Sport and business: learning to compete effectively

Another great summer of sport beckons with football’s Euro 2024 Finals, the Olympics in Paris, and cricket’s T20 World Cup as well as the summer perennials of Wimbledon in lawn tennis and the British Open in golf to name but five of the events that will dominate our TV screens and social media in the coming weeks.  

July also sees the UK Corporate Games come to the University of Leeds, attracting thousands of competitors and hundreds of companies to the city. The event is “a platform for companies from all business sectors to integrate and engage employees, address CSR strategies and raise brand awareness”, and brings together the world of sport and business.  

Whether we are watching national sporting events on the TV, or cheering on organisations at the UK Corporate Games in Leeds in person, inevitably we will ponder what can we learn from the winners. Afterall, there is nothing like success to inspire and imitate.  

An increasing number of business school academics are asking what can business learn from sport. But that presupposes a rather one-way learning process in which one sphere of activity (i.e. business) learns from another sphere of activity (i.e. sport).  

My starting point is rather different. Elite sport is big business, and, like all businesses, elite sport has to compete effectively within in its own specific context. This creates the potential for a two-way learning process in which both types of business, the sport business and general (non-sport) business, can learn from each other how to compete more effectively. 

I have a unique perspective, having started my career as a business analyst at Unilever before moving into academia and working in economics, finance and management with a common theme of applying empirical analysis to practical problems. I have also had a long involvement in sport as an amateur footballer, a qualified football coach and working as an analyst in elite sports with teams, governing bodies and the media particularly in football, rugby union and rugby league. 

At the core of all businesses is the production of goods and services, and the commercialisation of that production to generate financial returns. All successful businesses are able to make effective investment decisions to acquire the assets necessary for the production process.  

Successful businesses are also able to recruit, train and deploy the best people available to operate and manage the production process. And successful businesses are innovative and resilient in the face of an uncertain future. 

Successful sport businesses are no different to any other type of business in the fundamentals of production, investment, recruitment, deployment, innovation and resilience. But, of course, sport businesses operate in a rather unique context. Being constantly in the public eye produces a transparent and very data-rich environment. Can you think of any other business in which an outsider can view the actual production process (i.e. the sporting contest) and have extensive knowledge and data on the current and career performances of all of the key managers and employees?  

More and more business school academics are tapping into this transparency to test theories. For example, in my own research I have used football data to explore the importance for performance of the amount of shared experience of team members and managers. 

Sport does have its own peculiar economics. Unlike most other businesses where firms compete in markets to acquire inputs and to generate revenues from their produced output, sports businesses also compete in the production process.  

Indeed, the essence of the sport business is the production of sporting (i.e. competitive) contests that are commercialised as spectator and broadcast events with associated sponsorship and merchandising. One of the peculiarities of sport is that the production of competition requires cooperation between the competitors to create the structures and rules for the sporting contests. Cooperation between sporting competitors does not imply anti-competitive collusion as it can in other business sectors. 

So what can business in general learn from the sport business? I would highlight four specific lessons. First, elite team sports have led the way in the use of data analytics in human resource management especially recruitment. Moneyball, an Oscar-nominated  Hollywood movie starring Brad Pitt, is based on the true story of how the small-market Oakland Athletics in Major League Baseball used data analytics as a “David” strategy to identify undervalued players allowing them to compete effectively with the big-market financial Goliaths such as the New York Yankees and Boston Red Sox.  

Second, successful athletes, players and teams are able to separate performance from outcomes, recognising that they need to focus on, and take responsibility for, their own performance that they can control. You cannot guarantee successful outcomes which will be in part influenced by factors beyond your control but you can put yourself in the best position to succeed by continually striving to improve performance.  

Third, sporting contests produce winners and losers. Even at the elite level, an average performer loses 50% of the time. Successful competitors can deal with failure by treating it as a learning opportunity to be better in the future.  

Fourth, professional sport teams have to cope with multiple, partially conflicting objectives. The pursuit of sporting glory has to be financially sustainable. Business in general has to cope with the competing demands of multiple stakeholders and must pursue financial returns in ways that are profitable, environmentally sustainable and socially responsible.  

The sport business can also learn many lessons from other business sectors. All businesses need to operate with a degree of financial responsibility. There is an ever-present danger in the sport business of sporting passion over-riding financial prudence. Unfortunately, we in Leeds know only too well the costs of a sports team “living the dream” in a debt-financed pursuit of sporting glory that ended in bankruptcy and relegation. Twenty years on Leeds United are still striving to re-establish themselves in the Premier League.  

The sport business can also learn lessons from other businesses on the importance of a shared vision and deep-rooted corporate culture on the way things are done. Elite sports teams are tending to move away from the traditional organisational structure of a football manager with sole overall responsibility for the whole of the sporting operation including player recruitment, youth development, coaching and team performance.  

The current trend is towards greater specialisation of the executive functions within the sporting operation with the role of head coach responsible for team performance separate from the sporting director (or general manager in the North American major leagues) who has primary responsibility for recruitment. The separation of executive powers reinforces the imperative for a shared vision centred on a strategic plan and team-specific culture with buy-in from everyone. 

So the message is a very general one. Managing performance is necessarily a lifelong commitment to learning and the pursuit of excellence, irrespective of whether it is the sport business or any other type of business or organisation.  

Ultimately, managing performance in any organisation is about getting the most out of the available resources and facilitating people to get the best out of themselves. It is a simple formula: 

Effectiveness = Efficiency + Efficacy 

So as you cheer on your sporting heroes this summer, take a moment to reflect about what makes them so proficient in the sporting arena and what skills, habits and ways of doing things are transferable to you personally and to the organisations in which you are involved.