Do You Know What You Want?

By Noah Graff.

A principle my parents have repeated to me is that nobody in the world is a mind reader. Therefore, to get what you want from other people you have to be as clear as you possibly can.

I usually hate going to a new barber because they ask me tough hair questions that I do not feel qualified to answer. They ask things like, “Do you want it short on the sides?” “How much should I take off the top?” “What gage should I use?” “Do you want it thinned out?” I’m not a barber. I don’t know this stuff. Why can’t they just do their job and give me a haircut I like? The big problem is that after 34 years of getting haircuts, I still have a lot trouble knowing what is actually going to make me happy. But I can say, after the barber is finished, I usually do know whether I’m satisfied or not.

It’s a tough situation for a new barber because she can’t read my mind. All she can do is guess what I want, and compounding the challenge, sometimes I don’t even know what I want. Sometimes I just want to say something like, “make me look cool, or do something that will be appropriate for work.” I have been going to my current barber, Dita, for many years. She can remember what I’ve liked in the past because she cuts my hair every month, but what makes her special is that she can use her intuition to style my hair in ways that I couldn’t have envisioned myself.

It is a wonderful and rare thing to be able to trust a pro to do what I want without proper instructions. Dita is just about the only person in this world who I can say comes close to reading my mind. When going to new barbers, my best results have come when I first comb through a magazine and find a photo of an actor or model whose hair I like, and then show the photo to the barber before she begins. The barber then at least has a clear vision of what I have commissioned her to create. Please new barber, do not ask me how to do your job. You’re supposed to be the pro!

At Graff-Pinkert we constantly repair and rebuild screw machines, a process which takes both creativity and experience trying various methods to make machines work smoothly. We always encourage our mechanics to ask questions when they are unsure how to deal with a problem, as it is obviously better to ask than screw up a machine or get stuck and waste time. We have the advantage of employing people with decades of screw machine experience — we have an Irish guy who has worked on Wickmans for a half century. More often than not, the solutions to their technical problems come from the mechanics conferring with each other rather than with the people in the office. Lloyd, Rex, and I want to know the significant technical issues occurring in the shop, but sometimes we just have to say, “I’m not sure how to do it, but I know you can figure it out. SO JUST GET IT DONE.” The mechanics get paid because they are professionals who we can trust to do things we can’t. The system usually works well, because even though we don’t know how to repair the machines, we at least know what we want in the end.

There are very few people in this world like my barber who can predict what other people want. So before you can clearly tell someone what you want from them, you better make sure what you want is clear in your own mind first.

Question:  Do you usually get the haircut you want when you go to the barber?

Noah Graff is a Salesman at Graff-Pinkert & Co.

Check out this Seinfeld clip in which Jerry’s carpenter unsuccessfully reads his mind

Seinfeld Clip – Jerry And His New Cabinets

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Surviving August

By Lloyd Graff.

Robin Williams in “Good Morning Vietnam”

August is a strange month for me. It is the month of my mom’s birth and death, August 11, 1993. It is a celebration of surviving my heart attack, a near death experience in 2008. It is the time my daughter Sarah and son-in-law Scott come to Chicago for a week with my three spectacular granddaughters.

The baseball season is in its dog days, and my Cubs are in last, as usual. But oh those fabulous prospects – the best in the game they say – will turn it around next year. Well, maybe in 2016. With my August pre-occupation with life and death, I always wonder if I will be lucky enough to cheer the next Ernie Banks.

In business we feel the excitement of IMTS growing toward Labor Day. I can already feel me knees rebelling against the endless aisles of McCormick Place.

School is starting this week in my neighborhood, and the kids are oiling up their iPads and computers. My wife Risa is gearing up her educational therapy practice. She is in the “make school easier” business, and beginning in August, needy parents and struggling kids find their way to her office in our house.

In August, Rabbis like my daughter have started planning their Jewish High Holidays (Rosh Hashanah and Yom Kippur) sermons. The High Holidays are somber days of contemplation, fasting and relief. I’m particularly aware of the clergy prep. While writing this blog I sat next to two local rabbis who were planning their Temple services at the local Starbucks.

August also brings the Fantasy Football draft and NFL football pre-season, the former being the more important of the two. I find it fascinating that today the statistics of the game have become more important than who wins or loses for many people. The game really is a lot more fun seen TV than paying $100 to attend a game, fight the traffic, and sit in the sleet. Games may as well be played in big TV studios. Fans in the stands, who needs it? Just give me the stats in real time.

For the French, Italians and Spaniards, August is the traditional vacation month. Five weeks of saying goodbye to work. To me it is a quaint custom for the monied elites. I’d go nuts if I didn’t work for over a month. Oh, maybe I could survive it with constant doses of televised baseball, football and audio books, but it would be tough.

I am soaking up August, that difficult transitional month between summer and fall, baseball and football, and who shall live and who shall die.

Question: What was your favorite Robin Williams film?

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Congress Cares?

By Lloyd Graff.

Congressman Francis Underwood from the show, “House of Cards”

Man plans. God laughs.

A client of ours just had a huge fire that wiped out much of his capacity. He is scrambling to pull things together overnight to service his customer base. The insurance adjusters dither while he awaits the settlement.

Another client jumped into the machinery market because he landed a big new account that wants parts in September. He’s buying a $100,000 machine and new secondary equipment. It had not been in the budget finalized in April, but a million dollar job was not going to be missed for want of a machine to run it properly.

In Washington, the bonus depreciation law is up for debate again, behind and in front of closed doors. Code name – Section 179. The trade associations I belong to, the Precision Machined Products Association (PMPA) and the Machinery Dealers National Association (MDNA), have their law firms and lobbyists out buying drinks and advocating hard for the resuscitation of the expired law. It’s why we hire lobbyists and pay them $500 per hour to schmooze staffers and channel money to campaigns. But I have to wonder, in the end, how much do the incentives really change behavior?

In our machinery business we expected a rush of business before Section 179 expired last year. But I can attribute to it only one sale, a ridiculously cheap 1-1/4″ RB-8 National Acme, that a client (who happened to have an accounting background) rushed through because of the tax incentive.

I know this dissing of the catechism of tax benefits for business is Obamaesque blasphemy, but I really think it is true. People buy capital equipment generally only when they have a pressing need for it. Without a pressing need, they may buy a smaller item like a hardness tester, or a cleaning tank. At Graff-Pinkert we rushed to buy a Graymills cleaning machine last year and a backup generator the year before to get the convenient write-offs. They were purchases we could have lived without, but the ability to write them off against income did play a role in our timing and was an impetus to pull the trigger. If you multiplied our cleaning tank and generator buys through the whole economy it would be significant.

Section 179 is not part of the backbone of capital spending in the United States. It will not have a pivotal effect on our machine tool business. For big companies it will barely ripple the water. On the margins, the last-second buys of a clutch, a repair part, a set of bearings, or a generator, magnified by thousands of little buyers, is significant. It’s worth fighting for in Washington, but if we don’t get it, there’s still next year for another schmooze at it.

Question: Do feel like your congressman cares about you?

Lloyd Graff is Owner of both Today’s Machining World and Graff-Pinkert & Co.

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Auction Rookie

By Noah Graff.

Auction at Ameriflo, Two Mazak Turning Centers

Last Tuesday, I attended an auction in Carmel, a suburb of Indianapolis, trying to pick up a few CNC machines to round out Graff-Pinkert’s stock. Key Auctioneers was auctioning off machine tools owned by Ameriflo Corporation. The company wasn’t out of business. It had just decided to outsource its machined parts.

The sale featured an L32 Citizen manufactured in 1999 and four Mazak CNC Turning Centers, Multiplex 6200Y machines. Two of the Mazaks were new in 2000 and two in 2004. Mazak Turning Centers are not Graff-Pinkert’s specialty, but we are always trying to learn the CNC market better, and if there is an opportunity for a great spec we try to explore the possibilities. My boss, Lloyd Graff, saw an advertisement for the auction in the Chicago Tribune of all places. We had received only one email blast promoting the sale and had not received any print flyers for it, so we thought the auction might be a sleeper.

I had been given a rough number that I could spend at the sale for the Mazaks. I was told that if I could buy one of the 2004 Mazaks for $60,000, not including the 12% buyer’s premium, it would be too good a deal to pass up–even with our very limited experience with the equipment. An auctioneer colleague of ours estimated that the retail price from a used dealer for one of the 2004 Mazaks in good condition would be about $120,000. At the sale, I was told by a Mazak sales rep that if these type of machines were bought new today from Mazak they would cost $450,000 each. My instructions for bidding on the 2000 machines were more vague. All I remembered was, “bid a lot less than the $60,000 we targeted for 2004 Mazaks.”

I spent more than an hour the day before carefully inspecting the four Mazaks and the Citizen. The operator of the machines from Ameriflo put the machines under power and was extremely helpful in giving me the straight dope on the equipment. The machines had put in a lot of hours over the last 10-15 years, running lights-out a lot of the time. The bar loaders and the parts conveyors weren’t working on the Mazaks. One machine had a recently replaced motor, one needed a new ball screw, one just had a new battery installed. He told me the machines were all “good machines.” I had at least confirmed that the four Mazaks were relatively aesthetically pleasing and were running.

The auction was small, with only a few hundred lots. After just 15 minutes, the newest, best Mazak was on the block. The bidding started at $30,000. This was one of the main machines I had come for so I jumped into the action. It was the first time I had actually gotten to bid at an outcry auction. In the past I had pushed the button to bid online with my bosses directing me at my side. A few times at past outcry auctions I had permission to bid on certain items, but the prices went over my threshold before I could even throw a number out. But this time I was in the ring. I went back and forth with two other bidders. At least two auctioneers were swarming me, waving there hands just a few feet away trying to egg me on to bid more. One bidder was online, the other, who ended up buying all four Mazaks, I had seen the day before, inspecting the machines at the same time I was. I bid $40,000, then $50,000, and the intensity built as it got into the $60,000s. I think my highest bid was $67,500. I had reached my spending limit and I admit I was a little relieved when I couldn’t go any higher, even though I think that the $70,000 it went for was probably a good deal. But a price of $70,000 plus 12% buyer’s premium, rigging and repair costs was a lot of cash to throw at something I knew little about, even if I did know some customers who might be interested in it.

After the machine sold, I called my boss and told him what happened. He was pleased that I got in the thick of the bidding and gained the experience, but he was glad I didn’t go any higher. He said something like, “We don’t want that type of machinery anyway. Maybe you can get the Citizen when it comes up.” So, when the last Mazak 6200Y (new in 2000) came up, I sat back and watched it sell for a mere $40,000 to the same guy who had bought the other three similar machines. When the bidding ended on that machine I thought to myself, “That machine was probably the steal of the auction. This was the opportunity I blew.”

Looking back, I don’t think I should flagellate myself for not bidding. The money wasn’t coming out of my pocketbook and I had just been told that it wasn’t the type of equipment we wanted to spend our money on. Later, I spoke with the guy who had bought the four machines. He asked me if I was Lloyd Graff’s son or Jim Graff’s son–the machine tool business is a small incestuous world. Then the guy told me that he had not even planned to bid on the fourth Mazak, but it was just too cheap not to buy. Ug. I was learning. What did I learn? I should have been better prepared. I should have had a better bidding plan. I should have known more about the machines. Maybe I should have gone into battle with a partner.

I held out hope to get the Citizen, a machine we do have some experience with. Our target price was $40,000. The machine was clean and running but it was still pretty mature in CNC years–not as bad as dog years, but computers have come a long way since 1999. Heck, in 1999, I was a college sophomore, Bill Clinton was President and the Bulls had won the NBA Championship the year before. Also, the Citizen’s bar loader was an oddball at 6 feet. I got in the mix and bid all the way up to $47,500. I was then relieved when someone else after some deliberation bid up to $50,000 and won the machine.

I felt fine as I left the auction. I gained bidding experience, learned quite a bit about CNC equipment and made some good contacts. I think I might have let a good fish get away, which does not feel good, but I would have felt more disappointed if I had lost out on a multi-spindle screw machine or Hydromat that I knew well.

Question: Do you enjoy buying stuff at auctions?

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War and More War

By Lloyd Graff.

Rubble in Gaza City, 7.26.2014

I met up with a Jewish acquaintance a few days ago. I asked him what was new, and he said his son was having an interview the next day to volunteer for the Israeli Army.

Why would an American kid who was not subject to the U.S. draft volunteer to fight? I can’t speak for him, but I think I understand the pull. I feel it myself, vicariously.

Israel has been attacked once again by a hailstorm of rockets and vicious killers infiltrating the country through underground tunnels. The Palestinian leadership in Gaza has had decades to make a logical settlement with Israel’s government, but continues to commit itself to Israel’s destruction and doom the Palestinians to misery and containment. I am not an ardent fan of Benjamin Netanyahu’s hard-line stance, but there is a consensus in Israel for a two-state solution. Unfortunately, hard-line Palestinians have walked away from good deals that have been offered through the years.

Israel continues to get stronger both militarily and economically. The Palestinians are falling farther behind Israel and are even losing support in the wider Arab world. American leaders may not like the prickly Netanyahu, but both political parties find it useful to align with the American Jewish community that supports their campaigns generously.

I sympathize with the desperate folks in Gaza, who are victims of a cynical hateful leadership that has sacrificed its people to its ideology of Israel hatred.

I think the young guy who wants to join the fight thinks he can help end the endlessly painful struggle. It’s a romantic thought, though a dubious one.

I think the 2014 war will end soon. Perhaps it will buy 2 or 3 years of relative quiet in Israel. Maybe some peace will come from exhaustion and mourning. Maybe the Hamas leadership will flee in disgrace. I can hope.

I would hate to see this idealistic boy from Chicago caught up in a 2016 Gaza War. But I’m glad there are kids with the courage and idealism to put it all on the line for something they truly believe in – the one and only Jewish state.

Question: Can there ever be peace between Israelis and Palestinians?

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It’s in the (Business) Cards

By Noah Graff.

IMTS is coming and neither Graff-Pinkert nor Today’s Machining World will have a booth — but we do at least have business cards!

Cards are a funny thing these days. It’s the 21st Century, and everyone has a Website, a Facebook, and smartphone that can store detailed information plus take photos and video. But still, if you’re in business anywhere in the world, you have to have a business card. Those little portable pieces of cardboard can be powerful. Pass out a lot of them, and maybe one will have a lasting impression that pays dividends.

Last fall, I was traveling around Germany looking for screw machines and Hydromats. Often on my business trips I resort to shots in the dark while I’m in between previously planned appointments. I call up companies from old lists of machine shops acquired by Graff-Pinkert over the years. I have a beautiful phone intro, “I’m in the area, so I was wondering if I could stop by your shop. Do you have any machines for sale or that you’re looking for?”

On a rainy day, sitting in my hotel room in Cologne Germany, I was able to get through to an owner. He then told me he had nothing for sale, so I shouldn’t come, but he recommended that I try a colleague with a shop in the mountains, about two hours away. I called the shop up and made it through to the owner, and indeed they had a very expensive vertical Hydromat for sale and said they would be happy to have me. So I drove out to the boonies on the west side of Germany — it seems like most shops in Germany are in remote places — and when the owner met me at the door he handed me a boring black and white business card in pristine condition. I couldn’t believe it when the card read “Rex Magagnotti,” my fellow salesman at Graff-Pinkert. Apparently Rex had trekked up to the same shop 16 years ago, probably just like me, on a whim, looking for treasure.

There is something about a business card that has the power to make a lasting impression. Sure it likely will get tossed or bunched in a rubber band with 100 others, but it has a presence, it’s tangible, you can carry it in your wallet, keep it on your desk, or write on the back of it. If the receiver cares about what’s on it, it might just survive. Paper is a waste of natural resources and a cumbersome thing to organize. However paper can last for centuries. The Vatican library has books that have lasted 2000 years. Computer bytes disintegrate in 5 to 10 years, meaning the data has to be constantly backed up.

Another business trip also gave me a respect for business cards. When I went to Japan to do a story for Today’s Machining World, I was instructed that if a Japanese person presents you with a business card, you must read it thoughtfully for at least 30 seconds and then carefully store it in a holder, rather than shoving it in your pocket. The card is regarded as a symbol of a company, deserving respect.

My friend Rich Kaplan, a professor of creativity who used to contribute to Today’s Machining World, told me that a good business card should have a utilitarian purpose, in addition to just being a promotional tool. For example, he suggested putting a ruler on the back of a business card, or perhaps a table of feeds and speeds. Put something on the card so it can be constantly used for practical purposes and stay in the hand of a customer as much as possible. Our Graff-Pinkert business cards were designed with a matte finish and a lot of blank space on the back, so people can easily write notes on them. When I’m at IMTS this year, I will try to remember to only write on the back of our own cards and not on the back of one from a Japanese company.

Question: What should Barak Obama’s business card have on it?

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Stretching the Truth

By Lloyd Graff.

The American Girl Doll, Ivy, that Lloyd’s granddaughter Eliana received for her birthday (left)

My oldest granddaughter Eliana celebrated her 9th birthday Monday, and her grandmothers splurged on an American Girl doll for her present. She and her sisters love these dolls and they have a small family of them accumulated from several birthdays.

I am fascinated by the success of the doll company, started by Pleasant Rowland in 1986 on a shoestring, an idea and a bit of a lie. She sold her company, called Pleasant Company, to Mattel (owner of Barbie™) in 1998 for $700 million cash.

I have enormous respect for Rowland as a marketer. She built a brand based on history, wholesomeness, and quality that has endured and grown hugely under Mattel’s management. But she fudged the story about the genesis of the doll in her early catalogues. In Rowland’s story of the American Girl Doll, she writes that “deep in the basement of a small museum lies a tattered, water-stained doll trunk. Open the dusty lid and the long-ago childhood of some lucky girl comes instantly to life. Tucked gently inside a beautiful porcelain doll – dearly loved and much played with. I discovered this trunk by chance more than a year after I had begun working on the American Girl Collection. It served as a powerful reminder of why I had begun the collection, and what I hoped it would accomplish.”

However, the story written around this doll and its image is false. The doll was purchased for Sybil Hanks (born 1908) by her parents and named Nancy Hanks. She was kept in pristine condition and never played with before being donated to the Wisconsin Historical Society in 1966 along with Hanks’ entire collection. When Rowland put the doll in the catalogue, it was placed by a water stained trunk to convey a “well-played with” image.

Rowland’s story stretched the truth a little, but don’t we all in business and in life? Haven’t we all said “you look mahvelous!” to a friend who needed a boost, even if they looked pallid and frazzled.

When is stretching the truth a “lie” and when is it just smart marketing or saying the right thing at that moment?

I listened to a fascinating TED talk recently on this subject by Dan Ariely, the brilliant social scientist and commentator. His topic was ‘“cheating” and “stealing” not just lying.’ His point is that we tolerate and even accept a lie if it is perceived not to hurt other people and is believed to be a “small one.” Telling a friend that they “look mahvelous” is probably not going to offend anybody but the most sensitive sourpuss.

But how about Patience Rowland’s little lie to the parents of 8-year-old girls? Did she violate the sense of honesty and purity she meant to convey in her doll creations by dramatizing a fiction to the parents and grandparents who were shelling out a paycheck for dolls and doll clothes dedicated to a purified image of wholesomeness?

I am in the “who cares?” category. We love our stories and myths. They bring meaning and depth to our humdrum lives. My beloved granddaughter Eliana cherishes her dolls and their families. She gobbles up the books about the imagined stories of her doll figures and embellishes her dolls with her own version of their biographies.

The purists who begrudge Patience Rowland her fortune because she saw gold in a romanticized doll story and executed her vision to perfection miss the point. Myths, even made of little lies, are the stuff of life. My Dad and I used to joke around that all our dirty oily screw machines were used by “a little old lady on Sunday.” If we ever found a pristine National Acme that had been sitting in government storage for 25 years, we would call it a “little old lady machine” and laugh.

Stretching the truth. Indulging a little lie. It’s business.

And “you look mahvelous” too!

Question: Is lying a sin?

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Hiring or Renting?

By Lloyd Graff.

As an owner of two small businesses, which are doing pretty well these days, I am in the throes of a daily decision making quandary. Do I hire more people, rent more people, or just watch which way the wind is blowing? This is a very real problem for me and I sweat it almost every week.

The unemployment/employment numbers display the split personality of the current American economy starkly. The Unemployment Rate and number of Unemployed Persons have decreased significantly over the last year. However, in June, the average workweek for all employees on private non-farm payrolls was only 34.5 hours for the fourth straight month. (http://www.bls.gov/news.release/empsit.nr0.htm)

The Graff-Pinkert & Co. used machinery business is busy. Our machine cleaning and repainting area has been understaffed for years. This year we finally decided to do something about it by hiring a second shift. Rex Magagnotti, who watches over the plant, in addition to his major role in buying and selling machinery for the company, has been urging me too attend to our log jam of dirty machines for a long time. I hesitated spending the money, largely because of all of the add-on costs of full-time employees, particularly expensive health insurance. The compromise was to hire part-time people, summer people, and rented employees from temp agencies. This way I can get my elbow grease and cleaned machines without a sense of deep commitment to the folks we hire.

Like many small business owners, I am deeply invested in my employees.

Many have worked for the company for more than 20 years. They are members of the “Graff-Pinkert family.”

This was not the approach I took when I hired a new electrician and office manager last year. They were clearly full-timers, and I was all in with them. But for a second shift, I just wanted hardworking summer folks or people who knew they were temporary, and expendable. It’s the new American workforce, less than 30 hours a week, rental people from temp agencies like Manpower or contract workers.

I have learned that some workers also play the game very skillfully, maneuvering their hours so they can draw unemployment pay for many months after their mediocre short-term work ends. I find this annoying, but if somebody is going to spend their creative talent on gaming the system, so be it. I have better things to do than worry about their petty shrewdness. They will never end up with good long-term jobs.

The Affordable Care Act (ObamaCare) is certainly one reason part-time employment is soaring and full-time jobs are scarce. As a hirer, I am always struggling with the calculation of whether a person is worthy of full-time employment and the huge premium I pay for such services. It is very difficult for a potential low skill hire to make a convincing case that they are worthy of the full timer premium.

The issue of the day is the push to almost double the minimum wage to $15 per hour. It is the rebound reaction to the dearth of high paying full-time jobs. If the inflated minimum wage becomes local or national law, the sure result will be shorter hours, fewer jobs, and high real unemployment. It will mean young workers will not get the vital experience they need to become productive, high-paying earners.

I sympathize with poorly paid part-time workers. Their plight stinks. I look at Graff-Pinkert’s best employees who learned skills on the job and prospered over the years. Today they would have a harder time getting in the door and proving their worth.

There is still plenty of opportunity for bright, ambitious, hard-working people – even those without a lot of book learning. But unless they have connections or good luck, the economy and the politicians are inadvertently pushing them into 29-hour jobs or difficult to stitch together freelancing gigs.

It’s tough out there, but I have to watch my bottom line. I will be rationing my full-time jobs and looking for talent for the short term.

Question: Is $15.00 per hour the right minimum wage?

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The Right Place at the Right Time

By Noah Graff.

See the video below

A few weeks ago, I published a blog about my video series on YouTube. It is a documentary of my Greyhound Bus trip from Chicago to San Francisco when I was 19, called Where Are You Going?

The series centers around the colorful passengers who included a chef from a nudist spa, a 36-year-old bi-sexual grandfather, a man who had just gotten out of jail, and a guy who lives on a ranch in seclusion, house sitting for free.

I also filmed my dad driving me to the bus station, imparting some last minute wisdom. One of the things he told me has stayed in my mind over the years. We discussed the concept of “being in the right place, at the right time.” I told him that I hoped the coming bus ride was going to change my life. He responded by saying that if a person is in the right state of mind, he can find meaning and importance in all kinds of places, perhaps anywhere. Therefore, being in the “right place” is mostly caused by the person, rather than mere chance or luck. The idea has proved true for me throughout my life, including during the experience of the bus ride, as I had hoped. People on the bus told me stories that I could never have made up, their views opened my mind, and they gave me an opportunity to create a unique work of art.

In the short video included in this blog, my diverse fellow passengers illuminate my dad’s belief that a person’s frame of mind affects what happens in one’s life. A person’s ability to see special things when they come along is essential for finding happiness and success.  Please have a watch. It’s my favorite video of the series.

Question: What is the best trip you ever took?

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Potential or Experience

By Lloyd Graff.

A young Billy Beane

In Michael Lewis’ great book, Moneyball, he writes about Billy Beane, now GM of the Oakland A’s, when he was a high school phenom outfielder. Beane was a sure first round draft pick, which at that time meant a $100,000 signing bonus. But there was conflict in the Beane household. His parents wanted him to sign a pro contract right out of high school. Billy wanted to go to Stanford on a full ride.

Beane told Lewis that he started doubting his own baseball talent after his junior year of high school. He saw other star players catching up to him physically, and his hitting confidence was starting to erode. His senior year he was still an exceptional player, but in his heart of hearts he doubted himself.

Billy Beane took the money and did make the Majors, but he was a fringe player. When he had the chance to get into baseball management he gladly gave up the uniform. He regretted rejecting his opportunity to attend Stanford.

Now Beane is considered one of the smartest General Managers in the game. His team is in first place with a tiny payroll. He just traded his number one minor league prospect and two other highly regarded minor leaguers to the Chicago Cubs for two quality Major League pitchers, Jeff Samardzija and Jason Hammel. Oakland is now one of the favorites to reach the World Series.

I believe Billy Beane’s memory of himself as an 18-year-old “next big thing” had  a lot to do with the trade. I think he is a bit of a skeptic about “potential.”

I see a parallel debate when running a business, whether it is machining, retail or software. You must constantly weigh potential versus production in your staff. If you go with mostly youth and enthusiasm rather than pros with at least 10,000 hours experience, you are going to run into trouble with errors in judgment that could screw up the business. If you go with seasoned pros you may see a lack of risk taking and a tendency to try to recreate out of date successes. The knack is to know when to bring in youth and when to rely on experience. If you can keep experienced people motivated and willing to expand their knowledge you have something quite special.

I wish I had a guaranteed formula for success, but I think observing the Billy Beane approach in baseball is instructional. Stock up on youth and promise, but don’t be afraid to trade it in for veterans when they can seal the deal.

Question: Is your company looking to hire experienced pros or potential?

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