Chicago Cubs pitcher Jake Arrieta. 2014

Major League Baseball Spring Training officially begins this week. This is a signal event for me stating that the teeth of winter will lift out of my groin in a few weeks.

To me the beauty of baseball endures. It isn’t just the game and the stars, it’s the talking about the game with friends. It’s the memories of seasons past and the opportunity to watch my grandchildren swing a bat and toss a ball around. It’s memories of Ernie Banks and Harry Caray and a thousand semi-forgotten Chicago Cubs. And now it is hope for a better season with better players and a new manager and pitchers who throw smoke.

I find parallels between business and baseball. The game is timeless in its simplicity, just like the tenets of business are simple but very hard to execute in the moment.

With performance enhancing drugs now apparently reduced significantly in the game, the home run has become an unreliable weapon. Few teams are built around sluggers when 38 homers is good enough to lead the league. Pitchers are more dominant with 96-mile per hour fastballs common and split finger pitches at 88 and unhittable. But this kind of velocity quickly kills pitchers’ arms. Today a starting pitcher hopes to pitch a strong six innings and then give way to a bullpen of flame throwers and trick pitch specialists to finish the game.

With starters usually happy to just pitch into the 7^th inning you might expect the starting pitcher to have a reduced economic value, but the contrary is true. A reliable starter who can start 35 times a season and pitch 200 innings is one of the rarest and most valuable commodities in the game. A 10 game winner who can keep a team ahead or within one run most of the time makes $10 million a year of he has staying power in the game and can reach free agency status with an intact arm.

Every team in Major League Baseball is attempting to develop a dominant bullpen with high quality role players to fill the seventh, eighth and ninth inning slots. The Kansas City Royals showed us in the playoffs of 2014 that a shutdown bullpen and decent starting pitching can take a mediocre team to the World Series.

This brings us to the value of a manager in baseball. In a very long season with highly paid young people of very different backgrounds (often half the players are from the Dominican Republic, Venezuela, and increasingly Cuba) it is very hard to develop cohesion on the field and in the clubhouse. Teams that have a great manager and a Latin leader on the field like the San Francisco Giants did in the now departed Pablo Sandoval (signed with Boston) can play better than their players’ stats.

In the machining world, with the large number of Latinos on the shop floor, developing leadership amongst the Spanish speaking employees is crucial to the success of many firms I encounter.

Another change in baseball that has an analog in the business world is the emphasis on data analysis. Good managers in baseball have an a­nalysis of hitter success off various pitchers and where they are likely to hit the ball if they make contact. We see much more movement of defenses today than a few years ago. Good pitchers can dictate play by pitching to spots that match the defense. This makes bullpens even more invincible today because pitchers are fresh, relying usually on one pitch on which they have great control, with defenses set up specifically to combat players’ tendencies. I think many businesses follow the path of least resistance continuing to pursue products and customers who are low margin and high maintenance rather than focusing on new, juicier opportunities. Successful sports teams make changes quickly.  After Green Bay Packers’ coach Mike McCarthy’s terrible play calling against Seattle in the NFL Championship game he gave up his play calling responsibility to the Offensive Coordinator.  The Packers also have already cut the player who dropped the pivotal onside kick by Seattle. (I think the onside kick is a play that is under utilized. Teams should try it once a game and develop expertise).

With pitching so dominant today I am surprised that the super speedy running specialist is still rare on teams’ 25 man rosters. As single runs become super valuable in tight low scoring games against overpowering bullpens an unsettling base runner can tilt an inning. An analogous player in football might be a specialist in onside kicks. It would catch on.

Baseball 2015 is finally here. In the snows of January you think it will never come. When business stinks and you can’t seem to close a deal it feels like a winning streak will never come, too. Spring training means hope. It feels like I’ve been waiting a long time for this one.

Question: Have you been missing baseball this winter?

I recently heard a story on an NPR podcast called “Invisibilia,” which discussed the effects expectations can have on human abilities.

The story begins by describing a scientific test conducted on rats.

Researchers took several rats and put them in cages, arbitrarily labeling half the cages with “smart rat,” and the other half with “dumb rat.” Lab technicians who did not know that the rat cages were labeled arbitrarily, took the rats out and tested their abilities to finish a maze.

My inference, as I assume most people’s would be, is that the rats from cages labeled “smart” would do no better on average than the rats from cages labeled “dumb.” After all, the rats’ cages were labeled arbitrarily. But rat after rat, the ones labeled “smart” finished considerably better than those labeled “dumb.” So how did this happen?

Scientists theorized that the lab technicians, without thinking about it, treated the “smart” rats differently from the “dumb” rats, which led to the differing results. The technicians handled the supposedly smart rats with more care than those that were supposedly dumb, which led to their superior performance in the maze. Thus, the higher the expectations the technicians had for the rats, the better the rats would perform.

The NPR story centers around Daniel Kish, a blind man who from the time he was young was allowed by his mom to do everything seeing children could do. He was allowed to play outside on his own. He’d climb trees, cross streets, fight with other kids and even taught himself to ride a bike as a very young child. On his own, Kish trained himself to use a tongue clicking method called human echolocation which enables him to know where he is in space, much the same way bats navigate. By sensing echoes from nearby objects, people trained in echolocation can orient themselves by interpreting the sound waves reflected.

In elementary school, Kish met another blind kid who had previously gone to a school for the blind. This kid had been used to people constantly helping him function. People always had led him where to go and brought him whatever he needed, but when he was left on his own he became helpless. Schools for the blind are no longer in vogue today, as people have realized that not letting blind people struggle to function on their own is debilitating. Today Kish devotes his life to working with blind kids to teach them to be independent. He teaches kids do the type of activities on their own that he had taught himself when he was young, such as climbing trees, hiking, crossing the street and even riding a bike.

Kish says that the main obstacle he runs into in his quest to make kids independent is love. Parents understandably have considerable trouble allowing their disabled kids to become frustrated or perhaps even harmed by letting them struggle on their own.

I grew up with a learning disability which made me a slow reader and slow writer. I had to receive extra time on exams and go to special tutors, but my parents always expected me to get good grades and produce great work. They never said, “Maybe he’s just not good at school, so we shouldn’t put pressure on him to do better.” Instead, my parents gave me a ton of help, but they always treated me like a “smart rat,” making me believe that I was gifted and would do well, no matter how impossible the work seemed. I also think that by seeing their examples of academic achievement, along with those of my older siblings, I simply accepted that excelling in school was what I was supposed to do. If they excelled, why shouldn’t I?

Question: Did your parents’ expectations help you or hurt you?

Daniel Kish rides bicycle blind using echolocation

Yesterday, I received a one hour crash course from a client deep in the plumbing business on what it takes to be successful making faucets and bathroom components in America.

He works for a company that sells to big box retailers. They have made their stuff in China, but five years ago, they took on the challenge of showing the CEO and accountants of a publicly traded company that they were not only relevant, but could make good brass components in America for less money and with way less aggravation than using subsidiaries in Shanghai. In four years they reduced their hourly burden rate by one third. The employees who made the cut are making more money through production bonuses, and the shop’s old National Acmes are cranking out perfect parts on time to satisfy the numbers people at Home Depot who require a 98% inventory fill rate or they charge the companies penalties.

By reorganizing the shop floor into product cells they were able to change the standard of one operator running two machines to an average of three machines. They hooked up sophisticated monitoring equipment with predictive software that told the operators (and management) how many holes each drill made in real time, so they could change drills before they broke or made inferior parts. This dramatically increased productivity by eliminating most of the tooling wipeout that can kill a setup. The drills and taps now come out of a “vending machine” on the shop floor, not from an inefficient tooling czar, thus saving a lot of space and kibitzing time.

The tooling sales people became allies in the project, with Iscar, Kennametal and Allied reps visiting the plant every week to share best practices. They also started buying tooling from MSC, which is phenomenally efficient in getting tooling to a client quickly.

The company bought a new Fanuc wire EDM to augment their old Agie machine and improved output by 70%. It was a fast payback on a $150,000 investment, so now they are making all of their form tools in-house.

They have become great experimenters in the arcane world of coating. They love the mad scientists at Balzers who keep coming up with slightly different variations for their drills. This willingness to continually tinker with processes enables them to keep shaving costs.

The virtually complete changeover to lead-free brass in the water cooling industry has been a boon to them. Rather than complaining about lead-free, they embraced the change and figured out how to make the cranky material an ally while competitors fight with lead-free brass.

Brass prices have dropped by a dollar a pound over the last 18 months. The retailers are certainly aware of the raw material changes, but prices have held fairly solidly, which is one reason the company is prospering.

The firm does not make everything in house. They have two trusted outside suppliers who are highly skilled on lead-free brass and they have found it useful to job out about 10% of their work to reduce overtime costs and simplify their in-house operation. The outside sourcing is a safety valve and insurance against unforeseen disruptions. Price per piece is slightly higher, but it is deemed to be well worth it.

I had heard about American companies beating foreign competition, but it had never been clear to me how management in the ancient art of screw machining in the high wage market of the United States had managed the task. Wage cuts really have nothing to do with it. It’s all about the organization, tooling technology and the COMMITMENT.

Question:  Is manufacturing prospering in the United States?

I am fascinated by changes coming in staid old automotive land.

The battery operated car business is moving rapidly. Tesla may be surpassed by BMW or GM in the next few years, but Tesla may still be the big winner with its mega battery factory in Nevada, which will push the price down significantly on this platform. Never underestimate Elon Musk. Batteries are the game changer in the electric car business. The car is secondary for making money.

Other truly interesting developments include the advancement of self-driving car technology and the rise of Uber, the automated car service that is quickly replacing taxis and changing many people’s driving habits, particularly those of younger urban folk.

Several companies are predicting a viable self-driving car in three years. Certainly there will be regulatory issues to navigate and lawyers to neutralize, but the trend is clear. In some places in this country or elsewhere the autonomous car will likely be driving people around in five years or less.

Now word comes out that Google, which is at the forefront of development of the self-driving car and also a major backer of Uber, is considering competing with Uber. The Uber founders are furious and scared.

While Uber has a big first mover advantage in the automated car service business, Google could cut the wheels out from under it with its autonomous car. Google already comes into the race with elite searching and mapping software. Imagine the price advantage Google could have over Uber with a driverless fleet hailed by a Google App. This may sound like it’s out of the Jetsons, but it is likely within reach soon. It could revolutionize travel, particularly in cities where Uber is growing phenomenally at the moment.

Google currently has $64 billion in cash on its books, but it knows the search business which provides most of its profit can’t last forever. Some people see that business as threatened by the growing number of mobile apps that take away opportunities for search ads on mobile devices. So Google keeps buying companies and developing new products like Google Glass, looking for a home run to augment search. It looks like urban transportation has the potential to be a game changing business of major magnitude. Uber is now starting its own research into driverless cars by backing a team at Carnegie Mellon in Pittsburgh, but they are 10 laps behind Google. And, Google, an early investor in Uber, with its own person on the Uber board of directors, knows a tremendous amount about Uber’s operation.

From the viewpoint of the people in the machining world, the driverless car could be a net plus. A lot of old cars will be scrapped. The urban market for vehicles will expand. Rail traffic may be reduced. The pickup truck and SUV market will probably not be disrupted in the short run. I can easily imagine a driverless garbage truck with computer chips in garbage cans and dumpsters.

One reason why car sales are running at close to 17 million a year in the U.S. is the appeal of new technology. Honda’s clever Super Bowl ad with synchronized cars with rear cameras backing into parking spaces highlighted the appeal of new stuff for auto buyers. Scrap rates right now are relatively low as people are making their cars last longer than in the past, but high-tech cars are prompting increased sales despite that.

I believe the autonomous car will give car sales a big shot in the arm. I know I will be an early adopter.

Question: Do you want a driverless car?

Rocky’s Title Shot with Apollo Creed

Many Super Bowl watchers are familiar with the Doritos Brand Global Crash the Super Bowl Ad Contest, a competition Frito-Lay has been running since the 2006-07 football season. This year, Doritos received 4,900 videos submitted from 29 countries made by independent filmmakers — not ad agencies — to compete to have their ad played during the Super Bowl and receive $1 million. A panel of judges consisting of Doritos executives, advertising experts, and actress Elizabeth Banks picked 10 finalists. Those finalists’ videos are online currently and will be voted on by Web viewers. Two videos will be shown during the Super Bowl, one the winner of the Web audience vote, whose creator will receive $1 million, and one other video chosen by the panel, whose creator will win $50,000.

I see this contest as a symbol of America’s romance with democratic opportunity, the idea that everyone should have their chance to reach their dream. The Doritos contest is like the World Heavy Weight Title shot that Apollo Creed gave Rocky Balboa. It’s the chance, to be broadcast on the most watched event of the year, win $1 million, and possibly break into an advertising career. It is the same theme as the barage of talent contest reality shows that saturate our TV schedule, such as Top Chef, American Idol, Americas’s Got Talent, and my favorite, So You Think You Can Dance. Their message is that if you have the talent and drive you should be given your dream title shot, regardless of where you were born, how much money you have, or who you know.

I’ve written before about my various YouTube series, such as Jew Complete Me, a reality dating show about my search to find the Jewish woman of my dreams, and my recent documentary, Saving Ferris, a film about the Chicago locations of Ferris Bueller’s Day Off. When it first debuted, I saw Jew Complete Me as my longshot chance to be discovered by a Hollywood executive who could give me a way into the professional mainstream TV industry. It wasn’t exactly a direct title shot, but it was my way of throwing my hat into the ring. Despite my videos receiving hundreds of thousands of views, I never became famous beyond the YouTube screen. So I chose to embrace the quality career options in front of me, journalism and the used machinery business. They weren’t my romantic dream jobs that I had fantasized about when I was 15 — at that age I had envisioned myself following in the footsteps of Quentin Tarantino. But it turned out that I liked both jobs and they grow on me every day. Nowadays, I fulfill my passion for filmmaking with projects like Saving Ferris. What’s nice is that I don’t have to make videos to eat. I get to make videos, and I only produce ones I feel like making. Do I ask myself what if I went a different route and tried harder to be a full-time filmmaker? Once in a while, but not that often like I used to. My main filmmaking ambition now is for my work to be seen and enjoyed by a lot of people.

My dad Lloyd Graff took his title shot when he tried out for the Chicago Cubs as a sidearm pitcher. He wrote a letter to the team and somehow convinced the Cubs to invite him to tryouts at Wrigley Field. As his story goes, he didn’t have his control that day.

Later, Lloyd was confronted with the choice of going into the relative security of the family machinery business or using his journalism master’s degree to take a shot at becoming the next Mike Royko. He chose the family business, and I’ve never once heard him say, “I wonder what would have happened if I had tried to get a job at the New York Times,” despite the fact that some of his fellow journalism classmates at University of Michigan did eventually become famous writers. But obviously, he never did give up his dream job of reaching thousands of people with his writing.

Question: What was your dream job when you were younger?

Noah Graff writes for Today’s Machining World and sells machines for Graff-Pinkert & Co.

Watch a clip of Apollo giving Rocky his shot

There is a famous quote in the Talmud, the revered Jewish commentary, “Whoever saves a life, it is considered as if he saved an entire world.”

Our society puts a great value on human life, but the life preserving business is a complicated expensive challenge for patients, doctors, insurance companies and governments.

I want to share with you some fascinating insights on this topic brought up in a podcast of NPR’s show Radiolab.

Sovaldi (Sofosbuvir) is a drug for treating Hepatitis C that was released in December of 2013. In the U.S. it costs $1,000 per pill, which you take once a day. To cure the disease it costs about $84,000 over 12 weeks. It costs significantly less in other countries where governments regularly negotiate discounts with drug companies. In the first half of 2014, Gilead Sciences Inc., the company that owns Sovaldi, reported $5.8 billion in sales for the U.S. and Europe.

One thousand dollars a day is a ton of money, but unlike many expensive drugs, which often just attempt to prolong life, Sovaldi actually cures people and has a 95% success rate. Gilead argues that the steep $84,000 cost is justified because the treatment usually saves the patient’s life, and when the treatment ends he or she is no longer a burden to society. The company also justifies the high price based on the R&D cost such a powerful drug requires to develop.

The drug expense debate becomes more complicated with drugs that cannot be classified as a cure. For instance, Zaltrap is a cancer drug that costs $11,000 per month, and when the results are averaged out among patients it adds 42 days to a person’s life. It can prolong someone’s life three days or grant a person several more years.

How much money should 42 more days of life be worth? Eventually, the health care system, be it private or public, will not be able to support the number of sick people who have been promised whatever means necessary to preserve life. So where do you finally draw the line and say a person has already received the share of care they are entitled to in order to live longer? Many countries around the world have openly debated this question, but the discussion has remained fairly low key in the U.S. because when it was brought up a few years ago while Obamacare was conceived, Americans began ranting about “Death Panels.”

Believe it or not, the World Health Organization has an equation for this value. It recommends that for one additional year of a person’s life, countries should spend 1 to 3 times per capita income. With this standard, one more year of life for a U.S. citizen should be worth $50,000 to $150,000.

In the NPR story, a reporter asked people in Times Square what they believed was the right amount for society to pay for one more year of a person’s life. She was surprised that most people didn’t freak out or get angry at her. The responses ranged from under $1000 to $10 million. People often asked her questions such as, “What would the quality of life be?” “Would the person be emotionally happy during the year?” “Would other people also be trying to get the money at the same time?”

Listen to the Radiolab podcast here.

Question: How much money do you think one more year of your life should be worth?

Noah Graff writes for Today’s Machining World and sells machines for Graff-Pinkert & Co.