Imagine for a moment that you aren’t a coach, but instead the CFO at Ford Motor Company. You’re looking over the spreadsheets because that is part of your job and see a “frivolous” expense that you can easily cut to save the company 1 million dollars this year.
Any rational human being would say “wow, great job, you just saved us money that can’t be spent on maybe giving some of the sales managers a bonus or allocated somewhere else.” You might even be given a bonus yourself for making such a “smart” money move. But here are the questions most aren’t asking…
What are the hidden costs of that one decision?
By making things logically better, did you just make them psycho-logically worse?
How the heck does this have anything to do with being a better coach you ask… Let us lay some more foundation and then connect things back to coaching.
Start with Alchemy
If you’ve read the intro and Rory Sutherland popped into your mind, you’re ahead of the game. If not we are going to link his book and the video that inspired us to write this at the end.
For those that don’t know, Rory wrote a book called Alchemy in 2019 that makes the argument that the world we live in is becoming overly rational. We are cutting costs on a spreadsheet only to find out much later that cutting costs has a hidden cost that affects the most important people on our teams, the workforce or in our situation, the players.
A great move in the first order has 2nd and 3rd order effects that harm the system. Let’s give a quick example building off the first one.
Let’s say at world headquarters where you’re CFO of Ford, your personal office is on the 4th floor of the building. Every morning you have the choice to either take the stairs or get in the elevator. In the first order, taking the elevator is faster, less physically demanding, and more efficient because the elevator is right in front of your centrally located office on the 4th floor and the stairwells are at the end of the hallways.
In the first order, you rationalize all of this and decide to take the elevator because you’re thinking logically and love efficiency(you’re CFO)
But in the 2nd order, taking the elevator every day has hidden costs. Most CFOs like yourself work too much and are always at the office. You don’t “have time” for the gym because you’re too busy trying to save the company money. So deciding to not take the stairs is missing out on your only chance to get a micro-workout in.
Your legs don’t get stimulated and your heart doesn’t get elevated day after day as you continue to take the elevator for 20 years. Your average health negatively compounds year after year until you’re now forced to take the elevator due to being too physically out of shape to take 4 flights of stairs.
What used to be a choice, has now become a mandate. You’ve lost some freedom to choose because you didn’t account for the 2nd and 3rd order effects of making a simple choice. The hidden cost of declining health comes from your idea to save time and be comfortable every single workday of your life.
It’s easy to look at a spreadsheet and cut costs. It’s even easier to take the elevator. It’s fun to feel smart and do something because it’s the most rational thing to do. But there are hidden costs to saving money or time.
What is Cost Reduction?
Cost reduction is objective and visible, which makes it easier and more accessible. It is looking at a spreadsheet and decreasing expenses from $10K to $5K. We “accomplished” something and feel proud/satisfied as a result of our efforts. In short, cost reduction is intuitive, obvious & feels good. Decision makers (coaches) love the quick dopamine hit doing something that is obvious, measurable and feels good. We can see the “result” clearly. But as we stated, the pursuit of cost reduction has hidden costs. There is unseen value lost with a decision to cut something you can see. We don’t want to decrease value, we want to keep it or create it.
The opposite of this is value creation.
What is Value Creation?
Value creation is subjective and less visible, sometimes even invisible to outsiders. This makes it harder to measure and observe. There are no spreadsheets that will neatly show value creation.
Instead, this is a process that requires “boots on the ground” within the organization/team. We must invest in making those around us better as a way to lift the whole group. Although this process is likely more rewarding in the long run, it is not going to give us that instant dopamine rush that a cost reduction will.
In short, value creation is subjective, hard to see from the outside & takes time to cultivate. In the following example, we will connect all of these concepts. Where coaches are losing the forest(creating value) for the trees(getting the instant gratification of cutting costs) and the hidden costs associated with the cost reduction decision.
How This Applies to You
We tee up our next example with a tweet from strength coach, Grant Jenkins:
Quite the paradox here. As coaches, the thing we don’t like about the player is the cost we seek to reduce. If our player roster is our version of a spreadsheet, we’d like to see that player removed from our roster as quickly as possible. In junior hockey, we might try to trade them or if all else fails, cut them. In college hockey, coaches may opt to scratch the player a lot, not connect with him on a personal level, and hope he opts to transfer.
However, in our efforts to dampen the behavior we don’t like, we miss out on the upside value that same behavior or performance quality creates. Let’s take a look at how Mikhail has navigated a situation like this.
The 2nd Order Effects of “High Compete”
A player Mikhail has coached fits into Grant’s paradox almost to a T. We’ll call this player “Chris” for the sake of anonymity. Aside from Chris’ skill and talent (which he has plenty) what separates him at the junior/college level is his intense competitive spirit. He fits the axiom that we, as humans, hate to lose more than we love to win. As a dynamic forward, there is nothing that excites him more than scoring goals in the pursuit of winning. When he scores, whether it’s to go up 1-0 or 6-0, his emotions are the same. He goes nuts. This is what makes him great, he just wants to win and he will compete at extraordinary levels to accomplish his goal.
Now for the flip side…
Sometimes this same competitive spirit makes it difficult to coach Chris. When he is in what I (and Fergus Connolly) like to call the “game frame” he is susceptible to being highly irrational. For example, there are instances where a coach is noticing something he is doing that is not working so far in this game, and has an idea of how it might be done better. Good-intentioned as this is, Chris sometimes struggles to see the intentions of his coach and views it as a personal attack. It’s almost like his game frame mindset makes him see this situation as another competition - him vs the coach(es). This can make it hard to navigate in-game feedback and situations.
However, take Chris out of the game frame context and discuss these same ideas/suggestions the next day, and he’s completely receptive and views it entirely differently. What makes Chris so successful at this level, is also what poses challenges when it comes to coaching him. As coaches, we must nurture that competitive spirit and recognize how we can approach him effectively both in the game frame and out.
Coaching CTA: See the Unseen
If you want to gain an edge as a leader, understand there are hidden costs to your decisions. A New Wave Coach is aware of the 2nd and 3rd order effects. He doesn’t just see the rationale for his decision as simple as throwing a stone, he thinks about the ripple effect the stone being thrown will create.
In order to see the forest and the trees, coaches should do their best to weigh all costs when making decisions. Even when something seems relatively straightforward, there are often ripple effects that may not be so obvious. Being aware of these effects allows us to make decisions with more clarity and conviction. This is something we believe all coaches can and should start thinking about today, and every day moving forward. See the unseen.
This has been a co-written collaboration with Mikhail Bryan. Click this link to check out his work.
Help drive attention to his work by interacting with our tweet:
P.S. You can go further down these rabbit holes by checking out the video that inspired this article and the book that dives deeper on this topic. Also, there’s a part 2 and 3 of our series coming.
Rory’s Video that inspired us