Forty-nine years ago, the Philadelphia Phillies baseball team traded its most popular pitcher, Rick Wise, to the St. Louis Cardinals. It was the spring of 1972, and the Phillies were terrible, coming off three straight losing seasons. Dealing away their top pitcher did not strike many fans as, well, wise…and they took a beating in the press.
The point of the story is the name of the player the Phillies received in return for Rick Wise. That pitcher was a young lefthander named Steve Carlton. With Carlton now at the top of their pitching rotation, the 1972 Phillies were…still terrible. In fact, they finished last. But Steve Carlton enjoyed one of the great seasons of all time for any pitcher, and over the next 16 years he remained so dominant that he was elected to the Baseball Hall of Fame in 1994. With Carlton, the Phillies won the World Series in 1980.
Can baseball teach us anything about economics? Consider the words of renowned economist, Thomas Sowell. Sowell said that the mature thinker “realizes that there are no solutions, only trade-offs.”
The Phillies could not simply “solve” their problem (acquiring an ace pitcher). They needed to part with something of value in order to obtain value. The folly is in the tendency, especially in the world of politics, to think in terms of problems and solutions. In life, as in business, we often become confused by this. Most problems do not have clean solutions. The business of addressing problems – and implementing change – often requires difficult choices that are painful in the short-term. Why? Because those choices involve trading one good thing for another good thing.
Think about this in your business today. When have you ever had an important decision to make, and found that it was obvious all along? My guess is never, because the Latin root words for “decision” literally mean “to cut off.” A decision is always a tough trade, not a surrender to the obvious. The question is, what are your decision-making methods in your business? What metrics do you use, how do you develop those metrics, and how do you know if they’re accurate? Talk to your trusted advisor about this.