Where Have You Gone, Joe Dimaggio? Just What Is Really Great Business Performance
Raynor, Michael E., Ahmed, Mumtaz, Henderson, Andrew D., Ivey Business Journal Online
Are all the companies that supposedly go from good to great really that great after all? Or, are they merely one of a pack of pretty average performers? As these authors state, those really great companies may only be putatively great, successful but only in a middling sort of way. The authors studied the popular literature on "great" performing companies and came to their own, original conclusions.
It's not uncommon for managers to gain insight into their challenges by drawing examples from the world of sports. Rock climbing, chess, golf, hockey, football and basketball, among others, have all served as sources of wisdom. Typically, the advice that is drawn from the mooted similarities is based on the players or coaches and draws on their experiences and insights into strategy, leadership, motivation, perseverance, teamwork, overcoming adversity, and so on.
Here's yet another domain to add to the list: how to think about what really counts as exceptional performance, in business or sports. The source is the sport that is the granddaddy of all useful and arcane sports statistics, baseball. For while aficionados of other sports need to debate what the greatest achievement in their favourite pastime might be, Sabrematricians1 are of one voice when it comes to baseball: Joe DiMaggio's 56-game hitting streak in 1941.
What makes this streak so remarkable has much to teach us about what really constitutes exceptional performance in business. For in a culture obsessed with extraordinary results and the study of those who achieve them, it is surprising how little effort goes into determining whether or not a given achievement is worthy of our attention. If we think we have something to learn from the greats of business, you'd think we would by now have developed generally accepted ways of determining what counts as greatness. But we have not. Enter Joltin' Joe.
Streak of streaks
Every batter can have a hitting streak. The likelihood of a streak of a specified length is a function of that player's batting average. To make the math easy, imagine a .500 hitter. The odds of getting two hits in two at-bats is (0.5)2, or 0.25; three hits, (0.5)3, or 0.125. In other words, for every set of X at-bats, there's a (0.5)x chance of getting X hits.
What about "hot hands," you ask, in which a basketball player goes on a "streak" and the likelihood of, say, making the next shot in a game is a function of having made the last one? We might like the idea, but the data show that there's no such thing in practically any sport: there are almost no documented streaks that go beyond what one would have expected, given players' performances over the long run.2 Understanding someone's average performance perfectly predicts their seemingly exceptional performance.
With one shining, indisputable exception: DiMaggio's streak. Ed Purcell, a Nobel laureate in physics, has concluded that nothing has ever happened in baseball with a frequency beyond what would be expected, given the nature of the underlying system itself.3 Except for DiMaggio, no one has ever managed to rise above the peaks of performance that would be expected, given the players' abilities and the rules of the game. For example, the longest runs of team wins or losses are as long as they should be, and occur about as often as they ought to, given the winning percentages and, critically, the variability in those percentages for each team. In other words, most records are merely the right tails of the distribution that defines the system. They are, to borrow a term from statistical process control, "common cause" variations, and so, strictly speaking, unexceptional.
This framing puts DiMaggio's streak in a class of one. Purcell calculated that to make it likely (probability greater than 50 percent) that a run of even fifty games will occur once in the history of baseball (up to the late 1980s when Purcell did this work) there would have had to have been either four lifetime . …