Does Your Portfolio Have a Jeremy Lin?
His team is enjoying a five game winning streak. He’s ranked fourth on the NBA Player Efficiency Ratings. He’s played on three teams this season, and until recently was crashing on two friends’ couches since arriving in New York City. He’s also first in the league in points scored per million dollars paid among the NBA’s 40 highest-scoring players.
If you haven’t guessed, I’m talking about NBA (and Twitter) sensation Jeremy Lin, who’s become a phenomenon due to his surprisingly-stellar performance and his ‘lin-guistically’ elastic last name.
Jeremy’s narrative is wonderful on so many levels, especially for me as a second generation Asian American who can relate to him in many ways. But what is most fascinating is how badly overlooked he was by both old school talent scouts as well as nouveau ‘moneyball’ experts. Even Daryl Morey, general manager of the Houston Rockets, founder of the MIT Sports Analytic Conference (and an HBR contributor), released Lin and offered a mea culpa saying that he didn’t know Jeremy was this good. And it’s not just the absolute play, but also Jeremy’s relative value. Lin yields 35.2 points per $1 million paid, which is four times higher than the next-ranking player and 35 times higher than teammate Carmelo Anthony or past MVP Kobe Bryant.
I’m not saying a NBA general manager would trade Kobe Bryant for Jeremy Lin, but the question for business general managers is this: How many Jeremy Lins do you have riding the bench in your business portfolios? All big firms have hidden $100 million opportunities —a business, brand, market or leader that is overlooked and under-resourced with untapped upside.
In the book How Companies Win, Rick Kash and David Calhoun note how Sara Lee was about to de-prioritize the Ball Park brand in 2005, just before then Ball Park leaders Steve Clapp, Carl Gerlach and Chuck Hemmingway grew it 40% and to its leading market-share position. Do you remember Tang? Did you know it’s a $1 billion brand now, one that’s doubled in size since 2006?
I’ve written previously for HBR about how category creators drive exponential growth. Only 20% of category creators got there by acquisition. The majority re-directed and invested in key assets and capabilities they already had to tap into a rich vein of latent demand. One example: Coinstar took its kiosk capabilities and converted it into its Redbox DVD Kiosks, growing $1.2 billion in revenue in five years.
Why were these companies successful at finding and unleashing overlooked opportunities? Three reasons come to mind. First, being resource constrained required them to be focused on the most profitable and most concentrated demand profit pools. Second: Because they were under the radar, they were able to be more creative and try new things. Third, they had strong leaders who were willing to defy conventional wisdom and place big, educated bets that paid off.
A few factors can help managers look for Jeremy Lins in their portfolio now. We need better metrics that help us discover ROI anomalies. (For instance, I love John Hollinger’s Player Efficiency Ratings that normalize NBA player production for minutes.) We need to review all our businesses, brands, markets and leaders with metrics that normalize for opportunities and resources.
Once you find these hidden opportunities, we need to test pilot them in low risk and rapid ways. The NBA has a Development League, where prospects can play big minutes and see how they would flourish, just as Jeremy Lin did. Companies need to create D-League opportunities, such as a robust test in a small market where businesses, brands and leaders can spread their wings and experiment. A food brand figured out that 50% of its incremental profit pool opportunity was concentrated in 15 US local markets. It dramatically increased its local marketing in a few markets and saw its brand grow 300 basis points faster than the category.
Perhaps the most important insight here is to be self-aware and bit more humble. No matter how good we believe we are, overlooked opportunities exist everywhere. We must recognize we all have built-in biases and blind spots that cause us to over- and under-value certain things. How is it that Daryl Morey, an Ivy League analytics guru who knew first hand the impact of an iconic Chinese player (Yao Ming) would go on to under-value an undrafted, Taiwanese American Harvard player who outplayed the #1 draft pick John Wall in the summer league? The answer is that even the best of us make mistakes. The faster we accept the premise that despite our best efforts, every business likely has a hidden opportunity waiting to be discovered, the faster we will grow.
Does Your Portfolio Have a Jeremy Lin?
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