Gladwell, Spurs, Capitalization Rate

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Malcolm Gladwell, talking with Bill Simmons:

What we’re talking about is what are called capitalization rates, which refers to how efficiently any group makes use of its talent. So, for example, sub-Saharan Africa is radically undercapitalized when it comes to, say, physics: There are a large number of people who live there who have the ability to be physicists but never get the chance to develop that talent. Canada, by contrast, is highly capitalized when it comes to hockey players: If you can play hockey in Canada, trust me, we will find you. One of my favorite psychologists, James Flynn, has looked at capitalization rates in the U.S. for various occupations: For example, what percentage of American men who are intellectually capable of holding the top tier of managerial/professional jobs actually end up getting a job like that. The number is surprisingly low, like 60 percent or so. That suggests we have a lot of room for improvement.

What you’re saying with the NBA is that over the past decade, it has become more and more highly capitalized: There isn’t more talent than before, but there is — for a variety of reasons — a more efficient use of talent. But I suspect that in sports, as in the rest of society, there’s still an awful lot of room for improvement.

This isn’t the first time Gladwell has written something that provided a window of insight into the Spurs. In many ways, seeking an optimum capitalization rate is a quick tutorial in how Buford and company operate. One could come at this from multiple angles, so I’ll tease you in a few directions rather than overstating the point.

Gladwell makes a case of Peyton Manning, but it could just as easily apply to Tim Duncan. He writes:

Case in point: Everyone always says what an incredible advantage it has been for Peyton Manning to have had the same offensive coordinator and the same offensive system his entire career. Football offenses are so complex now that they take years to master properly, and having one system in place from the beginning has allowed Manning to capitalize on every inch of his talent. On the other hand, someone like Jason Campbell has had a different offensive coordinator in virtually every season of his pro and college career (and I’m guessing he’ll get another this offseason).

This is what Gregg Popovich likes to call “corporate knowledge,” and the Spurs value it like miners value diamonds. A lack of corporate knowledge is the major obstacle standing between the current Spurs team and their next championship, and Popovich knows it. Past Spurs squads were better defenders because their corporate knowledge allowed them a higher capitalization rate, despite less youth, athleticism and talent. The advantage of being the oldest team in the league is, perhaps, that the talent assembled will capitalize on the team’s schemes at a higher rate than a collection of more talented but system-ignorant newcomers.

As a small market team, the Spurs have done more under the restraints of  the salary cap than the rest of the league; Popovich has consistently squeezed more production from players like Bruce Bowen than anyone thought imaginable; the front office has found ways to get more out of the draft than most, if not all, of their opponents (relatively late selections of Ginobili, Parker, Splitter, Blair and Hill, as examples), and their investment in the Austin Toros (including the once passed-over coaching talent Quin Snyder)  is nothing if not an adventure in converting under-realized talent into NBA production.

The comparisons don’t work in every way, but the Spurs have had one the best capitalization rates in all of sports over the last decade.

  • Vic De Zen

    …and it’s not too late this year, I say. George Hill and DeJuan Blair are examples of capitalization and, by the end of the year, we’ll hopefully see this year’s versions of Manu, McDyess, and RJ the same way.

  • mikrobass

    terrific article with excellent points. it leads me to believe that last year, we used up ‘capitalization’ during the regular season and got blown out (i.e., ‘de-capitalized’) in the playoffs. assuming we make the playoffs, here’s to maximising ‘capitalization’ during a long, deep playoff run.

  • agutierrez

    Included in this analysis is getting players to realize the limits of their talents and then having them buy into a system that puts those talents to best use (the efficient use of talent). Two examples are Bruce Bowen (play defense and the corner three) period; and Fabricio Oberto. He knew exactly what he could and couldn’t do and fit perfectly within the system. And it really didn’t matter to him that he was under-appreciated outside of the Spurs locker room. At the end of the day, I think that’s really what is meant by “chemistry.” The Spurs are clearly a work in progress on all these scores.

  • Dr. Theopolus

    I kind of disagree with this thesis. I appreciate digging for new ways to praise the Spurs, but I think our problem this year is that 2/3 of our Big 3 are playing the worst basketball of their career. With the best bench in the NBA it would seem that not all of our players are having the greatest difficulty this year. I don’t everyone has the System down, but I don’t think our problems are because of not knowing the system.

    Blair hardly knows the System but he’s playing well. On the other hand, Hairston and Ian know the System but somehow can’t find a way into the game just to see if they could help, even in small situational moments.

    Parker and Manu are playing way beyond their past levels, with Parker being the more surprising disappointment.

    I suppose we’ll do somewhat better when Dice and RJ learn the plays better, but I think our problems go beyond just learning curves.

  • ThatBigGuy

    After this season, either Kobe or Duncan will be able to definitively lay claim to The Best Player Of the Decade. Right now it’s a toss-up between the two. However, I’m a die hard Spurs fan, been bleeding Black and Silver (and Turquoise) since I was born, and I will argue until the day I die that Duncan meant more to his fan base than Kobe has, even if Kobe ends up winning more titles than Jordan. Robinson built the foundation for the mansion that is Timothy Theodore Duncan, the best fit for a particular franchise and the best fit for a particular city that the NBA has ever seen.

    God is a Spurs fan!

  • duaneofly

    One thing I think Duncan has over other great players, like Kobe, is how his career has no controversy. He hasn’t been a whiny you-know-what, demanded trades etc etc. He complains to refs in game, but doesn’t say a word about them in post game interviews. Nor have the Spurs pulled any lopsided trades.
    Things against other players are, Kobe asking for a trade on radio, the Gasol trade, the KG trade, the ridiculous referring in the Lakers Vs Kings and Lakers Vs Nets series, in the Dallas Vs Miami series.
    I just think if you have a group of great players, who have all accomplished a lot, but only one of them has no controversy in his career, he’s the one you pick.

  • Pingback: Talent Capitalization and Organizational Structures « Innovative Knowledge (INK)

  • http://innovativeknowledge.wordpress.com/2010/01/23/talent-capitalization-and-organizational-structures/ TOIN

    I think this post and commentary has much more significance and potential if you take the word ‘Spurs’ out of it.

    See the post at http://innovativeknowledge.wordpress.com/2010/01/23/talent-capitalization-and-organizational-structures/
    for a look at this business implications of this….