Conventional Wisdom

Movie producers are launching more rehashes of older films, comic books, and crappy TV shows...

NFL teams draft players from big football factory programs with great 40 times and tons of bench press reps...

NBA teams roll out predictable strategies and lineups that bring out ridicule for their lack on ingenuity...

I've been thinking about a lot of those examples recently, and particularly how these things relate to each other. In all cases, they seem to present situations where people in unique positions of power choose well-worn courses of action as opposed to novel, and potentially profitable, strategies.

From an outsider's perspective, the lack of ingenuity amongst the aforementioned examples seems stunning. In the past week, I've read pieces from Malcolm Gladwell on the NBA's reluctance to experiment with the full-court press, from ESPN's Bill Simmons on why he would make a better NBA general manager than current executives, and from radio personality/madman Adam Carolla and a movie producer on the extent to which Hollywood lacks creative capabilities.

What is apparent, is that people in these positions are really attached to conventional wisdom, or to put it another way, the way things have always been done. It echoes something Steven Levitt said in our first Experimental Design class, that when he asks companies why they do things a certain (often crazy) way, the first answer is almost always that "it's the way we've always done it"

Why would rational people do this?

In thinking about why these strategies (let's call them conventional as a group) are popular, it seems that the underlying theme across all of them is that first and foremost, they are risk-minimizing. No one ever asks someone why they decided to do something if that thing is the same thing everyone else would've done.

As an example, take the NFL and going for it on fourth down.

As a small cadre of dedicated analysts will point out, NFL coaches are way too scared of going for it on fourth down. In many cases, the coaches will elect to punt (that is, sacrifice possession of the ball for field position advantage) rather than attempt to convert a fourth down. What's maddening is how often this happens when the team is in opposing territory and still decides to kick the ball away.

Why would NFL coaches do this so often (unless you're Bill Belichick, who goes for it all the time) ?

Because going for it incurs a risk of failure, and the possibility of having to explain yourself to the media who demand to know why the coach didn't follow conventional wisdom.

This risk, and the fear of failure, is what causes all these parties to cling to conventional wisdom, because it helps deflect blame and criticism.

I know I know, this is hardly groundbreaking stuff.

But, I was trying to think of why this happens so often, and to the extent that it's prevalent in sports and media, I think it has a fundamental economic explanation.

These people in power, these decision-makers who have the chances to go against the grain and attempt novel strategies, have next to nothing in the way of transferable skills.

An NBA coach, a movie studio executive, an NFL general manager?

These people can't go anywhere else if they get fired!

These are people who have reached the pinnacle levels of their respective industries and who, in many cases, have slaved for years just to get their opportunities.

So, if these decision makers, each of whom's choices are meticulously picked over by the public, try something wacky, and fail miserably...it'd be a long long way down with potentially no way back up.

Marty Mornhinweg serves to partially illustrate this point.

Mornhinweg, currently on the coaching staff of the NFL's Philadelphia Eagles, actually used to be a Head Coach with the Detroit Lions. I'll let his Wikipedia page explain the rest:

"The most notable moment in Mornhinweg's history was his decision to kick after winning an overtime coin toss. Mornhinweg felt that having the wind in his favor was more important for his Lions to win the game against the Chicago Bears. He elected to kick and on the Bears opening drive, Chicago scored a field goal. Mornhinweg's Lions went on to become 3-13 after that game, and prompted fed-up Lions fans to refer to the coach as "Marty Moron-weg""

Since being fired, he's never been a Head Coach again (although he is the Assistant Head Coach in Philadelphia)

But there, in a nutshell, is why so many criticisms of strategy go unheeded.

Just one wrong attempt at unconventional thinking, and you're toast (even worse if they think of a catchy nickname)

If there were lots of professional football leagues, and coaches had realistic alternatives to the NFL(and effectively, lower opportunity costs for taking risks), maybe they'd take some more chances.

But they don't. The same could be said for TV execs, NHL general managers, and probably most corporate CEOs.

To solve such a problem, you'd need to hire people in those positions with certain characteristics. For one, it would help if they had huge amounts of transferable skills. If an NFL general manager could go become the CEO of a major company, he would have less to lose by taking chances because his alternative isn't that bad. You might also be able to achieve a similar effect by finding someone who just doesn't give a damn about money (i.e., is already rich) or personal reputation. The other alternative is to have an ownership group who challenges their manager to take risks (I would argue you see this with both the NFL's Patriots and Eagles, each of whom appear completely willing to trust the instincts of their coaches)

Without such measures, the rest of us will only keep wondering what those idiots in charge are thinking.