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Boston Celtics: A Management Lesson

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Jack and Suzy Welch have a column in Business Week called “The Welch Way”. For those not in the know, Jack Welch was born in Peabody, went to college at UMass Amherst, and ran GE for 20 years. He is widely considered to be one of the most visionary corporate leaders over the last half century. The Welches recently (February 19, 2007 issue) had a column addressing the difficulty managers face between trying to balance short term Wall Street expectations with long term business sustainability. They write:

“Look, anyone can manage for the short term. Just keep squeezing the lemon, wringing out costs until there’s nothing left but the pulp. And anyone can manage for the long term. Just keep telling people: ‘Be patient. Our strategy will pay off in time.’ The mark of a leader is someone who has the rigor, vision, and courage to do both simultaneously.”

I think the Welches don’t emphasize the last point enough: the “do both” path is much riskier, and is littered with managers who thought big but failed.

How does this apply to the Celtics? When Danny Ainge took over as GM (in all respects except title) he was faced with three choices: trade a few pieces to get more veteran help (the Win Now strategy), trade away players and start anew (the Build For Future strategy) or do both and try to Win Now AND Build For Future. As Jack and Suzy Welch point out, it is relatively easy to justify the first two strategies, but risky to attempt the third. Ainge could have justified the Win Now strategy given that the prior season the Celtics had made it to the Eastern Conference Finals. Perhaps the two first round draft picks the Celtics had in 2003 could have been traded with an expiring contract (Eric Williams’) to land an impact vet player, and perhaps the strategy would have paid off (or not… we will never know). Similarly, Ainge could have justified the Build For Future strategy, given that the Celtics were not in good salary cap condition and that the Pierce-Walker duo had just lost four straight to the New Jersey Nets in the playoffs. In addition to trading Walker, Ainge could have traded Pierce, probably netting at least a couple of good draft picks in return. The Celtics could then have rebuilt through the draft; given the absence of Pierce and Walker, the Celtics own draft picks would probably have been very high for a few years, perhaps netting franchise players like Dwight Howard or Chris Paul (or not… we will never know).

In any case, instead of taking either of these courses of action, Ainge decided to take a risk and attempt the Win Now AND Build For Future strategy. By Jack and Suzy Welch’s description, this choice alone marks Ainge as a leader, but the results of this strategy have been dubious. Ainge traded Walker but not Pierce, and ended up with mid-first round draft picks. Ainge drafted smartly for where he held picks, traded fairly shrewdly for players to complement Pierce, and for one brief moment - Game 1 of the 2005 playoffs against Indiana - it looked like the strategy was paying off. But the Celtics lost in seven games to Indiana and have not been the same since. That summer and following year was followed by questionable signings and trades and the results (particularly the 18 game losing streak this year) speak for themselves.

To date, it appears that Ainge gambled on the Win Now AND Build For Future strategy and lost, and is now on his way to join the list of other managers who thought big but failed. Of course, the book is not closed on Ainge yet; there are a few promising young players, Pierce still looks good, and the Celtics should have a good pick in a deep draft. Nevertheless, Ainge’s tenure as GM will forever be blemished, and helps point out why so few managers - in basketball and in the business world - take the riskier path. The managers that do are considered leaders (as pointed out by the Welches) but only if they succeed. Since the path is riskier, it means more of these managers fail than succeed, and those who fail are rarely considered leaders.

{mos_smf_discuss:Celtics Talk}