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Why Startups play basketball and scale-ups play football (soccer)

Here is a thought-provoking exploration of team dynamics and the pivotal role of individual contributions within various team structures. I want to delve into the intriguing world of weak and strong link teams through the lens of sports analogies. Contrasting football (soccer) and basketball illuminates how the collective strength of a team can either hinge on its weakest members or be propelled by its stars. I feel this changes in business with size. In sports, what is the impact of the manager, and in a company, what is the impact of the CEO? In soccer, are all goals created equally? And what could we infer from this for business?

In his distinctive storytelling style, Malcolm Gladwell draws upon two analogies to depict team structures in contemporary settings: the weak link teams, exemplified by football (soccer), and the strong link teams, illustrated using basketball.

Gladwell categorises sports into two types: strong link, where the best athletes determine outcomes, as seen in basketball, and weak link, where the collective ability of the team dictates success, as exemplified by football.

In basketball, the influence of a few key players can dominate and secure victories. Gladwell says that historically, elite basketball teams have been distinguished by their inclusion of three superstar players, with the remainder of the team serving to make up the numbers. Basketball benefits from enhancing the capabilities of top players, given the minimal impact of errors on the game’s outcome.

Whereas football is a game where the performance of the team’s less prominent members is crucial. The weakest links must outperform their counterparts for success. Errors define football, a single mistake can unravel a team’s efforts. Hence, investing in the team’s overall improvement is more beneficial than focusing solely on star players. Here, Gladwell is relying on the work of Chris Anderson and David Sally in their book The Numbers Game.

In football, possessing the best player does not ensure victory, as the team’s performance ultimately depends on its least proficient members.

To illustrate his point, Gladwell refers to Tottenham Hotspur’s remarkable 48-pass goal against Queens Park Rangers, showcasing teamwork. Interestingly, the 18th and 19th highest-paid team members, not the top earners, played pivotal roles in this sequence.

In essence, basketball thrives on the prowess of its star players, while football’s outcomes are often determined by the errors of the least skilled players. I contend that startups resemble basketball, and scale-ups are like football.

Why are startups like basketball

Startups can be compared to basketball teams in terms of being “strong link” teams because their success can be disproportionately influenced by the performance of their most talented individuals (often founders) or “superstars.” In basketball, the presence of a superstar player can dominate the game and significantly increase the team’s chances of winning. This is because a single player in basketball can control the game by scoring points, which directly impacts the outcome.

In the startup world, having high-performing individuals can have an outsized impact on the company’s success. These individuals might be exceptional in innovation, leadership, product development, or sales. Their contributions can drive the startup’s growth, help reach MVP and gain a competitive edge. For example, a brilliant startup marketer can devise a creative campaign that propels the company to succeed, or an innovative engineer might develop a breakthrough product that defines the market.

The strong-link nature of startups is particularly evident in the early stages when the team is small and each member’s influence is magnified. As startups grow, the dynamic shifts towards a “weak link” game, where the overall performance becomes more dependent on the entire team’s capabilities, similar to soccer, where minimising mistakes across the team is crucial.

I contend weak-link teams are more effective than their strong-link counterparts in the complex systems that define modern business and professional environments. As organisations become more intricate, relying on a few experts is no longer feasible. Instead, tapping into all team members’ collective knowledge and skills is essential for comprehensive oversight and success.

This theory is particularly pertinent to organisational change, where a focus on strengthening all areas equally is vital for achieving excellence, challenging the common preference for strong link strategies. At the very least, look at the areas in the business where success is vital. Do we have a high enough talent density in those teams where failure is not an option? Do we have a plan to ensure we drive toward all A-Players in the team? If a company is beginning to struggle with growth and seems to have plateaued, have we ensured the leadership team has successfully transitioned from a strong link to a weak link team? Replacing your weakest member will have more impact than hiring a new superstar.

The success of a leadership team is predicated upon the individuals’ ability to collaborate and play as a team. These skills are often not essential before reaching the top team. So, they have often not been taught or learnt on the journey. What got these leaders to the top team was their expertise and skill in their narrow domain. Many founders will struggle to move from a strong link team to a weak link team.

Soccer Strategy Reconsidered

Football’s strategic evolution from traditional formations and star player reliance to a deeper appreciation of nuanced statistics reflects a broader understanding of what drives success. The revelation that managers influence only a fraction of outcomes challenges preconceived notions, suggesting that improving a team’s weakest elements is more strategic than star acquisitions. What is the impact of a manager? In football, the evidence suggests 15% of the team’s final league position can be attributed to the manager’s skill as a coach. In business, what is the impact of the CEO? The research surrounding the six conditions of high-performance teams framework puts the impact at 10% of leadership team effectiveness due to the ongoing coaching it receives from the CEO.

Organisations that identify and enhance their weak links will surpass their competitors. Fred Reichheld told me in our conversation on The Melting Pot that customers move from firms with lower NPS to firms with high NPS over time. The NPS difference can be shown to account for 85% of this customer migration. At the heart of a high NPS is constantly high and predictable customer interactions. In the era of a transparent review economy, a holistic approach to addressing customer experience flaws becomes essential. The firm that makes fewer mistakes wins. The firm with the best, weaker players will make fewer mistakes. Improving every aspect of the operation does not necessitate perfection everywhere but prioritise areas that need attention based on customer feedback.

Strengthening the overall system, rather than concentrating solely on the most successful elements, ensures substantial progress. Viewing operations through a football strategy lens enables businesses to identify and rectify critical weaknesses for meaningful transformation.

Net Negative Churn

Reflecting on “The Numbers Game: Why Everything You Know About Football Is Wrong” by Chris Anderson and David Sally, an intriguing parallel emerges when comparing their football analytics to the scaling of a technology enterprise. Within the realm of football, their research underscores the critical significance of a robust defence. Statistically, a formidable backline holds more value than the presence of prolific forwards. The concept of clean sheets being more valuable than goals scored is particularly noteworthy. The authors show that preventing a goal is more than twice as valuable as scoring one, in terms of the average points earned per match.

I suggest this defensive ability is akin to achieving net negative churn (NNC). NNC occurs when the additional revenue won from existing clients surpasses the revenue lost due to cancellations and downgrades. This phenomenon signals that your recurring revenue is on an upward trajectory, even in the absence of new client acquisitions, thereby indicating a positive net revenue retention. This milestone is pivotal for technology businesses, as it underscores the loyalty of your client base and the enhanced value they find in your offerings over time.

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