Moments after the Baltimore Ravens kicker missed a near-gimme field goal attempt with no time left and let my Pittsburgh Steelers escape with a two-point victory that won them the AFC North and got them into the NFL playoffs, ESPN sent out a notification. The headline read, "The North Belongs to Ravens."
Oops.
I'm sorry I was too busy whooping and hollering at my TV to quickly click on the notification, and ESPN had fixed the story by the time I got to it, but I can imagine the tone it took about my Steelers. After all, I've read all the vitriol aimed at the Ravens.
Ravens head coach John Harbaugh would have been a hero in Baltimore if he'd won the game against his archrivals and snuck into the playoffs, but now there is even speculation he will lose his job. He had his team in a position where it was so obviously going to win that I had my finger on the remote, ready to turn the TV off the moment the ball went through the uprights, so I could go out into the yard and scream. But his kicker missed the field goal, so, boom, let's get rid of the bum.
The coverage is not only wrong-headed — as much as I'm happy to see people beat up on the Ravens and Harbaugh — but demonstrates the sort of mistake that makes executives, including in insurance, evaluate innovation efforts poorly.
The problem is that we don't think in percentages, or at least not well. We may know that the Baltimore kicker had a nearly 90% chance to make his 44-yard field goal try, but we don't quite get that the percentage means he'll miss one time in 10. We know it, but we don't really believe it. So when the kicker misses, we just see failure and look for someone to blame.
The Yahoo Sports writer acted as though the Ravens failure to make the playoffs was foreordained, even though they began the season as one of the top-ranked teams in the league. His article began:
"From the beginning of the Baltimore Ravens’ season, when they had an epic collapse and lost to the Buffalo Bills, right to the end when their season ended with a loss to the Pittsburgh Steelers, nothing was good enough." He added that the Ravens "will be searching for answers after a season that went horribly wrong. There will be immediate questions about John Harbaugh’s future as the team’s coach."
The Steelers and head coach Mike Tomlin would have come in for exactly this sort of treatment if the field goal had been good, even though the Steelers had even a stronger gripe about the kicking gods being against them. The Steelers were only two points ahead, and thus in danger of losing to a field goal, because their kicker had missed an extra point with 55 seconds to go in the game, after not missing one all season. The pressure on Tomlin isn't entirely gone, given that he hasn't won a playoff game in eight years, but there will be a lot less of it in the off-season, especially if we beat the Texans in Pittsburgh on Monday night.
The Steelers even came in for misconceived criticism despite winning the game. I always liked Trey Wingo when he was an analyst on ESPN, but he posted a Tweet that was downright silly. He said Tomlin made a terrible decision by going for a field goal at the end of the first half rather than trying for a touchdown from the Ravens one-yard line. He tried to back up his claim, but he was clearly just Monday morning quarterbacking — because the Steelers failed to score a touchdown, they shouldn't have tried.
The truly goofy part of his argument was his statement that, had the Steelers converted a chip-shot field goal, they would have been five points ahead of the Ravens at the end of the game, not two, and wouldn't have had to worry about a field goal. But come on. If the Steelers had scored a field goal, the dynamics of the game would have changed. The coaches would have made different decisions, and the players would have done different things in the different circumstance. You can't just take the three points and add them to their score for the rest of the night.
The other part was nearly as bad. He offered an adage: "You always take the points." But the NFL has moved beyond a lot of adages and started to apply real, live math to questions such as when to go for it on fourth down, as I wrote a year ago. And here's the math:
A field goal would have been almost a 100% chance, so the Steelers could have counted on almost three points. The attempt at a touchdown had a slightly better than 70% chance, based on league averages, and an extra point is almost a lock. 70%-plus of seven points is roughly five points. Yes, the Steelers' attempt was embarrassingly incompetent, but I'm still going to take a likely outcome of five points over one of three points in almost every circumstance.
This is the Ravens we're talking about. I need every edge I can get.
What does this mean for insurers?
Insurers need to think more like venture capitalists and less like Yahoo Sports or Trey Wingo. Venture capitalists not only know that 90% of the startups they invest in will fail but act on that knowledge. If they think an area is promising, they make a number of bets rather than assuming they're going to pick the one winner. They don't label their entrepreneurs as losers just because they lose — if you had a 90% chance to win but lost, they count that as a win and blame the circumstance, not you. As a result, VCs often invest in serial entrepreneurs, who have either previously failed or only had modest successes.
A line from the mother of a girl who ski raced with my younger daughter has stuck with me. Stephanie, who build a financial software business she sold for $2.5 billion, told me: "I like people with scars."
Insurers also need to think of early innovation efforts as opportunities to learn, rather than trying to immediately shape them into pilot projects designed to scale and go to market. As I've been saying for almost 30 years now, the key is to Think Big, Start Small and Learn Fast — the latter two points meaning that you need to do lots of inexpensive projects, even though they're in the service of a grand vision, and move on quickly to the next set of tests once you've learned what you can. The vast majority of these projects won't get anywhere near the market, but they aren't failures if you've learned something important.
I'm hardly arguing for no accountability. There are still bad ideas, and they may be executed poorly by people who should no longer be part of your organization. I'm just arguing that we all take a more sophisticated view of success and don't decide that failing to convert a 90% chance merits firing — even though I'd love to see Harbaugh out of Baltimore.
Go, Steelers! Beat those Texans!
Cheers,
Paul