By: Carter Copeland
Sam Hinkie was named general manager of the Philadelphia 76ers in May of 2013. Hinkie is a Stanford MBA who worked at Bain Capital before taking a job with the Houston Rockets and their general manager, Daryl Morey, a leader in the use of advanced basketball analytics – “Moneyball” philosophies applied to the NBA. When Hinkie took over Philly’s front office, the team was in bad shape. Philadelphia hadn’t won an NBA title since 1983 and had only finished with a record above .500 twice in the previous 10 years. The franchise had overspent on players that either weren’t stars or weren’t poised to succeed in the high efficiency offenses that were re-shaping the league on the back of the advanced analytics movement. They had no coach and had already traded away two future first round picks. At the time, ESPN’s three-year forward ranking, which considered current roster, future draft picks, salary cap, etc. had the team ranked 24th out of the 30 teams in the NBA. The turnaround task was large and ultimately aimed at winning a championship, which in the NBA is nearly impossible to do without multiple star players. In 2016, Hinkie wrote, “a league with 30 intense competitors requires a culture of finding new, better ways to solve repeating problems.” The strategy, dubbed “the process” focused on maximizing the probability of acquiring superstars through the draft using non-traditional, long-term and data-driven thinking. By the end of the 2017 season, the 76ers won 52 games, reached the second round of the playoffs and had one of the most promising young rosters in the league, with two potential superstars. With a little luck, “the process” worked.
Big changes in process and culture can transform an organization’s operational and financial performance. We’ve observed such changes at Boeing over the last several years and they’re a key aspect of our bull case for the stock going forward.