Think like a loser

The baseball statistician Bill James has thoughtfully described how the best baseball teams seem to get worse, while the worst teams seem to be improving.

One of the most striking pieces of evidence supporting this trend Bill James has found in his analysis of the finals of the baseball season (the World Series play), which is decided on the best of seven games.

Who do you think usually wins the second game of the World Series play, the team which won the first game and thus leads 1-0 or the team which is behind 1-0? The team which lost the first game of the series will win the second game 56% of the time.

But what if the score is 2-1 after three games, which team will then win the fourth game? The answer is the same. The team that lost the third game wins the fourth match in more than half of all cases. If the score is 3-2, the pattern is even more pronounced. 62% of the time the sixth game is won by the team which lost the fifth game.

This is really thought provoking, because we usually expect a winning team to be developing a positive momentum and maximizing its chances of winning the next game. But actually the exact opposite happens.

Bill James has called the phenomenon »The Law of Competitive Balance«. As he puts it: »There develops over time separate and unequal strategies adopted by winners and losers; the balance of those strategies favors the losers, and thus serves constantly to narrow the difference between the two.«

In fact, this is quite easy to understand.

Imagine you coach a baseball team going into the third inning with an 11-0 lead. What do you tell your players? Probably they should just continue doing what they’ve done so far. The leading team prefers stability. Why change something that works? Why mess with success?

On the other hand, the coach of the team which is behind 11-0 is making tactical adjustments. His team’s situation drives him to change his strategy, find new solutions and substitute weakly performing players with fresh players who want to prove themselves.

This dynamic is constantly at stake both in the short and in the long run. Teams which had a bad season chase reinforcements and look intensively for ways to improve themselves because they want a different result. Successful teams want the same result and therefore continue to do the same.

While the best then perhaps improves by 5% per year, the next best improves by 10%, and thus catches up over time.

I believe that the same is true in business. The less successful you are the more you are forced to work harder, change and improve, and this dynamic constantly reduces the difference between the best and worst players and teams. Because the winners by nature are left with the answers, and the losers have all the questions.

Or let me put it in a different way: Sometimes you need to think as a loser, even if you are winning.

Posted on 3th Dec 2013 by Rasmus Ankersen

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