two opposing american football teams
What firms could learn from American football teams about effective decision-making.
Be it a firm or an American football team, their main goal – attaining profitability or winning a game – is often supported by various sub-goals. For firms, these sub-goals include productivity and growth; for American football teams, they range from advancing the ball to scoring a touchdown.
Prior researchon firms has produced a somewhat depressing conclusion about organisational decision-making: It’s not unusual to see executives pursue the firm’s primary goal to the exclusion of other goals, including sub-goals. That seems like slightly less smart behaviour than we would like to see.
In ourarticlepublished in the Journal of Management Studies, my co-author Xavier Sobrepere (Tilburg University) and I investigate the interactions and interdependencies between primary and sub-goals, and whether it’s possible to make smart trade-offs between them. We do this by examining the decision-making behind the runs, passes and interceptions of the United States’ most popular sport: American football.
Making smart decisions
What does smart decision-making look like in practice? We usually take it to mean that there is a situation with specific goals to fulfil and certain constraints and risks to consider. The decision-maker weighs these factors carefully and comes up with a choice that offers a good chance of fulfilling the main goal, and preferably other goals as well.
American football is a prime example of this and offers parallels to the conditions faced by executives. While firms may not encounter the same scenario of going head-to-head with an opposing team, organisational decision-makers must deal with similar primary and sub-goals, actions that can help them accomplish these goals and risks associated with each action.
For American football teams, the primary goal is to win the game, and a sub-goal that helps achieve this is advancing the ball. The risks and constraints are that the opposing team can stop runs, intercept passes, prevent pass completion, sack the quarterback and so on. The offensive coordinator calls the play, but the quarterback can modify it either before or after receiving the ball when observing the opponent’s defensive formation, as well as the offensive and defensive movement of their own team. The sub-goal of advancing the ball towards the opponent’s goal is important, but it is scoring more points than the opposing team that ultimately matters.
These risks and the associated rewards are why many people enjoy watching the sport, in addition to the spectacular athletic performances on display. But how do the teams’ decision-makers determine the actions they take, and can they execute smart trade-offs between primary and sub-goals in the heat of battle?
Navigating primary and sub-goals
We analysed teams’ play selections in 2,304 National Football League (NFL) games between 2009 and 2016. Specifically, we looked at regular-time pass-or-run decisions in the second and third downs (attempts to advance the ball by 10 yards or more towards the opponent’s goal line).
We wanted to see how the teams’ decision-makers adjust risk-taking in response to their position relative to the primary and sub-goals. The hierarchical goals model, which informed our research, suggests that the pursuit of each sub-goal occurs, and is adjusted, depending on the performance feedback for the primary goal and the actions that contribute most to fulfilling it.
Decision-makers in this scenario face clear trade-offs that may at times produce conflicting demands. They must also work towards accomplishing these goals by a firm deadline. For example, a team losing by 10 points may be incentivised to pass the ball as a response to performance feedback on the primary goal (a 10-point deficit is a strong motivation to scoring quickly). However, there may simultaneously be only one yard left to achieve the current down. The team may therefore be incentivised to run, instead of pass, to secure possession of the ball and further opportunities to gaining yards.
Our results showed that NFL teams’ decision-makers make intelligent trade-offs between primary and sub-goals that are effective for winning games. Specifically, we found that teams were less responsive to performance shortfalls from the primary goal (winning the game) when a sub-goal (advancing the ball by 10 yards) demanded urgent resolution. On the other hand, teams were more likely to make decisions in service of winning the game rather than responding to sub-goal shortfalls when the latter’s deadline wasn’t imminent. But as the sub-goal’s deadline approached, they prioritised addressing sub-goal shortfalls over shortfalls in the primary goal.
What firms can learn
Though often seen as secondary objectives, sub-goals are important because they come before and are instrumental to the main goal. This makes organisational responses to primary and sub-goals interdependent in interesting ways. By demonstrating American football teams’ responses to shifts between the demands of primary and sub-goals, we highlight a more sophisticated approach to multiple goals than earlier studies on firms suggest.
Our findings suggest that when problem-solving for the primary goal is activated, responsiveness to the sub-goal decreases when it does not require urgent resolution. However, responsiveness increases when the sub-goal requires urgent resolution, even if this implies temporarily deviating from the demands of the primary goal. This is an example of sophisticated decision-making and how the prioritisation of goals changes in response to the context and performance feedback.
We argue that a clear structure of primary and sub-goals is essential for firms to engage in effective decision-making when facing adversity. Deadlines for sub-goals are also important. Short and definitive time constraints produce a sense of urgency that drives rapid action, helps focus attention and can facilitate innovation and change. For instance, when the primary goal of profitability is disappointing, executives can examine which sub-goals fall short and appear fixable. They can then devote resources to finding and implementing solutions to address this.
What does this look like in practice? Investing in R&D is a plausible response to profitability shortfalls in the pharmaceutical industry. Alternatively, firms may first improve existing products that are underperforming by focusing on production costs, product placement or other sub-goals experiencing shortfalls. In such cases, not finding substantial increases in R&D investments does not necessarily imply a lack of response to shortfalls. Perhaps firms are simply reallocating resources to prioritise the resolution of other sub-goals that can offer quicker results than long-term and uncertain R&D investments.
Who comes out on top?
So, are quarterbacks more capable at making smart trade-offs between primary and sub-goals than CEOs? Some may argue that sports teams have an edge over firms because they execute their plays countless times in practice, meaning they have more learning and experience embedded into the decisions they make on the field.
Another way to look at it is that executives are equally smart – we just haven’t observed it. It’s difficult for researchers to identify exactly how different goals are ranked into primary and sub-goals in firms, and it is especially hard to find goals that have a sequence as natural as we see in American football – where first downs come before scoring, and scoring comes before winning. Firms are far more complex and interdependent, which makes analysing decision-making much more difficult.
Our findings are an early indication that organisations can rank multiple goals hierarchically and switch between addressing primary and sub-goals depending on the need. Future research could examine how this plays out in the business arena. Indeed, if it is possible to show sophisticated decision-making in the pursuit of primary and sub-goals in a sporting context, perhaps it is also possible elsewhere.
Edited by:
Rachel Eva Lim
About the author(s)
Henrich Greve
is a Professor of Entrepreneurship at INSEAD, the Rudolf and Valeria Maag Chaired Professor in Entrepreneurship, and the Academic Director of the Rudolf and Valeria Maag INSEAD Centre for Entrepreneurship. He holds a PhD in Organisational Behaviour and MA in Sociology from the Graduate School of Business, Stanford University.
You can read his blog here.
About the research