrier of entry by a factor of 10. Many more clubs will pop up if they don’t also have to immediately have another 10 – 12 clubs that they have to organize with to form a league.

With many more clubs popping up, US Soccer would do the job that its counterparts in other countries do, put together leagues that make sense for the clubs that want to enter, keep score and standings in a way so players, coaches, teams and clubs actually know how good they are.

Fight now, it’s really, really difficult to tell the difference between good and bad teams because there are so many disconnected leagues, tournaments and competitions.

A team from the Midwest can be division and tournament champs in their hometown and think they are tops, but would be routed by a mid-level team from Southern California.

That’s no good because it takes players and coaches in this disjointed model much too long to figure out what good is because the feedback is mostly noise.

It would be much better for the sport if that Midwest team knew that, loudly and clearly.

Having a better feel for where you rank as a player, coach and team, across the country, not just your insulated bubble, would help align everyone involved to pushing toward the right standard.

There’s more feedbacks that are important, but I will leave this post with the one that I think is most important at the grassroots.

The full positive sum soccer package includes pro/rel, transfer payments, training compensation and solidarity payments. The last three change grassroots soccer.

Grassroots soccer currently feeds off parent wallets. This results quantity over quality and little helpful feedback for the player. They will tell you how great your kid is because you write a check, don’t want to lose your check to the competing and clubs and they want to fill all their rosters to maximize their revenue.

They recruit the best players in the club to their academy teams, and use those as marketing tools to help fill the rest of their rosters. They know that by the time the parents discover that it’s 10x more about the internal motivation and interests of the kid than anything the club can do, they will have drained several years of fees from them.

Transfer payments, training comp and solidarity payments changes it to quality over quantity. These payments reward clubs for discovering and training talent. So, instead of relying solely on parents, clubs can make money by finding good players, training them, getting them under contract on a first team and trading them.

This results in more club owners sponsoring free house leagues, so the area kids have a place to play and the club has a place to see if they have any diamonds in the rough. When they find one, that kid doesn’t have to pay $2,000 a year to play, so there are more opportunities for kids of all incomes to play more soccer.

For some kids, hopping from the house league to the club’s competitive team will seem like a pretty cool goal. Those kids will become more interested in learning what it takes to hop from the house league to the competitive team that competes in US Soccer’s league and it will be in the club’s best interests to let the kids clearly know.

These are just some of the feedbacks that the FIFA positive sum soccer package creates to grow the game, but these are the biggies.

Nudge, sludge and silver bullets

I recommend this Freakonomics podcast with Richard Thaler on Nudge and sludge.

I had a few thoughts while listening.

We don’t know it before we know it

In one part, they were talking about one of the most successful outcomes of nudging, changing the choice to participate in a 401k from opt-in when you become eligible to opting out. That simple flip increased participation from something like 10% to 90%.

Host Dubner thinks its a problem that the choice to participate in a 401k shouldn’t have been designed the way it was in the first place, that it was just dumb.

I was surprised by that, because Dubner strikes me as smart enough to understand that things evolve and emerge as they are discovered. For the 401k choice to be designed better in the first place would have taken knowledge that didn’t exist yet.

I mean, it would be awesome if we all could just think of successful things from the start, but it’s really more of a trial-and-error, tinkering process.

Silver bullets

I feel like the concept of nudging became the shiny object, silver bullet, clever sounding tool du jour. It spawned “nudge” units in government and businesses, that usually fail to meet expectations.

I’d say that like most shiny objects and ‘silver bullets’ it’s because the expectations are too high. The 401k choice is the case that sells nudging, but it’s absolute best case.

Other nudge tactics aren’t nearly has successful. They might move the success rate a few points, but not from 10% to 90%, more like 25% to 29%.

I think then managers become frustrated. They thought they had a clever trick up their sleeve to expand their market penetration to 100% and it only moves it a few points and not enough to pay for the cost of employing the nudge tactics.

I think governments made the same mistake. They used nudges in pandemic messaging and politicians seemed to become frustrated because they didn’t achieve 100%, even though they never have.

Sludge

I like the idea of calling barriers that keep you from doing things, sludge, which was also discussed. That’s easier than ‘barriers.’

I’m going to use that.

Don’t overly rely on clever tactics

While I think choice architecture should be considered, it’s good to keep expectations in check. If you a running a mature company that is already well-penetrated, you may get some marginal results from playing with choice architecture, but if you want real growth, you need to innovate to find things that people value.

Innovation notes

From Luca Dellanna’s EconTalk appearance on Compulsion, Self-Deception and the Brain:

Try a lot of things and see what works, see what sticks. And, at the beginning, don’t necessarily look for effectiveness. Look for what sticks, what you keep doing. And then, only in a second step, you can look for effectiveness.

One common mistake in the startup world is to optimize before having found a product/market fit–a product that the market really wants, that they start pulling. And, only then you can think how to advertise it better, how to make it cheaper, and so on. But, if you try to optimize too early, there is just too much friction because you don’t have a good product enough. You don’t have a product that the market wants; and you push it, but the market doesn’t get it.

And, the same applies in some way to our habits. If you try to look only for the habit which is the most effective, but it’s not a habit that your brain is, like, receptive to, then you might waste a lot of effort.

I agree. I’ve been involved in a lot of idea generation sessions, one this week even, where this happened.

There’s a strong tendency for people to want to think down the road to the finished product or write-off an idea if they can’t immediately see how it can fit into the current system or if they think it will cost too much to make.

It’s often hard to reel them back to step 1. Forget about finished product, cost troubles or how it will fit in the current system. Step 1 is to figure out if you got something that works, on a really small scale.

This is another hurdle. Lots of folks still want to jump to step 3 or 4, imagining what a market test would look like.

Think smaller. What’s the minimum you would need to do for a proof of concept and very small pilot? That could be as simple as mocking up the idea on some paper and talking to 5 or 6 random friends about it.

Many think this is too small. They want fully baked market research.

Some of the tendency to jump over the early steps comes from folks who just don’t know better. In big companies with big resources, they large test is considered a gold standard.

But, I think some of the tendency also comes from another incentive. I’ve worked in companies where people got brownie for simply proposing smart sounding ideas, but had not ownership of whether the idea got tried or worked, or not. That was someone else’s job. But, they basked in the glow of of their great sounding ideas.

Talk is cheap. Have them put their money where their mouth is.

They don’t want to test the idea because they want credit for coming up with the idea. Actually giving it life, even in a small way, terrifies them because it might fail. So they try to optimize for what the final product will look like because they know that finding out is in some far out future and nobody will remember who had the idea by the time everyone finds out it’s a dud.

In one company that I worked in, field management had lots of discount ideas, many of which have been tried many times without. We had a hard time getting them to pay attention to that info as they were too busy accepting the praise for having an idea.

When field managers came to me with ideas, I started asking if they would fund a trial from their budget.

About 90% of ideas died on the spot. When faced with the prospect of paying for their idea, they became more interested in the results of previous attempts, calculated the hole that would put in their budget and refrained from spitting those ideas out in meetings for brownie points because I might ask them to fund it.

One time a field manager did have an idea that hadn’t been tried before. We asked if he’d be willing to fund it to try it.

Yes.

I was skeptical of the idea, but he was taking the risk. Also, I know I can be wrong, so I didn’t let my skepticism get in the way.

It turns out it worked, spectacularly. He never let me forget my skepticism. I never let him forget that I didn’t let that stand in the way of trying it, nor did it keep me from digging to discover why it worked.

To Luca’s point, when we tried, it wasn’t fully baked. There were lots of problems in execution. It was late getting out the door. There were systems problems.

But, there were strong signs that he was onto something. None of those early problems hurt the signal that. The signal was one of the clearest signals I’ve seen in all my years of looking for things.

Folks who haven’t seen such signs tend to get excited about 1-2% bumps. I don’t anymore. They can have those. I’ve seen too many statistically significant 1-2% bumps that evaporate into the noise of the real world when they are rolled out and they have to resort to the smart sounding, but empty defense, “just think how much worse it would have been if we hadn’t done it.”

These are the same folks that want to optimize before finding out if they have something.

Strange business model, if you stare at it too long, part 2

Media is another strange business model if you stare at it too long.

What other business gets a pass for double dipping from its customers?

I noticed this while flipping channels late one night on my regular lineup of about 100 channels. I couldn’t find anything worth watching and I noticed every channel that I pay for also gets paid to show me ads.

What’s more, ,any of the channels started streaming services and have moved ‘premium’ content to those services to encourage more people to pay more to watch it, while they let their buggy whip programmed channels rot on the vine.

The base levels of the premium services that people pay extra for, like Discovery+, also runs ads, unless you pay $2 more.

I get the same feeling when I click on a link of an article that looks interesting on some site I’ve never heard of and before I read a word, I get a popup asking me to subscribe, while I also notice that they have ads on the site.

I guess, more power to them. Double dipping seems to be working for them.

Strange business model, if you stare at it too long

Can you think of a business that charges you so dearly for its product as you use it that many customers go deep into debt to pay for it, has increased prices 2-3x ahead of inflation for decades without changing the quality and once you are done using it and have paid in full they will continue to ask you to give it more money until death as if it’s no big deal? And, many happily do.

That’s college education.

Throw in that good chunks of their budget is already covered by taxes and many colleges could survive indefinitely off their endowments without charging customers a dime and it seems even stranger.

Yet, many of the folks who enjoy the spoils of this business model get away with pointing fingers at for-profit companies for making profits, or attempting to do so as most fail over time. Never mind their prices are constrained by competition and inflation, which also encourages them to improve their quality and efficiency over time to keep attracting customers.

Pay no attention that when you are done using their products, they may try to win you back by offering your better deals or better products, but do any expect you to keep paying them just because you were a customer in the past? Well, maybe gyms.

If you stare at it too long, it just looks strange. And nobody notices.

What does ‘with’ mean?

Many reports on covid hospitalizations report admissions ‘with’ covid, yet people seem to interpret that to mean “due to.”

If you point out that ‘with’ does not mean ‘due to’, you may be accused of minimizing the situation rather than trying to apply basic reading comprehension.

Some of the negative blow back comes from those inexperienced with interpreting numbers. For them, the difference in meaning between ‘with’ and ‘due to’ seems trivial enough that they make a leap on what the report says, “what they really means is ‘due to.'”

What’s more is they do this without realizing it. When they think back to the report they remember the meaning they created for the report rather than what the report actually said.

The movie Inception was about implanting an idea in someone’s mind so that they thought it was their own idea.

What I describe above is reverse-inception, causing someone to believe their own idea is someone else’s. In this case, they think the idea that hospitalizations due to covid is what the reports say, when it is not.

This reminds me of when reporters asked Lance Armstrong if he took performance enhancing drugs and he would respond, “I never failed a drug test.”

Many would interpret Armstrong’s answer as a strong “no” when he didn’t directly say no. He reverse-incepted the answer into our heads. Later, he admitted that answer was his way of feeling like he wasn’t lying, even though he knew how folks would interpret it.

This is not to say that more folks aren’t being hospitalized due to Covid or having serious illness due to Covid. If you think that’s what this says, then you are reverse-incepting an idea onto me.

This is just to point out that if you read the reports on covid hospitalizations, carefully, you will notice they usually do not provide clear enough info on the number of folks hospitalized due to covid to draw sound conclusions.

When I point this out to folks, they ask, what does the report mean then? I’ve used some version of this simplified example to explain it.

Let’s say 100 kids per week are hospitalized for broken arms and all those admitted to the hospital are tested for Covid as standard practice, which they are.

Last week, 10 of those 100 kids tested positive for covid, while 10% in the general population were also testing positive.

This week, Omicron blows through the area and now 25% of people in the general population test positive for covid. Those familiar with data will expect to see this trend in test positivity in hospital admissions, as well.

Sure enough, the local hospital reports that 25 admissions tested positive for covid this week vs 10 last week, therefore the number of kids admitted to the hospital with covid more than doubled!

Here’s what they don’t mention: those 25 were admitted for broken arms, not covid; that the total number admitted for broken arms is on par with the previous week; that the test positivity rate was in-line with the rate in the general population in the area.

They also don’t mention how many people were admitted specifically for covid.

The next stage of reverse-inception is to doubt that the reports would dare be that misleading, because it seems like it would be too easy to be debunked and surely someone would so!

Folks did the same with Lance Armstrong. When they realized that his response didn’t directly deny taking drugs, they would reason that there’s no way he would dare be that misleading because it would be too easy to debunk. And, yet it took years to do so.

Read reports on covid carefully. Pay attention when you hear yourself saying things like “I think what they really mean is…” or “they are making it sound like…”. Those are sure signs that you may be getting reverse-incepted.

Why not build more hospital capacity?

We’ve been hearing that hospital capacity is an issue for 2 years.

I find it strange that building more hospital capacity doesn’t ever seem to be considered as a solution.

Hidden Profit Part 2: Bureaucratic Profit

One form of hidden profit is bureaucratic profit, which is what keeps bureaucracies going.

The familiar example is a government bureaucracy that survives on taxes. But, bureaucracies can crop up wherever there is a flow of cash to sustain it like businesses, charities, churches, trade organizations, governing bodies and so on.

A bureaucracy is a group of folks that don’t necessarily add value to the organization, even though they are expert at making it look like they do.

When you scratch past the surface, what they contribute to the success of the business is elusive. But, they are masters are filling their calendars to look important and busy, being engaged in meetings and claiming credit for successes that “couldn’t have happened without their input.”

I can’t tell you how many times I’ve seen such folks leave organizations and the organization didn’t miss a beat without them.

It kind of reminds me of that moment in a musical, just after a big song and dance, where the characters go on to the next scene and act as if the big song and dance never really happened, like it took place in someone’s head.

The organization keeps chugging. Sometimes, the remaining bureaucrats reminisce about a departed bureaucrat’s big song and dance, that’s the main mark they left — stories of their song and dance.

When I’m feeling a mischievous, I like to interrupt these remembrances with something like, “Yes, he was a character, but do you have any examples of what he did to move the business forward? The revenue trajectory seemed to remain on course during his career here and has remained so since he left.”

Bureaucrat jobs exists more for the bureaucrat than for the organization. They might be interested in the steady income the job brings, the title it gives or the way the job can help them build their resume so they can get to the next rung on their career ladder.

Over years and decades, these bureaucracies become entrenched and tough to spot because the value they bring is assumed and there’s nothing to disrupt or put into question that assumption. It’s just assumed the company needs a VP of such-and-such, because it has had one for the last twenty years. Nobody has had to do a true cost-benefit analysis on the position, so it keeps going.

Bureaucracies are only threatened when there’s a massive disruption to the flow of cash that sustains. I can’t say for sure, but I assume Eastman Kodak had a massive bureaucracy before smartphones made the film and photo paper industry nearly go poof and the cash flow that sustained it also went poof. I would also venture a guess that many of the folks that were part of that bureaucracy, found other bureaucratic profits elsewhere to survive on.

The key point of this post is to introduce the concept of bureaucratic profit so you can recognize it.

There is a big spotlight on bottom line profits in our society while hidden profit, like bureaucratic profit, avoids detection.

Put another way, we often hear how bad it is for investors and founders to earn profits, but don’t hear much about all the folks that skim the bureaucratic profit before what’s left makes it to the owners, with the notable exception of CEOs.

CEOs aren’t the only bureaucrats that deserve attention. SVPs, VPs, and Directors in company management are common positions for bureaucrats, as well as boards of directors.

If innovation isn’t easy, you’re doing it wrong

After some time working in mature companies it occurred to me how difficult companies make their innovation.

There is more action in just getting ideas through the political and operational hurdles. Ideas compete for executive approval and company resources. Ideas that win executive buy-in are then treated as if success is a fore drawn conclusion.

That’s how it worked at one of my former employers. My group went to the executives each year during planning with a list of 10 ideas to have them pick the 2-3 they wanted to try.

One year, we had a new CEO from a company with a healthier innovation culture (though he didn’t know it and neither did I, at the time).

We presented our 10 ideas and sat there with an awkward silence. He broke the silence after a bit, “So, what do you want from me?”

“Which 2 or 3 should we try?”

He responded, “Is there a reason you can’t try them all? I don’t know which one is going to work. Figure out ways to try them, even if on small scales, to find out.”

That completely changed how we approached our work. While he was there over the next three years we tried lots of stuff and found a lot of success. We spent zero time on the politics of trying to get buy in and almost all of time trying to figure out how to market research, proof of concepts, pilots and tests to figure out what would work for customers.

I now call this the ‘discovery innovation culture.’ It has some basic underlying principles, like the chances of success of any one thing is low, so try lots. Also, an ounce of customer reaction is worth 5 pounds of executive politics.

Sadly, I don’t think he knew the impact his innovation culture had on the business. He also did the typical CEO, top down ‘5 point plan’ like his predecessors and when that failed to make an impact, as most of such plans do, the board soured on him.

Ironically, the month after he left, the board approved rolling out one of the projects we discovered under his discovery innovation culture. It had a major impact on the business. He didn’t get a lick of credit for it.

It wasn’t his idea. It was a crazy idea that wouldn’t have seen the light of day in the political innovation culture. But, he didn’t stand in its way when one of the field leaders wanted to test it, like his predecessors would have.

Thinking back, I think he could have bought himself more time as CEO if he recognized what was happening and told the Board, Look, when I got here the innovation pipeline was bureaucratic and anemic. Innovation is the way to grow, but you have to be extremely lucky to grow if your pipeline only has 1 or 2 projects in it at a time. No wonder you have been struggling. I’m going to change that, but it’s going to take 3-5 years to see scalable projects coming out the other end of the pipelin. This is how we did it at the company I’m from and it works. Be patient.

After he left, his replacements brought back the political innovation culture.

In the 3 years under him my group alone rolled out about a half a dozen things that has stuck with the business.

Since he left about 10 years ago, the business has been going sideways and they’ve just been tweaking the stuff we rolled out. The energy has gone back to the politics of getting executive buy-in rather than just trying stuff and nothing new has come of it.

When I see organizations that are struggling to stay relevant, I tend to see the political innovation cultures that result in anemic innovation pipelines that usually do not produce enough successes to keep the business ahead of its evolving competition, which is innovating at faster rates in more discovery innovation cultures.