On a long enough timeline, talent wins

Talent wins, duh

I've never watched a game of my favorite coach, John Wooden. However, his teams were so successful (10 championships in a 12 year period) and his approach so distinct (Pyramid of Success) that I could not escape his gravity during my college years despite never watching a game.

John Wooden's philosophy "process first, results follow" was novel to me. He was so focused on discipline of approach (i.e., process) that he claims his most successful team, in 1959-1960, went 14-12 due to what they achieved vs the challenges they faced:

From a win-loss point of view, it was the worst year I'd ever had as head coach at UCLA…we didn't have much of [talent or experience]…with the sizeable obstacles we faced…in looking back at all 27 years I coached the Bruins, I wouldn’t put another season ahead of 1959-1960 for what we achieved in that regard. [1]

A nay-sayer of Wooden's greatness might belittle his achievements by saying "he only won so much because he had the two greatest college players of all time, Kareem Abdul-Jabbar and Bill Walton". Of course, and that proves my point. Even John Wooden admits that he would not have won without talent:

The 1959-1960 group just didn’t have the extreme level of talent the championship teams possessed. I've often said that as a leader, I'd rather have a lot of talent and little experience than a lot of experience and little talent. [1]

…on a long enough timeline, returns are driven by people/culture…

If you accept that talent wins. And, as John Wooden proves, talent on top of a disciplined approach (i.e., culture) wins consistently. Then consider this chart [2]:

People/Culture is the ballast of returns. Sentiment, valuation, quick-wins will ebb and flow on the short term and strategies, cycles, markets, themes...these waves will rise and fall. Through those waves, people and culture steady the ship.

If a ballast metaphor doesn’t "float your boat", here is another anecdote. In 2009, at the peak of the Great Recession, someone anxiously asked Warren Buffet how the country could pull out of the recession and return to normal. Buffet calmly said, "Do you know what the best-selling candy bar was in 1962?"…snickers…and, "Do you know what the best selling candy bar is today?"…snickers. People/Culture is the snickers bar which remains through cycles, through industry boom/busts, through mega-themes etc. Guess what, one of the pillars of Buffet's investing is a strong, ethical management team.

…and what of it, strong vs weak link sports

There are two types of sports: weak link and strong link. John Wooden coached a strong link sport – his teams were as good as their best player (i.e., the strong link). In basketball, if you have Lebron James or Michael Jordan you will undoubtably be very good. Soccer is a weak link sport – teams are as good as their worst player (i.e., the weak link). One goal can swing a game, and this typically results from errors by your 9th, 10th or 11th best player. Even if you have Messi or Pele, the 10th and 11th best players on your team disproportionately affect success. [3]

There is an overwhelming volume of articles and courses on retention, team building etc. I only have one point to get across which could bring clarity to the chaos:

• I think business is a strong link game. So, focus on the critical few (say 5-10%) of the company and align them to strategic value and culture carrier roles.

This McKinsey article is very good if you care to read more. Companies that align talent to value vs org hierarchy are 2.2x more likely to outperform competitors:

Is Venture Capital a strong or weak link game?

I wonder if venture capital is a weak or a strong link determinant of success. I've mostly seen firms base investing philosophies on founders alone (i.e., they make strong link investment decision). However, when teams are very small (think the founding team of Google fitting in one garage) and competition is extremely fierce (there is no room for error or the companies dies)…that is probably a weak link determinant of success, like soccer where one mistake drastically swings an outcome. I would be curious to read more if anyone knows of weak link arguments for VC.

[1] Wooden On Leadership

[2] Shout out to the book, The Rebel Allocator by Jacob L. Taylor, which was the inspiration for the returns chart. In my opinion, The Goal : Lean :: The Rebel Allocator : Investing.

[3] Revisionist History podcast, episode My First Hundred Million