Hire like a pro sports team?

Netflix CEO Reid Hoffman (along with his various co-authors) has repeatedly invoked professional sports as a model for how companies should think about the evaluation and compensation of talent, and about the composition of teams.

In No Rules Rules, he explores the way professional sports factors into the way Netflix values talent.

After a lot of discussion Patty suggested that we think of Netflix as a professional sports team. Initially this didn’t sound very profound. The metaphor of team for company is just about as tired as the metaphor of family. But as she kept talking, I started to see what she meant:

• Demand excellence, counting on the manager to make sure every position is filled by the best person at any given time.
• Train to win, expecting to receive candid and continuous feedback about how to up their game from the coach and from one another.
• Know effort isn’t enough, recognizing that, if they put in a B performance despite an A for effort, they will be thanked and respectfully swapped out for another player.

Four years later, Hoffman joined various co-authors to explore how these fundamental management principles apply more broadly to corporations not named Netflix.

[A] professional sports team has a specific mission (to win games and championships), and its members come together to accomplish that mission. The composition of the team changes over time, either because a team member chooses to go to another team, or because the team’s management decides to cut or trade a team member. In this sense, a business is far more like a sports team than a family.

Yet while a professional sports team doesn’t assume lifetime employment, the principles of trust, mutual investment, and mutual benefit still apply. Teams win when their individual members trust each other enough to prioritize team success over individual glory; paradoxically, winning as a team is the best way for the team members to achieve individual success. The members of a winning team are highly sought after by other teams, both for the skills they demonstrate and for their ability to help a new team develop a winning culture.

Hoffman's books are full of helpful guidance for business leaders; I recommend them wholeheartedly. However, ever since I read his analogies based on pro sports teams, I have kept my eye on sports business to test the applicability of Hoffman's sports-based analogies. I now feel comfortable saying that his analogies are applicable in only a laughably facile way; that a closer look at the business of sports actually cuts against many of his conclusions; and that if Hoffman were to take a more nuanced look at pro sports, there is much to learn that is applicable to an enterprise like his, and even more so to enterprises that are less economically powerful than Netflix.

How Netlix thinks about the economy of pro sports

The earlier book, No Rules Rules, is an exploration of how Netflix thinks about culture and talent.

Let's start by conceding that at the most facile level, Hoffman, et al., have a point: the composition of pro sports teams is fluid in nature, and orgnizations are always trying to get the best possible performance at every position. Long-term loyalty in either direction (players or management) is not unheard of, but extremely rare.

Hoffman, Reid; Hoffman, Reid; Casnocha, Ben; Casnocha, Ben; Yeh, Chris; Yeh, Chris. The Alliance (p. 13). Harvard Business Review Press. Kindle Edition.

Hastings, Reed; Meyer, Erin. No Rules Rules (p. 169). Penguin Publishing Group. Kindle Edition.

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