The Real Madrid Way. Steven G. Mandis
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Jackson.] What analytics do the Spurs have? [Referring to the five-time NBA champions San Antonio Spurs with star players David Robinson and Tim Duncan and coach Gregg Popovich.] They have the best players, coaching staffs who make players better . . . The NBA is about talent.”
Money or talent or data analytics. Which is the most important ingredient for winning a championship? There is a long list of rich teams with big payrolls and numerous superstars that don’t win championships and an equally long list of teams that now rely primarily on data analytics to make decisions, and even have several superstars, but don’t win either.42
Why has Real Madrid been able to win? Money, certainly. Talented players, of course. Data analytics, without a doubt. But these are only elements of the Real Madrid way. Real Madrid’s executives believe that, in the end, it is a team’s culture that has the greatest impact on performance on and off the field. To them, culture means everyone working around a common mission in a selfless way and everyone knowing the goals and how to achieve them in a collaborative way. What makes Real Madrid such a fascinating case of organizational management is that their entire strategy both on and off the field is based in the adherence to the values and expectations of their community members—the community dictates the culture.
Real Madrid embraces data analytics. In fact, they utilize very sophisticated data collection and analysis tools both on the field and in business. It is hard to imagine what is not tracked. The club even has unique twists on the use of data that fit its culture. For example, more than evaluating players, Real Madrid employs data analytics to help examine and explain relevant and compelling questions, from in-game performance to front-office management. In contrast to most teams’ data analysts and executives protecting their data and analysis like it was the Holy Grail of competitive advantages, Real Madrid seeks to make their data and data analytics available to their community. The club exposes and disperses information—possibly providing others a competitive informational advantage—to the community because the community passionately demands and consumes it and expects transparency. Real Madrid believes their community desires data and analysis for active and frequent updates, sharing, learning, understanding, clarifying, collaborating, storytelling, and infotainment. Serving the community’s needs is Real Madrid’s primary strategy. The club’s management sees themselves as “community’s values first.” The club’s leadership believes culture is the glue that holds a complex organization together, and when culture is drawn from shared values of their community it can forge extraordinary loyalty, inspiration, strength, passion, and identity.
Management consulting firm McKinsey & Company has highlighted the importance and value of culture.43 The firm, through a survey of 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