Coach Thompson used to always say that there’s two things to do: ‘make shots and guard your guy’.  If you do those two, you’re going to be in and win a lot of games.  Let’s go over the ‘making shots’ aspect of their team today by looking at three subtle things that Cornell does well on the offensive end.

• Know thyself – Each guy on the Cornell team knows his strengths and weaknesses.  And each guy knows those of the guys around him as well.  Dale gets the ball when something needs to be created.  Wittman spends half his life running off of screens.  Foote owns the block and clears out to set picks wherever needed.  Wroblewski (quite a good player though he might not show up in the box score as such) provides whatever is needed in the guard spot.  And any of they squadron of boys who assuredly spent half their offseason doing bicep curls in the weight-room come in, hustle, grab rebounds, and stand prepared to either pass or shoot immediately.   Each guy knows what he does, and does just that.  Contrast that with the Harvard team.  On that team, each guy is still figuring out how he fits in.  For example, Kyle Casey is a beast on the block, but he still spends a good portion of the game floating on the wing.
• Space the court – It’s a mark of a good team that the players away from the ball know where they need to be to open up the court for both themselves and others.  Let’s give a concrete example of how this actually manifests itself.  When Cornell guys drive the middle, the last man  stays in the corner ready to shoot.  This forces the defender to make a choice to help (it helps that Dale and Wroblewski can beat their men) or stick with the shooter.  Either way, it leads to a wide open shot for Cornell.  When Harvard guys drive the middle, their shooter slowly creeps up to the wing.  One defender can jab to stop the drive and get back to contest any shot on a kick.  You think open shots are easier than contested ones?
• Move the ball – The ball zips.  Each Cornell fellow who caught a pass already knew where they were going with it.  The beauty of this is that they slowly, throughout a possession, gain an advantage.  The first move in the offense gives a slight advantage though help-side stops any scoring position.  But with Cornell, the second pass comes before the defense can reset and get into good position and the advantage is widened.  These small gains add up into something bigger and by the 3rd or 4th pass, someone either has an open shot or an opportunity to play one-on-one with the help defense out of position.  It’s the mark of a team that knows what it wants to do.  Contrast that with Harvard’s guys.  Each guy went into the triple-threat when he caught the ball.  While that’s all well and good fundamentally, it takes time and gives the defense time to get back in the right position.  That 0.2 second advantage that is now lost.  Every shot becomes contested and every drive is into multiple people.  Again, a difference between an easy shot and a tough shot.

All of these are the mark of experience.  Harvard will get there (I’m an Amaker fan), they’re just young right now.  These little things come from playing together, growing together, and getting better together.  And as we can see, these little things add up to something much bigger.  They add up to half the equation.  Together, they come to a team that just makes shots.  It’s that simple.  Look at the stats.  Cornell is in the top 5 in the country in 3-point field goal shooting and makes (2 and 4 respectively), but isn’t even in the top 50 in attempts. That’s a winning team.

(Hat tip to Coach Donahue for pointing this out in his post-game)

Back in early November 2008 (you’ll soon know why I remember the timing so specifically), I hopped on my routine 7:00 am flight from DC to Houston on Monday morning.  After sleeping for the first hour, I woke up and sleepily looked over at the guy next to me.  Being a poker player for so long had trained me to pick up small details and put them together so it clicked in my head that the plane ticket he was using as a bookmark and the book that he was reading were both marked Charles Krause.  Interesting.  If you know me, you’ll be completely unsurprised to know that I immediately struck up a conversation.

Charles, it turned out, was on his way out to California for a memorial of the 30th anniversary of the famed Jonestown massacre (http://en.wikipedia.org/wiki/Jonestown).  He had been the Washington Post foreign correspondent who traveled down to Guyana with Congressman Leo Ryan to investigate, an action that some say tripped the powder keg and led to the mass suicide.  Ryan had been assassinated and much of the rest of the contingent (including Krause and Ryan’s aide Jackie Speier*) had been shot by Jones’ followers.  Despite his injuries, Charles still faithfully investigated the site the next day (after the mass suicide) and filed the first report on the tragedy.  According to Charles, the phrase ‘drinking the Kool-Aid’ comes from the story that he filed.

Now the amazing part of the story is what I learned next.  Kool-Aid was not the drink that was consumed by the Jonestown folk.  The real drink was grape Flavor-Aid, but that didn’t sound as good in the story.  Hence, because of a catchier name, Kool-Aid will live on with free marketing while Flavor-Aid languishes wherever it currently is (when’s the last time Flavor-Aid ever came up in a conversation?).  Obviously it associates them with a negative event, but even so, how much do you think Kool-Aid would have paid for that type of enduring publicity?  It makes you think of the famous PT Barnum quote (“I don’t care what they say about me, just make sure they spell my name right!”), doesn’t it?

*- In a fascinating part of the story, Speier eventually became the congresswoman the same district.

For example, he says, what already collected data can be used to better predict which students will drop out of high school (it turns out that absenteeism and failing grades in Math/English will predict the vast majority of drop outs).  He then looks at designing systems such that they give a warning when they’re not working correctly.  The ingenious example that he uses to prove his point comes, ironically, from Van Halen.  Their policy for how stages/concert halls needed to be set up was an intricate and complicated procedure that, if not done right, would throw everything off.  Given that their procedure needed to be followed to a T, they wrote all the detailed instructions into the contract.  Hidden in plain view within the contract was a policy they had that there always needed to be  bowl of M&Ms backstage that contained NO BROWN M&Ms.  It sounds like a prima donna move at first, but a more detailed look shows it as clever operational monitoring.  The story goes that if they found brown M&Ms in the bowl, they immediately knew that the rest of their procedures hadn’t been followed without having to check every single piece.  Brilliant!

So what other spheres could something like this work?  I suppose whenever there’s an overly complicated procedure that needs to be done exactly right, creating a ‘canary in the coal mine’ to look at will help improve the operational effectiveness.  I’ll have to do some thinking to find other areas that this will work.

On at least one front (marketing) this young start-up is giving local companies a fighting chance.  By buying generic domain names and selling them to companies ONLY in their local area, they provide access to the best domains for companies that wouldn’t have the budget to even consider them before.  What does this mean?  Let’s consider two mechanics, Corky and Fred, who both own their own repair shops.  Corky lives in Buffalo and Fred lives in Seattle.  Rather than housing their material on “www.corkyslocalcarmechanicandrepairshop.com” and “www.fredsseattlebasedautomechanic.com” and losing out on all internet traffic to the national owner of “www.autocenter.com”, they can each now rent “www.autocenter.com” within their metro area.  How cool is that?  It’s an opening of a local wide web. What will come out of this?  Hopefully, the ability for small businesses to more aptly compete.  There’s something to be said for the huge company and the quality that they give you.  But I’d like my city to have space for the little guy too.  After all, Corky does a great job and sure knows my car, even if the internet doesn’t know him too well.

He told The Wall Street Journal at that time that his research would “be focused on sustaining and growing our brand however possible. A brand with goals like ours requires a big capital investment.’’

On Friday he said he decided to close the restaurant for good because he and his partner, Juli Soler, had been losing a half million Euros a year on the restaurant and his cooking workshop in Barcelona.

I remember having a debate about whether Adria was a shrewd businessman or not, and I was firmly in the former camp. This move has left me terribly confused. The acclaim that he garnered with the restaurant wasn’t the sort of thing competing chefs could just replicate. Through luck, skill, or both, he had the perfect location, an outstanding staff, a revolving door of incredible sous chefs (willing to work for free!), and an unmatched mystique. The restaurant was worth every bit of those half million dollars, and Adria’s other ventures benefited tremendously from El Bulli’s existence. It would be a shame if he thought it had to be a profit center.

Is his brand cemented to the point that he didn’t need elBulli? Will the culinary academy create the same mystique? I suppose those are his bets, and I’m not optimistic. It won’t take too many Ferran Adria-designed Lay’s Potato Chips to destroy the elBulli halo. And considering the size of elBulli’s waiting list, why not just do the obvious … raise the price? Consider me puzzled.

I stepped out of line and heard music to my ears: “Shoe man here!  Come get shoes!”  Standing in front of me was a disheveled guy yelling out to the line.  Of course I walked over.  ”You need shoes, big guy?”, he asked as I sauntered up. “You better believe it.  Let’s see ‘em.”, I responded.  He took me to the back of a Tahoe that was parked on the street and yelled at his friend to open the back of the truck.  Fascinated, I peered in.  No less than 10 pairs of shoes were in a tupperware crate in the back.  We searched through together and found no shoes larger than a pair of 10 1/2 loafers.  ”Wait!”, he exclaimed and took off his backpack and poured out 4 more pairs of shoes.  Again, no luck.  Now this guy was not one to lose a sale for the simple reason that he didn’t have the right product.  Thinking quickly, he said “Use this, but be careful, it’s sharp.”, and handed me a very sharp knife.  Apparently I was supposed to cut the side of the loafers and squeeze my feet in Akeem Olajuwon style*.  We’ll mark this up as things that sound like a good idea after the sun goes down.  I went to work.  As I cut the sides, my salesman had already turned away from me and was trying to fanagle a tip by flagging down a taxi for an older woman who had just finished dinner.  Always working!!!

Anyways, I cut the shoes, paid the man, and set off to squeeze my feet into the too small shoes and make it into Gypsy.  It was certainly the start of a great night!

The thing I’ve left out of the story so far is the pricing aspect, and it’s there that I believe you find who’s truly making money here.  When I asked him how much, the salesman quoted $20.  ”I’ll give you $10″, I responded.  At that point, through a mix of the alcohol and the need to make a sale, he let me know that the guy whose car he was using as storage took $10 out of every purchase so he would be losing money if he sold it that cheaply.  A couple of rounds of negotiation (and a little bit of yelling) later, the price was back at $20 (don’t negotiate too much with drunk men on the side of the street) and we went from there.  However, isn’ t it telling how high his cost of storage was? Beyond having to pay for the shoes, he was also losing half of his top-line revenue IMMEDIATELY to the guy who just gave him a trunk to put the product.  That’s the true entrepreneur and the job to have.

*- The story goes that when Akeem was growing up in Africa, they didn’t have shoes bigger than 13s so he had to squeeze his size 18 feet in them until he came to America.

You’re right. We are absolutely a rule-based society. The question is why, and are we better off for it?

I think that it’s a natural human tendency to create rules, even if strong principles exist. There are some actions that are so clearly unacceptable to a society that there’s no reason not to codify them. Don’t kill people, for example. It certainly fits under my common sense umbrella, but common sense varies and we don’t want ambiguity on this issue. So we make a rule.

The US absolutely started off principle-based (The Bill of Rights) and, over the course of two centuries, we’ve built an enormous set of rules on top of that foundation of principle. I think this is simply inevitable – when enough people think a certain behavior is intolerable, and that behavior is potentially defensible under the principles, we make a rule. Luke, I bet you anything that IFRS (the international, principle-based accounting standard) eventually becomes rule-based as people manipulate or misbehave within the principles.

Now, are we better off with rules? At heart, this is a principal/agent problem (principal vs. principle … this could get confusing!) For a government, or a business, or any organization to function properly, the principal needs confidence that the agent will act in his or her best interest. If principles are sufficient to create that confidence, I’m on board. I think the story of human history indicates that principles are not sufficient – you need rules and enforcement, and the right rules can build confidence. Even though I think most people are fundamentally good, it doesn’t take too many bad ones to destroy our collective confidence in agency arrangements.  Without trusted agency arrangements, we’re limited to very small organizations. Your Rule of 150 post illuminated this well.

I acknowledge the possibility that we can build the wrong set of rules, even if we get the principles right. Revolution also appears to be a recurring human tendency. With every revolution, we wipe out the rules and reassess the principles, and the cycle starts again. It’s not a bad thing. Ultimately, rules are not perfect but principles are not sufficient.

Looking merely at the side of law relating to business, our legal system is one of the most active in the world.  We legislate and litigate everything.  The law is prescriptive and concrete (or is made concrete by rulings) and then people and companies do their best to find ways around it.  This causes there to be an uproar for more laws (or litigation) as one group or another (customers, shareholders, employees, etc.) feels wronged and slowly but surely, every action is either classified as illegal or else unclassified and thus presumed legal.  This is in stark contrast to a principle-based landscape where an initial principle is laid down and folk are expected to follow it in good faith.  The benefit of our system is that there is (usually) clear guidance from the government about how they expect you to act.  Further, the government provides a level of regulation that, in theory, protects all parties from any societally-deemed wrongdoing.  The costs of it are the added bureaucracy needed for compliance (not insignificant), the bloated legal and auditing industries, and worst of all, the fact that trust is placed in the gov’t and enforcement bodies rather than in other members of society.  Parties become dependent on the law (not personal relationships) in order to trust others.  Is this a society that we want to live in?  One where rules are constantly prescriptive as to our behavior all to mitigate (or shift) risks?

This type of society has one other tenet that scares me immensely.  Namely, the fact that laws, once enacted, and a culture without trust in each other, once formed, are extremely difficult to undo.  Once a law is on the book, it stays because any attempt at repealing it would shift risk from the gov’t to individual actors (Analogy: Imagine a law outlawing swim pools got past.  It would be EXTREMELY difficult politically to ever roll it back because if anyone EVER got hurt in a swimming pool after that, it would be political death for whoever rolled it back.).  So we continue along the line of more and more regulation and eventually we create a society where it’s members refuse to take risk (any wrong can just be sued for), no one trusts each other, and the costs of complying with regulation becomes our main use of time*.  Does that sound like where you want to be?

*- My buddy who was in London after Sarbanes-Oxley was passed told me the nickname that they used in the UK for the legislation.  They called it “Guaranteed Employment for Accountants”.  Great.  Let’s throw money down the drain with more and more auditors.

The captains are doing an incredible job of leading the team.

Whenever I go to a game, I like to watch the players’ eyes.  Who do they look to?  Does the coach centrally impose his authority and thus have his players always glancing at the bench?   When the coach isn’t talking to them, do the players talk to each other?  And when times get tough, do they glance around in a rushed way, or do they remain confident in themselves?

This team, more than anything, plays with a knowledge of who they are and a confidence in that.  They play hard.  They communicate.  They care.  On the court, it starts with Marcus Schroeder.  He pulls the guys together, gives them direction, and does all the little things that a leader uses to set the tone.  On the bench with his injured knee, Nick Lake provides the same guidance to the younger guys on the team.  Always retaining his focus, he doesn’t tell the bench how to act.  He shows them every play in so many little ways.

Last year, I went to a fair amount of Georgetown games (Go Hoyas!!!), and though they were talented, they were lacking that bit of leadership from the players.  Every single player looked at Coach Thompson in between every play.  At the beginnings of timeouts, the players would sit not talking and wait for coach.  (I have theories on why this was and maybe I’ll get into them some day, but this is not the post for that).  On the other hand, this Princeton team was talking the whole time.  Marcus would point out something he saw to the guys on the court.  Nick would stand behind and whisper something he had picked up while watching.  In their own ways, Marcus’ overt and Nick’s covert style make this team a team. It was wonderful to watch.

The two-headed monster is a nice fit for the block.

With Pavel playing 22-28 minutes/game and Zach Finley playing 12-18 minutes/game, Princeton has a locked down center position.  Pavel’s intelligent decisions and length on defense set the tone for a patient Tiger team to impose their will on the pace of the game.  At no point did he or the Tigers look rushed or tempted to get into an up-and-down game with Harvard.  Zach, likewise, played his role off the bench quite well.  Jumping up with enthusiasm and running on and off the court, he gave a burst of energy and a new look to the team.  Most impressively, both guys have embraced their roles and teach the young guys a lot about maturity.

These young guys are good!

Between Kareem’s abundant athleticism and Hummer’s raw strength, these guys have game.  Straight up.

The coaches have built a culture of caring.

The one word that comes to mind when watching these guys play is simple: “Care”.  Every single person on that bench cares about how the team does and that’s it.  On offense, cuts are hard (and golly if only they passed it to the of those cutters who are open late… tell ‘em you’re open, Saunders!) and passing is usually crisp.  On defense, every player is locked in (usually with their hands up) and ready to make everything difficult for the other team.  I’d venture to say that the mistakes that they make are actually mistakes of ‘caring too much’.  Helping out a little bit too much when someone’s beat leaves an open three pointer, diving for a loose ball and getting out of position… these are mistakes that any coach can live with.  They’re comfortable with who they are, they’re confident in what they do, and they care about what they’re doing.  The attitude of the coach permeates through the team.  It has happened.  These guys may not be the most talented team in the world, but I can guarantee you that they will go down fighting.

I’ll always remember that one of the most important lessons I learned during my college basketball career was to never make a mistake because I didn’t care enough.  It has nothing to do with the other team or anything else out there.  It has to do with you and how much of yourself you’re willing to put on the line.  These guys have learned that lesson.  It’s a joy to watch them play.

But what’s the line between cultivating favorable expectations and lying? Expectations clearly have an impact on economic activity, but lowered expectations are more of a symptom rather than a cause of economic problems. You can easily imagine the danger if a government gets this backwards. If expectations are so critical, should a government that fears recession put out intentional misinformation and economic propaganda? It may be putting its own credibility and some of society’s important institutions on the line, but is that worth the trade-off?

Keep in mind that official statistics like GDP, inflation and unemployment stats are compiled and published by government agencies. People and companies have enormous trust that the government will give them truthful information, and their economic activity depends on that information. Is official misinformation OK for a better end? Can you even ensure a better end, or do you just postpone an inevitable recession?

“Economic propaganda” seems like an alarming term, but it’s something we all need to watch for. The bank stress tests from last May (which every bank passed!) and the rather frequent GDP restatements in many countries (typically downward) come to mind. Bill Gross, the PIMCO luminary, has stated that the US government understates inflation, and that investors should not pay attention to the official numbers.

Call me crazy, but cultivating expectations is an uncomfortable trend. While there may be a short-term boost to spending and asset prices, people and companies need accurate information if they are going to make productive economic decisions in the long term.