I recently got the chance to read through Sam Hinkie’s Philadelphia 76ers resignation letter in full. For those of you unfamiliar with Sam Hinkie and his time in the NBA, Sam Hinkie was the former General Manager and President of Basketball Operations of the Philadelphia 76ers, rather infamous for his contrarian approaches to managing a basketball team, an approach that was undoubtedly influenced by his background in management consulting and finance.
After embarking on a multi-year quest of stockpiling young players and orchestrating a variety of other non-traditional basketball moves, Hinkie suddenly resigned from his position. In a leaked resignation letter, he revealed the motivating theories and ideas that drove his decision-making process — I’ve included a few of the more noteworthy quotes and ideas from the letter, and have also added my own thoughts and reactions.
“Whenever possible, I think cross-pollinating ideas from other contexts is far, far better than attempting to solve our problems in basketball as if no one has ever faced anything similar. Accordingly, this approach comes from a frequent search into behavioral economics, cognitive science, and a lot of observation and trial and error over my 11 years in the NBA. And mistakes. Lots and lots of mistakes.”
I think this is a fair and valid point that he makes, as well as one that resonates with me. For too long, many basketball legends and commentators have railed about the evolving nature of the game, how different strategies and components are disrupting the traditional “purity” of basketball. I think that it’s important that we acknowledge that basketball is not played in a temporal vacuum, and our learning in different areas and contexts can be adapted to inform our knowledge and performance in the game. That being said, the world of basketball is supremely complex, and we can’t expect that our experience in other contexts can be perfectly integrated without some resistance.
“A way to prop up this kind of humility is to keep score. Use a decision journal. Write in your own words what you think will happen and why before a decision. Refer back to it later. See if you were right, and for the right reasons … Reading your own past reasoning in your own words in your own handwriting time after time causes the tides of humility to gather at your feet.”
I can’t help but think that this is a great idea to combat errors of omission, or as Hinkie describes, “the most insidious type of errors, the ones the narrative generating parts of our lizard brains storytell their way around.” Humans are selectively forgetful creatures, prone to remember our successes and neglect the level of discipline and insight required to learn from our mistakes. A decision journal (or some version of it) is something that I too, in my efforts to learn more about myself and my thought process, am incorporating into my own life.
“In the NBA, that’s wins. The same 82 games are up for grabs every year for every team. Just like in 1985 (or before). To get more wins, you’re going to have to take them from someone else. Wins are a zero-growth industry (how many of you regularly choose to invest in those?), and the only way up is to steal share from your competitors.”
While NBA wins are indeed a zero-sum game, I can’t help but feel like this sort of viewpoint is constraining, limiting, and stressful. Sure, the NBA is a closed ecosystem, a league of 30 teams competing against each other, but the way that Hinkie writes about this competitive relationship in his letter seems to overlook the fact that teams in the league also rely on each other to succeed. One simple example: it is very possible for two teams trading players to both emerge better off after the transaction, and such trades impossible without good will between the two teams and their respective leadership. Hinkie is surely right — that wins are a zero-sum game — but this seems to be a distinctly Machiavellian perspective that I can’t help but think contributed to the ruining of many relationships between the Philadelphia front office and those of other teams.
“As I described to you in our first ever board meeting, we were fundamentally aiming for something different — disruption. We should concentrate our efforts in a few key areas in ways others had proven unwilling. We should attempt to gain a competitive advantage that had a chance to be lasting, hopefully one unforeseen enough by our competition to leapfrog them from a seemingly disadvantaged position. A goal that lofty is anything but certain. And it sure doesn’t come from those that are content to color within the lines.”
This quote hints at something that I’ve found extremely frustrating after talking with many people involved in investing and finance: this never-ending obsession with “disruption.” “Disruption” is one of the new buzzwords that people tend to throw around, and like with all buzzwords, many throwing around the term have an overly simplistic view of the idea. Too many people conflate “disruption” with “contrarian,” and the reality could not be further from the truth. While it might seem attractive to take the contrarian viewpoint, fervently believing that you’ll be vindicated when your product overwhelms and fundamentally transforms the industry, that is seldom the case.
I believe that true disruption — rather ironically — requires a return to the fundamentals and an intimate understanding and knowledge about the industry you plan to disrupt. It’s great that the 76ers were aiming to disrupt the league, but their attempt to gain a competitive advantage purely through contrarian action was foolish and ill-advised. Who knows though — perhaps everything will pan out in the end, and Sam Hinkie will have been right all along.