Management Lessons from the Golden State Warriors
How - in just five years - did the Warriors go from a joke of a franchise to one of the best teams in basketball? It's about people and culture, says Filip Caeldries in this blog.
“I pick people. That’s what I do for a living – 30 years”. (Joe Lacob)
“Culture was our business plan”. (Peter Guber)
On July 15, 2010, Joe Lacob – a seasoned Silicon Valley venture capitalist – together with his partner Peter Guber – a hugely successful media executive – agreed to buy the Golden State Warriors NBA basketball team for $450 million. The Lacob-Gruber team won out over a dozen other bidders, including Oracle CEO Larry Ellison. The $450 million price tag beat the previous record of $401 million for the 2004 Phoenix Suns purchase. Many thought the $450 million price tag was an overpay. Clearly, the Warriors-on-the-court performance didn’t really justify the price tag. The team was 25-56 and coming off a stretch of 14 losing seasons. One columnist described the Warriors as “they suck every year, they always screw up, but at least they have great fans” (Simmons, B. 2015)
Later that day, Lacob commented on buying the Warriors.
We’re all about winning. We think it’s a very good opportunity as a business enterprise and the potential is there. But this is all about winning. We’re going to change the course of the franchise.” (Thompson, 2010).
A couple of days later, Lacob was introduced to the home crowd and noticed the Warriors’ 1974-75 NBA championship banner. His ambition was clear, he wanted another one.
On June 16, 2015, The Golden State Warriors won game 6 in Cleveland (105-97) to win their first NBA championship title in 40 years. Five years after his successful bid to buy the Warriors, Lacob had his banner. Earlier that year, Forbes valued the Warriors franchise at $1.3 billion – nearly triple the purchase price.
How did he do it? How - in just five years - did the Warriors go from a joke of a franchise to one of the best teams in basketball?
Once Joe Lacob had bought the Golden State Warriors in 2010, he did what he had always done as a venture capitalist. He took a little time to observe the operation. Then he blew it up.
“I spent six months doing what I’d do with any startup company. I spent six months looking at things, and realized I didn’t have the right people here.” […] “We tore it down and built it back up.” (Saracevic, 2015)
For Lacob, it’s all about people. The Warriors were not going to become a winning team without having the right people on board.
For example, Lacob realized he needed better talent in the front office, so he got the most famous executive in the game, Jerry West (a two-time NBA Executive of the Year winner). He needed a new GM, took a huge gamble and hired the untested Bob Myers1. He wanted to strengthen the business side of the Warriors’ operations and hired Rick Weltz (the former CEO of the Phoenix Suns and a winner of the Marketer of the Year award) to become the team’s COO. Seven of nine VPs were changed in a two-year period. He wanted the team to get bigger, so he traded Monta Ellis - his best player at the time - for an oft-injured Aussie named Andrew Bogut. Shortly after trading Ellis, Lacob was booed by 20,000 Warrior fans. But the Ellis trade worked out beautifully. The Ellis departure opened the door for Stephen Curry to flourish. Bogut ended up giving the team much-needed toughness and his presence also attracted other high-profile players to round out the roster.
In an interview one week before winning the NBA championship, Lacob made the following observation.
“We really hit it out of the park. You can attribute it to a little bit of luck. Or you can attribute it to the people we picked.
“That’s what I do for a living — 30 years. I pick people.” (Saracevic, 2015)
One of Lacob’s most controversial people changes was his firing of Warrior coach Mark Jackson. Judging by the numbers, Jackson was doing well. After making it to the post season only once in the previous 18 years, Jackson lead the Warriors there in all consecutive seasons. And yet he was fired. Jackson was replaced by Steve Kerr, a former TV analyst with a great playing career but with no coaching experience.
In a December 2014 speaking appearance before venture capitalists in Menlo Park, Lacob commented on his reasons for firing coach Mark Jackson.
“[Kerr] did the one big thing that I wanted more than anything else from Mark Jackson (that) he just wouldn't do, in all honesty, which is hire the very best.”
"Carte blanche. Take my wallet. Do whatever it is to get the best assistants that are in the world. Period. End of story. Don't want to hear it. And (Jackson's) answer ... was, 'Well, I have the best staff.' No you don't. And so with Steve, very, very different."
"You can't have a staff underneath you that isn't that good. And if you're going to get better, you've got to have really good assistants. You've got to have people that can be there to replace you. We all know this from all of our companies. It's ... Management 101”. (Leung, 2014)
Lacob’s approach to people management echoes one of Jim Collins’ main conclusions in Good to Great. All executives who ignited a transformation process from good to great first got the right people on the bus and the wrong people off the bus (Collins, 2001). Once Lacob and Guber had the right people on board, the problem of how to motivate and manage them largely went away. The right people don’t need to be tightly managed or fired up. Typically, they will be self-motivated by their inner drive to deliver and to be part of creating something extraordinary. And that’s just what the Warriors did. They created something extraordinary.
Every organization has a culture. But too many have a culture of failure. They have a culture that fails to inspire employees to do the best they can. For the Warriors to become a championship team, it needed a culture that made it possible to become first-class.
Schein (2004) characterizes culture as “… a dynamic phenomenon that surrounds us at all times, being constantly enacted and created by our interactions with others and shaped by leadership behavior, and a set of structures, routines, rules, and norms that guide and constrain behavior” (2004, p. 1).
Clearly, Lacob and Guber saw themselves as key architects of the ‘new’ Warrior culture
“You have to build a culture that is respectful. We didn't want any bad guys in the locker room, or in the organization. When I took over, we cleaned out everything”.
“We need a culture established here, which is if you're not respectful, you don't want the same things we want and we don't want you here. We got rid of a lot of people, but we have a great group of people now in the front office, a great group of guys on the court. There isn't a bad guy in that locker room. We've built a culture with the organization that I feel is second to none around the league.” (Weisberg, 2015)
During an interview on Fox Business (2015), Guber was asked how he and Lacob had transformed the Warriors from a group of “underperformers” to a winning team. His answer was clear: “Culture was our business plan.” Guber added: “When the chips are down, the soft stuff matters”. (Fox Business, June 18, 2015)2.
On 2012 – after the Ellis-Bogut trade – Warriors owner Lacob was nearly booed off the court. At the time, a notable columnist published a blog (How to annoy a fan base in 60 easy steps, Simmons, B. 2015) outlining the 60 reasons why Warriors fans weren’t exactly in love with the new owners.
Said Lacob the day after winning the NBA championship: “Now he should write something about the 60 ways in which we’ve improved the team” (Lowe, 2015).
Collins, J. (2001) Good to Great: Why some companies make the leap … and others don’t, HarperCollins, NY.
Fox Business (June 18, 2015)
Leung, D. (2014) https://www.mercurynews.com/warriors/ci_27078013/warriors-co-owner-lacob-lists-reasons-firing-mark
Lowe, Z. (2015) https://grantland.com/the-triangle/the-champs-are-here-a-guide-to-the-elite-and-unlikely-cast-of-characters-who-defined-the-2014-15-golden-state-warriors/
Saracevic, A. (2015) https://www.sfgate.com/warriors/article/Owner-Joe-Lacob-rebuilt-Warriors-with-Silicon-6311704.php
Schein, E. (2004) Organizational Culture and Leadership (3rd Ed), Jossey-Bass, CA
Simmons, B. (2012) https://grantland.com/features/how-annoy-fan-base-60-easy-steps/
1. On May 1, 2015 it was announced that Bob Myers was voted 2014-2015 NBA Executive of the Year.
2. Interestingly, Dan Gilbert, the owner of the NBA Finals losing team (The Cleveland Cavaliers) seems to agree about the importance of culture. Argues Gilbert in an interview with Warriors owner Lacob: “Culture drives everything. It drives every single thing that happens.” (Chat Sports, 2015)
Beeld: © Flickr/Nikk_la