What do 206 Million Words and the Super Bowl have in Common?
I read an interesting article today in the Wall Street Journal. The biggest sports event in America is being held this weekend, the Super Bowl, and the article described the total effort in terms of hours necessary to reach this highest level of American football. The author of the article, Reed Albergotti, had this to say, “According to an operational study of National Football League teams prepared for The Wall Street Journal by Boston Consulting Group, the typical NFL season requires 514,000 hours of labor per team. That’s about eight times the effort it took to conceptualize, build and market Apple’s iPod, according to BCG, and enough time to build 25 America’s Cup yachts. If both Super Bowl teams dedicated themselves to construction rather than football, their members could have built the Empire State Building in seven seasons.”
These are remarkable numbers. They are even more remarkable when you consider their return on investment. According to the author, “If you divide a team’s total preparation time by the number of yards its offense gains on the field in a season; you’ll find that an NFL team moves at the rate of about 32 hours per foot. And it’s only getting worse: According to interviews with NFL personnel, the study’s authors say the total prep time per team has nearly doubled in the last 20 years.”
Why is it taking nearly double the amount of time to accomplish a goal that remains exactly the same – making it to the Super Bowl?
Welocalize is in different game, but similar rules apply. Football teams must please their fans, and Welocalize must please its customers. In order to be an industry leader, we must continually put more time into producing the best possible results for our clients. And this is one of the reasons why it took us more time to produce 206 million words. This figure is the total number of words translated by Welocalize in 2009
In reviewing our 2009 numbers, Welocalize full time staff worldwide worked a total of 239,685 hours. This equates to a production rate of 859 words per hour. Our 2008 production rate was 1,005 words per hour. But our 2009 sales, gross margin and revenue per head all increased, likewise, “revenue for the entire football league went from around $1 billion in 1989 to $8 billion today.”
So what is going on? Why is it taking more effort to get to the Super Bowl and also more effort to deliver 2006 million words? Our productivity is being pressured downwards, but our numbers are rising? How is this possible?
The answer lies in competition, innovation and efficiency.
Competition drives the need for both innovation and efficiency. And what may seem counterintuitive is nonetheless the outcome, innovation does not lead to less work – it very often leads to more work! The author goes on to say, “Indianapolis linebackers coach Mike Murphy, who has been an NFL coach for more than two decades, says he remembers when computers, introduced in the 1990s, first eliminated the hours coaches used to spend splicing game film. But instead of going home at a reasonable hour, he says, coaches started working more. The average NFL team has about 20 coaches today, up from around 10 in 1990, according to the BCG study.”
It appears that the initial innovation, such as the use of computers, results in a short efficiency burst, but it is quickly absorbed by the market as competitors rush to copy.
Once the rising tide lifts all boats, all are left to row even harder to keep pace.
What is interesting is that while effort and productivity move in inverse directions, well managed football teams, and companies alike, are able to convert the increased effort into increased revenue. Welocalize grew revenue per head by 11% in 2009 and according to the author, “While NFL teams splurge on the resources that go into planning a game, they have remained remarkably efficient. John Budd, a partner at BCG and the author of the study, says NFL teams may, in fact, have room to grow. The league’s least profitable team generates more revenue per employee than Apple, Google and Goldman Sachs, according Mr. Budd.”
I realize this appears confusing. Effort is up, productivity is down, but efficiency is up as measured by revenue per head.
The cause is pricing. Competition is always driving down prices in any mature industry. A volume discount results in more work, for a lower rate per unit, leading to lower productivity (without an offset through innovation); but if an additional person is not hired – the result is more revenue per head and higher margins.
The challenge then becomes either to innovate or suffer either employee burnout, quality degradation, or both. “As a head coach, Mr. Mora, who appeared as an NFL Network analyst this week, says improvements in technology eventually allowed him to watch game film almost constantly—even right up to kickoff—and to resume immediately after the game. “At some point you get to the time spent (versus) value received point of demarcation and say ‘hey, that’s enough.”
So now what do you think about the Super Bowl and 206 million words? What do they have in common? Well, business and sports are not very different indeed, and in either endeavor, the team that finds a way to manage all of the challenges (competition, innovation and efficiency) most successfully, and consistently – wins.