The Harvard Business Review Interview with Red Auerbach - March, 1987

These are from an interview Red did with the Harvard Business Review in the March, 1987 issue. It's amazing how many things he said are true. Scary. No 'idiot savant' or one-trick pony he, he not only had the finest eye for basketball talent in the history of the NBA he also was a management genius; financially, organizationally and with his personnel. He could, and did, it all. The Art of War is required reading in every quality MBA program in the US, including Harvard. They should create a class teaching The Art of Auerbach...


http://hbr.org/1987/03/red-auerbach-on-management/ar/1


Red Auerbach on Management
An Interview with Red Auerbach by Alan M. Webber


Former Boston Celtics star Bob Cousy calls him “Arnold.” But most diehard basketball fans know him as “Red.” Hanging from the rafters of the Boston Garden are 16 green-and-white championship banners, testimony to his managerial genius.

He is Arnold “Red” Auerbach—inspiration and leader of the most successful sports franchise in America. For 36 years, as coach, general manager, and now president of the Boston Celtics, Mr. Auerbach has practiced his style of management in an enterprise in which the difference between winning and losing is very clear and very public. His management philosophy, based on the values of loyalty, pride, teamwork, and discipline, is applicable to managers in any field. And the results he has attained—measured in athletic and economic terms, or even just in the number of victory cigars he has savored—demonstrate his ability to make this philosophy work.

Mr. Auerbach is the author of On and Off the Court (Macmillan, 1985), written with Joe Fitzgerald. This interview was conducted in his Boston office by Alan M. Webber, managing editor at HBR.

HBR: When you started here in 1950, there was no such thing as “Celtics pride.”

Auerbach: Right.

Thirty-six years later, everybody talks about it. It’s at the heart of the Celtics’ mystique. What is it?

It’s the whole idea of caring. I’m in contact with the Frank Ramseys and Ed McCauleys and Bones McKinneys who played for me 35 years ago. I know where they are, what they do. If they want something, they call me and if I want something, I call them.

There’s a family feeling. Two people in particular evidenced it for me. One was Wayne Embry, who played at Cincinnati for nine years and came here to finish his career. He never talks about Cincinnati. He talks about Celtics pride and the Celtics organization.

The other was Paul Silas. One of the best compliments I ever got was from Paul Silas. One day he came over to me and said, “I heard a lot about this Celtics pride and I thought it was a bunch of crap”—because he was an old veteran when he came here. “But,” he said, “I was wrong. I feel a part of it and this has been the happiest part of my career.” It was super. When you hear it from the players, it really makes you feel nine feet tall.

What are some of the things that explain this special feeling?

Well, it started way back, when Walter Brown owned the team. I had this theory, which we still use. And that is, a player’s salary is determined by what the coaches see and what I see. What determines a player’s salary is his contribution to winning—not his statistical accomplishments.

I don’t believe in statistics. There are too many factors that can’t be measured. You can’t measure a ballplayer’s heart, his ability to perform in the clutch, his willingness to sacrifice his offense or to play strong defense.

See, if you play strong defense and concentrate and work hard, it’s got to affect your offense. But a lot of players on a lot of teams, all they point at is offense. Like in baseball they say, “I hit .300 so I should get so much money.”

I’ve always eliminated the statistic of how many points a guy scores. Where did he score them? Did he score them during garbage time? Did he score them when the game was on the line? Did he score them against good opponents? There are so many factors.

So part of the Celtics’ system is the way you set up the salaries?

Well, it’s not just the money reward, it’s more than that. It’s like Larry Bird always says before a big game: “I’ll be ready and the other guys will be ready and we’re going to win this thing.” Not “I’m going to win it.” He says, “We’re going to win it.” Larry Bird gets as big a thrill out of making the pass as he does making the shot.

What are the other factors?

One important thing is trust within our organization. I really believe that loyalty is a two-way street. Unfortunately, in most businesses managers expect loyalty from employees but are very reluctant to give loyalty.

We’ve built up an organization where we care about our people. That doesn’t mean that you can’t make trades. You must have a certain amount of flexibility so if you feel you can improve your club, you go ahead and make a trade. But over the years we’ve made very few trades. Anybody who’s been with us for more than five or six years will usually finish his career here. And when a player is on the tail end of his career, we don’t just say, “We paid you, you played. See you later.”

Most of our players have self-retired. They tell me when they don’t think they can play anymore. The Jones boys, Cousy, Russell, Havlicek, Sanders, Nelson, Heinsohn—they all announced their retirements with no pressure from me whatsoever. People who come here realize that if they produce and do the job as they should and are happy here, we’ll do our best for them. And we’re interested in what they do when they leave here, when their careers are over.

What else goes into the relationship with the players?

I think the players know that if I make a decision, we’re all going to stand with it. The players won’t con me because I don’t con them. They don’t give me what we call false hustle, when a guy just goes through the motions but he’s not really putting out much effort.

How do you discipline your athletes?

We like our players to play for fun and to be happy rather than afraid. It’s like that in any business. If you have employees who work through fear, you’re not going to get any ingenuity out of them. You’re not going to get any employees who will take a gamble or come up with ideas. All you’ll have are robots that are going to do their jobs, have a low-key approach, stay out of trouble. They’ll put in their hours and go home. But I’d rather have it the other way.

So we talk to people. We don’t fine them indiscriminately. A lot of teams have rules that say if you’re late or miss a plane, you get fined. We have rules, but we temper them with mercy. We talk to people. And we never threaten employees specifically.

What I used to do when I coached was this: I wouldn’t say that if they did something I’d fine them a thousand dollars or I’d suspend them; I’d just say that if they did something I’d bust their hump. So then they’d wonder, what is he going to do?

How do you motivate the players?

Pride, that’s all. Pride of excellence. Pride of winning. I tell our guys, “Isn’t it nice to go around all summer and say that you’re a member of the greatest basketball team in the world.”

Of course, we used to do funny things. I mean, how many times can you go in there and say, “Hey, let’s win one for the Gipper?” So one day I said to one of the players, Frank Ramsey, “Ramsey, give them a motivating talk.” So he walked up to the board and he put down on it, “If you win, $8,000. If you lose, $4,000.” And they all broke up.

But the biggest motivating force you can have is the championship ring.

And the Celtics players have always responded to this kind of approach?

You see, in sports you have so many things that aren’t expected. There’s so much uncertainty. So when players find themselves in a situation where management has a great deal of integrity and they can depend on my word or anybody else’s word in the organization, they feel secure. And if the players feel secure, they don’t want to leave here. And if they don’t want to leave here, they’re going to do everything they can on the court to stay here.

I’ve turned down a lot of trades where I might have gotten a better player, but I wasn’t totally sure of the chemistry of that new player coming in. Even though he might possess golden ability, his personality and the way he gets along with teammates might be things you just don’t want to cope with.

When you are thinking of making a trade or acquiring a new player, do you consult the players?

Sometimes, sure. Our players are quite intelligent and they want the Celtics to be as good as possible. So I’d talk to a Cousy, a Havlicek, or Russell, or Bird and say, “Hey, we’ve got a chance to get so and so. What do you think?” Why not ask them? I’ve never had the ego to think that I know it all.

The coaching staff is also involved in every decision. I would never take it upon myself to force any player down the coach’s throat. Because if I give a player to the coach and the coach doesn’t want him, he’ll resent it and the production of the whole team will suffer.

Now that you’re president of the Celtics, what is your relationship with the coaching staff?

It’s simple. I don’t interfere with the coaches of the team. If they have a problem or something is on their minds, they come to me and we discuss it. But it’s only when they ask. Because the worst thing a guy in my position can do is interfere. You see it on so many other teams, where the general managers feel they know more than the coaches and the scouts and they really interfere. I think the players sense that, and it breeds discord. It affects the team’s chemistry.

You have a reputation as a tough negotiator.

Not really.

No?

Yeah, I have a reputation for being a tough negotiator, but it’s not like that. I just don’t like it when a guy comes in with a player who’s worth $100,000 and he wants a million, figuring we’ll negotiate and he’ll walk away with $500,000.

What I’d say is, “Now look, this is what the guy is worth, based on his abilities and his contribution to the ball club. We might give or take a few thousand, but I’m not interested in a million dollars. That’s it. And there’s nothing you can do to change my mind. So don’t come in at one million. Come in at two million. Come in at three million. It won’t do you any good.” I’d say, “We’re fair. Now if the player pays his dues and performs, we’ll pay him more. But he’s got to earn it first.”

And you don’t deal in perks with your players?

Not at all. I tell them, “Look, I’m not in the car business. I’m not in the real estate business or the banking business. How much does it cost for you to play basketball? Let’s set a figure and do that. You want a car, buy a car.”

I could tell you stories of guys who make a million dollars and want a $10,000 bonus for making the All-Rookie team. I tell them, “I’m paying you the highest money a rookie ever got and if you don’t make the All-Rookie team I have to be dumb.”

You place such a great emphasis on teamwork and Celtics pride. Does it bother you that there’s a players’ union?

It did at first, sure. I think they’ve done some good things for the players, no question about that. But they don’t concern themselves with ownership. They want this, they want that, and you realize that if you give them all of it, you’ll lose money. But they don’t care. They don’t want to know about your problems. They’re interested in feathering their own nests. They figure, what’s the difference? So the owner sells out. There’s always someone with the ego out there who’ll buy another franchise, mainly because of this ego factor and the idea of national recognition.

Well, eventually that could stop too. A lot of these super-wealthy people who indulge themselves in sports say they’ve got so much money they don’t care if they lose five million dollars a year. Then as soon as they lose five million dollars they want to get out. They all want to get out, they run like thieves. It’s not really the money. It’s the fact that they spent the money, they lost the money, and they still didn’t win.

But there’s got to be a happy medium. There’s got to be a meeting point where the players realize that if they get everything they want, the owner can’t stay in business.

Speaking of owners, you’ve worked for two, both named Brown—Walter and John Y. Brown.

They’re like day and night. Walter Brown was one of the finest human beings I’ve ever been associated with. I learned a lot from him. Hell, I worked for him for 16 years and never had a contract.

You never had a contract? How did you do business?

At the end of every year I’d say, “What’s the deal for next year, Walter?” He’d say, “What do you want?” Sometimes I’d tell him I didn’t want anything. We didn’t make any money and the club was just pretty good. Sometimes I’d come in and say that I wanted more money. He’d say, “Fine, what else do you want?” I’d say, “Nothing.” We’d have a discussion of no more than a minute.

We’d end up making the deal in the washroom every time. His office door was always open and there was always somebody in there. I used to get mad. I’d say, “For crying out loud, can’t we sit and talk?” And he’d say, “All right, let’s go to the bathroom and get the thing done.”

What about the other Mr. Brown, John Y?

The other Brown, he had a tremendous ego, like he knew it all. He used to call up different general managers around the league to pick their brains, and they’d lie to him. They’d feed him all this information and then they’d call me up and ask, “Hey, what does that guy really want?”

And he’d make deals. Well, he made one great big deal that could have destroyed the team, without even consulting me.

You worked for 30 years to build the team and the franchise. Could one owner really destroy it?

He did ruin it. We just happened to put it back together again, luckily. One wrong guy can ruin it so fast your head will swim.

How does one person ruin the whole franchise?

For instance, you make a wrong move that costs you a few million dollars. If you make a trade for a player who’s getting a million dollars a year and he doesn’t produce, all of a sudden you’re stuck paying three or four million dollars for an unproductive situation. That happens all the time in the league, and most of these guys shrug it off. To me, a player like that is a distraction.

What was your approach to putting the team back together again?

I had to start from scratch. I picked out the best team in the league and said, “We’ve got to put a team together that’s competitive with that team.” Well, there was no way we could do it right away. You set a goal, you try for two or three years, and you say the hell with it, if we’ve got to suffer another year, let’s do that. So we took Larry Bird, even though he wasn’t eligible to play for another year. Then we made the deal for Kevin McHale and Robert Parish. And the owner, Harry Mangurian, knew what had to be done and was behind me. He had a private plane in those days, and we flew out to Minnesota just to take a look at Kevin McHale, so Harry was with it.

With all the money involved, the owners, the big contracts, do you look at professional basketball as a business or a sport?

At the back of your mind, you can’t help but think that it’s a business. But basically I’ve always felt that it’s a labor of love. I’ve always put the chemistry and the performance of the ball club first. My prime concern has always been to have a competitive basketball team.

If you have a team that people like to see because the players are charismatic and they hustle, they play hard, they play as if they enjoy it—when you’ve got that, you draw people and you make money. Then the business practices fall into place.

You’ve gone from being coach of the Celtics to general manager and now to president. Have you changed your thoughts on how to run the organization?

Not at all. I still try to answer all the letters I get because that’s the way I always did it. I would always tell the people in the front office that I didn’t want to see any special treatment of the rich people buying box seats, any more than the guy buying a $3 seat upstairs. I don’t want to see any meanness toward the lesser customers. They’re the backbone of our business. One thing we have here is manners. That person buying the tickets is our bread and butter, and we don’t forget it.

Too often, when people become executives they think that gives them a key to the toilet nobody else has. All of a sudden their heads get bigger than their shirt size. I’ve never operated that way. My door is open. Guys come in to shoot the bull and we talk.

That doesn’t mean you can let them get so close that they lose respect. You have to have some sort of distance without being a snob. Too many executives become snobs, their egos are so big. They lose touch, they forget what got them there. After a while they don’t even care about names. All they do is get the reports every morning and look at the bottom line.

Do you think managing the Celtics is like managing any other business?

I do. People say that I could run any other business. They used to put in the paper that I should take over the Red Sox or manage the Patriots. But that doesn’t make sense. My knowledge of the product isn’t there.

That’s one of the big problems in sports today. The old adage is true, a little knowledge is a dangerous thing. Lots of owners who have been successful in one thing think they can pick up something new in a few months. Then they can’t understand why they’re not successful in the new business. They don’t realize that they don’t have a complete knowledge of the product.

How did you get a knowledge of the product?

Well, I paid my dues. I started as a coach, and while I was coaching I was also the general manager, the road secretary, and the scout. I was working 16, 17 hours a day. We’d play in New York on Thursday and in Boston on Saturday. I’d tell somebody to handle practice and I’d go scout, because I had no scouts. We had no movies, no video. Today we have six guys doing what I used to do.

You’ve been part of the Celtics for more than 36 years. Is there Celtics pride after Red Auerbach? Are you the center of the whole thing?

No, it’s a team. Everybody right now is a cog in the machine. If you take out one part, you just do the best you can until you can replace it. There was a Celtics team before Larry Bird, there will be a Celtics team after Larry Bird. There was a Celtics team before me, and there will be a Celtics team after me. How good, I don’t know. But it’ll be there.

So what is Red Auerbach’s secret recipe for creating America’s most successful sports franchise?

I think it all stems from the fact that the players’ livelihoods depend on their contribution toward the Celtics, not toward themselves. And after a while they believe in this.

Take Bill Walton. He contacted me when he was a free agent and asked if I could possibly get him. So I asked him why he wanted to play with the Celtics. He said it was not only because we had a team that was a contender and he could get along tremendously with the guys we had. On top of that, the Celtics’ chemistry and reputation made it a team he’d always dreamed of playing for—which I felt was very kind. In fact, when he was with San Diego, he came up here to my office to see me. He wanted some Celtics T-shirts for his kids because to him this was what a sports franchise should be.

So it worked out that we got him. And one day he told me that he was down in the dumps. I asked him what was wrong, and he said he didn’t feel like he was contributing to the team. I told him, “Of course you’re contributing.” “But I’m not scoring,” he said. “That’s the trouble with you,” I said. “You’re worried about statistics.”

I told him that we didn’t care about what he scored. All we were interested in was what he contributed. Did he roll down? Did he play defense? Did he run the court? Did he pass?

He asked, “You mean you really don’t care about scoring?” I told him, “Not at all. It won’t affect you one iota.”

You could see his face light up. And from that point on, he was a different guy. He was always great to begin with, but this made him even better. He became loose. And he never looked to see what he scored. All he looked at was, did we win. And it was “we,” not “I.”


bob


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