Business Game Time

When six weeks ago, coach Steve McClaren was fired at VfL Wolfsburg in Germany, it seemed like just a mismatch of coach and club. Since then, the Bundesliga has been going crazy as far as coaching changes are concerned. And even though I’ve been writing about the German soccer league quite a lot during the past couple of weeks, I have to do so again today after what many consider one of the weirdest weeks ever.

It was decided on Louis Van Gaal’s exit at Bayern Munich at the end of the season, in the next match, his team destroys Hamburg by 6-0. Then Hamburg fired their coach, but not only him, also general manager Bernd Hoffmann and head of marketing and communications Katja Kraus. Interim successor Michael Oenning called the situation of coaching changes this week crazy, after winning the next match against Cologne 6-2 (!), even though it landed him his job.

What he referred to:
Schalke 04 fired coach Felix Magath, who was also working as some kind of general manager for the club. Only a couple of hours later, he was presented new coach at Steve McClaren’s former team, VfL Wolfsburg. McClaren’s successor, Pierre Littbarski, was already fired, as was sports manager Dieter Hoeneß (the brother of Bayern Munich president Uli Hoeneß). By the way: Magath went the other way from Wolfsburg to Schalke only a little more than one and a half years ago, obviously for financial reasons.

His successor at Schalke will be Ralf Rangnick, who used to coach Schalke before in a quite successful way, but was fired because of tensions with the club’s management.
That might also have been the main reason behind the firing of Magath, as despite a pretty mediocre performance in the domestic league, Schalke reached both the German Cup final and the Champions League quarter finals – as the only German team.

Bayern exited this competition after a bizarre loss against Inter Milan. It seems like their next coach will be Jupp Heynckes, who already won the Champions League as coach of Real Madrid and was twice coaching Bayern before. His firing in 1991, at his first stay with the team (the second was just on an interim basis for a few months), was later referred to as “the biggest mistake of my career” by then manager Uli Hoeneß.
Not that Heynckes would be a free agent – he is currently coaching Bayer Leverkusen and the only real contender left to fight Borussia Dortmund for the league title. Today it was announced that Heynckes will be replaced by Robin Dutt – not a free agent either, he currently coaches SC Freiburg, currently ranked 8th in the Bundesliga.

Have you been able to follow? Congratulations! But why are coaches in Germany switched so quickly? Looking for an answer brings us back to Steve McClaren.
In an interview with The Times a few days after leaving Wolfsburg, he compared coaching in Germany with coaching in England. While he mentioned a couple of things he thought would be worthwhile introducing to English soccer, he also talked about the difference in management structures.

While in England, “team managers” are not only responsible for coaching the team, but also for the composition of the team, i.e. for player transfers, in Germany most clubs follow a distributed model: The coach is responsible for coaching the team on a day-to-day basis while the “sports manager” is in charge of the composition of the team. McClaren sees the advantage in this system that when a coach is exchanged, that does not mean that the team has to be completely changed, so there can still be continuity. Maybe that’s why coaches are fired that fast in the Bundesliga these days.

Yet McClaren said that for him it was quite problematic to work this way, as he always felt like someone, in that case sports manager Dieter Hoeneß, was interfering. The new Wolfsburg coach, Felix Magath, is known to be the only German coach not accepting this setup and insisting on having all power himself, just like English managers. With his arrival at Wolfsburg last week, Dieter Hoeneß was also fired. Wolfsburg is moving back to the “one man show”.

So which system is the better one? Well, while obviously those clubs changing their coaches are not completely happy with how their season is going so far, let’s have a look at the happy faces to find out:
The top three teams in the league all operate very successful cooperations of coaches and sports directors. While at league leaders Borussia Dortmund, Jürgen Klopp and Michael Zorc have often expressed how good their cooperation is, at second placed Bayer Leverkusen, coach Heynckes today expressed again how great the joint work Rudi Völler has been so far. Meanwhile, third placed Hannover 96 has just extended the contract of sports director Jörg Schmadtke, one main reason being the good team work with coach Mirko Slomka.

What makes these teams so successful? Looking at how they cooperate and at the various statements they gave in interviews, I see three main points, and I believe that all of these are also valid in areas other than soccer:

1. Targets

Looking at the examples of Wolfsburg and Hamburg, there’s a new twist to changing coaches: In both cases, the teams were less successful than expected, but instead of just firing the coach, the sports manager also had to go. Fans and media also saw them responsible for the bad performance, not only the coach.
I think this is an important point: If success cannot be attributed to individuals, how could being unsuccessful?

This made me think about the standard mode of cooperation in companies.
Traditional transaction cost theory differentiates between market coordination and hierarchical coordination, which both delivers individual incentives for those involved. In hierarchical coordination, the subordinate is typically incentivized for following his manager, while the manager is incentivized for the results. These target systems are different. In market coordination, each individual receives the incentive via the direct pay-out, in whatever form this may occur.

Both these individual incentive structures seem not to work were responsibilities are distributed. And looking at how difficult it seems for many executives to distribute decision power to a subordinate, how much more difficult would it be to distribute it to a team, where it is impossible to define one responsible to blame in case of bad performance.

This leads to a problem I discussed here before: Group targets would be required, but they are a lot more difficult to establish in a clear and measureable way that allows attributing the performance of each individual to it. My earlier alternative was: Bring in outstanding performers, that are also great team workers, and they won’t be needing targets and incentives. Bundesliga leaders Borussia Dortmund enter the season without a target of where they wanted to end up in the table, they just wanted to play a good match every week.

2. Close cooperation yet keeping clear responsibilities:

In an interview, the sports director from the same club, Michael Zorc, stated that he would never buy or sell a player without discussing the matter with coach Jürgen Klopp. It seemed like he wasn’t even understanding where the question came from, as this is all natural for him. At other – less successful – clubs, this seems to be different: The above mentioned Ralf Rangnick has only been available for Schalke 04 because he left his last club, TSG 1899 Hoffenheim, fuming after player Luiz Gustavo was sold to Bayern Munich without his approval.

3. Respect the others

This final point brings me back to Steve McClaren and his problems in working with sports director Dieter Hoeneß, more specifically the level of Hoeneß’ involvement. The example McClaren gave was that Hoeneß was even present during the team meeting at half time instead of trusting McClaren, who was the one in charge, and leaving the job up to him. Steve McClaren found that it was impossible to work in this environment…

Related posts:

1. Van Gaal’s Team Building: Forming, storming, norming, performing
2. Micro-Tactics: The Post-Ideological Future
3. Chelsea’s winning strategy: A SWOT analysis
4. Derby Boycott: Choose your Customers!
5. The loneliness of an egocentric leader

Filed under: soccer (football) by Johannes Musseleck
on March 21, 2011 at 9:50 pm CET
Tagged with: 1. fc köln • appraisal • bayern münchen • bayern munich • bernd hoffmann • borussia dortmund • bundesliga • coach • coaching change • cologne • cooperation • dieter hoeneß • dieter hoeness • distributed model • england • fc cologne • fc schalke 04 • felix magath • free agent • general manager • german cup • germany • hamburg • hamburger sv • incentive structures • individual targets • inter milan • jörg schmadtke • jupp heynckes • jürgen klopp • katja kraus • louis van gaal • luiz gustavo • management structure • michael oenning • michael zorc • mirko slomka • one man show • pierre littbarski • ralf rangnick • real madrid • respnsibilities • robin dutt • rudi völler • sc freiburg • soccer (football) • steve mcclaren • tagrets • team manager • team targets • team work • tsg 1899 hoffenheim • uefa champions league • uli hoeneß • uli hoeness • vfl wolfsburg