Atlanta Braves take a page out of the Pittsburgh Pirates losing playbook
All baseball decisions are business decisions, despite what general managers Frank Wren and Neal Huntington say. The Pittsburgh Pirates downsized their payroll by trading Nate McLouth to the Atlanta Braves, and the Atlanta Braves followed suit by releasing Tom Glavine.
In my final MBA class, we learned about three models of value creation: i/o, resource-based, and stakeholder. The i/o model states that management should ensure the firm is well-positioned economically within an industry (i.e., Major League Baseball) and environment (i.e., market size). The resource-based model states management should acquire, develop, and manage key resources (e.g., finances, players, coaches). The stakeholder model states management should develop and manage relationships with external stakeholders (e.g., fans, players, advertisers, TV stations, investors).
The Pittsburgh Pirates are primarily following the i/o model because their actions reflect that of an organization concerned solely with profitability in a small-market environment. Further, they place less importance on acquiring key resources such as players and coaches and cannot afford to worry about stakeholders such as fans, players, and TV stations.
The Atlanta Braves are utilizing a resource-based model because they are focused on building financial resources by saving money and increasing talent resources by acquiring better players.
Both the Pittsburgh Pirates and Atlanta Braves are going to suffer in the long run because they pay too much attention to their investor stakeholders and not enough attention to their fans, players, TV stations, and advertisers.
For example, Pirates players are pissed that management traded McLouth. The team cannot be successful if the players do not trust management.
What's more, the Atlanta Braves had an opportunity to please their fans, players, TV stations, and advertisers by allowing Glavine to retire in a Braves' uniform. They ignored their relationships with these key stakeholders and, instead, opted to conserve resources (i.e., finances), which is good only for their investor stakeholders.
Winning organizations such as the Pittsburgh Steelers, Detroit Red Wings, San Antonio Spurs, and Boston Red Sox utilize a balanced mix of all three value-creation models. The Pirates and Braves should take a page out of winning organizations' playbooks.
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