"Good to Great" & the DeMar DeRozan trade

On our 4th year leadership in sport class (shoutout to Professor Kristy Spence) curriculum was the book Good to Great by Jim Collins. This excellent book took a look at over a thousand companies to identify 11 great companies to study and identify common concepts in their rise to business excellence. I devoured the book and the concepts stuck with me; the fact that it was data driven in a time where business data books were not as prominent was a big factor in my appreciation of the book. Later, I utilized it as a reference point during an interesting internship experience with the failed Niagara Daredevils, attempting to utilize the concepts in the book to understand what was going on during a tumultuous time. Now that I think about it, that's a whole other article...

On a sleepless Wednesday morning, I checked my phone to see that the rumoured DeMar DeRozan/Kawhi Leonard trade was coming to fruition. DeRozan was a lifetime Toronto Raptors player, spending almost ten years with the team after committing to it with a long term contract. Leonard is potentially a top 5 player in the NBA but comes off a bizarre season and could leave at the end of the upcoming season. The trade has been debated, there’s no need to do that here, but part of the Raptors' thought process can be understood utilizing 3 concepts from Collins’ book.

? Good is the enemy of great ?

The first chapter of Collins' book outlines the companies that were chosen and the factors that made them "great", one of the more important ones being a period of growth and sustained success. The chapter also outlines that discipline (in people, thoughts and actions in this order) was most likely to be a key factor in a company's ability to achieve greatness. Once a company had it's disciplined people and thoughts, the actions leaders took could cause breakthrough.

The Raptors had not made the playoffs for five seasons when Masai Ujiri was hired as their General Manager in 2013. They made the playoffs in his first season and have made it for five consecutive years including their first Eastern Conference Semi-Finals Appearance since 2001. In 2017-18, they had the best record in the Eastern Conference but ended up getting swept for the second year in a row by the Cleveland Cavaliers and LeBron James in the 2nd round. Quite simply, the Raptors have been good, potentially very good but greatness in sports is defined by championships, and the Toronto squad hasn't been able to achieve an NBA Finals appearance....good, not great!

Lesson: Do not be content with good if you have aspirations of greatness, evaluate where your company stands currently and how it can evolve to become great.

? First who, then what ?

Masai's first big move was to trade Andrea Bargnani for a 1st round pick (Jakub Poeltl), 2 2nd round picks and players that were mostly salary considerations, ridding the Raptors of an underperforming player with a large contract for the next three seasons. Bargnani was a declining player who had faced injuries and was coming off a season with his worst Field Goal Percentage. During that first season, he also traded Rudy Gay, the highest paid player on the team but another underperforming individual for a pot-pourri of players that would be easier to trade or release. Some of these players actually became key contributors for the Raptors in their early playoff runs. Masai's purge ended there although rumour has it he had a deal in principle to trade Kyle Lowry to the New York Knicks that fell through because of Knicks' ownership interference.

I know what you're thinking, thanks for the trade history but what does this have to do with my business and my career? Well, the third chapter of Jim Collins' book speaks about the importance of having the right people in the right positions to succeed. He speaks about the need to be rigorous in hiring decisions and reacting quickly in removing personnel that are not performing to the levels expected of them. Further, the research found that compensation is an asset to be utilized to retain the right people instead of motivating the wrong people to commit the right behaviours. In a business where your player salaries are essentially capped, it can be surmised that Ujiri looked at his roster and found that the compensation could be better utilized on different players. One of the players that was retained and then rewarded with a contract extension was Demar DeRozan.

DeRozan became a catalyst for the success of the Raptors and the face of the franchise after being retained by Ujiri, he is a multiple time All-Star that improved every summer to contribute at a high level. However, he also was a player who was not able to elevate or even sustain his play in the playoffs and was often seen as a large factor for the lack of success against the Cavaliers where he was compared to the best player in the game, LeBron James. On a recent Lowe Post podcast, Kevin Arvonitz may have helped defined the concept when it came to a basketball team - ‘Your team’s culture will be set by your best player’. If Masai Ujiri wants to build a great culture of winning championships in Toronto, he decided that DeMar was not the right person to set this culture. Circling back to compensation, DeMar was the second highest paid player on the team and was signed for multiple season while Leonard is an unrestricted free agent at the end of the year. If this trade doesn't bring the Raptors to the glory they seek, it can be utilized as a reset of their compensation structure.

Lesson: Business success can come in different ways and with different performers. Constantly be asking yourself if you have the right people in the right positions to be great, and if not, don't be shy to make a change whether it be moving them to a different role or replacing them.

? Confront the brutal facts ?

Jim Collins and his team identified a 4 step process for senior leaders to identify emerging trends in their industry and potential problems in their own business, outlined in the 4th chapter of the book.

1. Lead with questions, not answers;
2. Engage in dialogue and debate, not coercion;
3. Conduct autopsies without blame;
4. Build red flag mechanisms that turn information into information that cannot be ignored

Without insight into the inner workings of the organization, it's hard to know if this process was followed, however it seems like Raptors' management confronted the fact that the team in its current state wasn't great. The red flag mechanisms surely communicated that the window for the team to make the leap was getting smaller yet at the same time with LeBron James out of the conference there was an opportunity for the team. The autopsy may have identified that DeRozan was a player whose three point shooting improved but still employed the high-risk low-reward long range 2 point shot on many possessions.

Masai looked at the findings of the system he had put into place and found that he needed to act quickly with an eye to the short term possibility in the Eastern Conference and the long term viability of the team. Acquiring Leonard makes the team a favourite immediately to make their first NBA Finals and also gives them financial flexibility at the end of the season to re-sign him or use that compensation more effectively.

Lesson: As a leader in your business or in your career, you can utilize this simple 4 step process to stay guided on your direction. Asking intelligent questions, engaging in dialogue and conducting autopsies will allow you to identify potential roadblocks while building red flag mechanisms will tell you to act when the direction is wavering. A simple example would be to ask yourself "How many new contracts do I/we need to acquire to push this business forward?", following with "How many meetings/phone calls are needed to acquire these contracts?" Breaking this down into monthly chunks will allow to conduct autopsies and setting a baseline number as a red flag will allow you to act if the performance is not there.

When it comes to the other 4 tenets of the "Good to Great" companies , without living inside the organization on a daily basis, it's harder to speak of them but there are definitely signs of the Raptors organization possessing them. Is Masai Ujiri a Level 5 leader with Professional Will and Personal Humility, well, when describing his own leadership style, Ujiri stated that he does not micromanage, and instead places a large emphasis on being personal – he wants to “treat people like they want to be treated,” The Raptors utilize technology accelerators constantly and have built their own practice facility to help train and maintain their players.

Why was DeMar DeRozan traded and Kawhi Leonard acquired? The easy answer is that the trade was what the general manager thought would bring his team to the next level. In evaluating the move, we can see aspects of "Good to Great" in his management style and hopefully, this move helps the Raptors achieve the great status.

My role at NewFound Recruiting allows me to combine my passions for learning in a business setting and helping others acquire the most talented employees for their company. I've previously combined sports (my other passion) and business concepts in articles such as Business Lessons from the Vegas Golden Knights amongst others.