By Edward Iwata
This is only the beginning for this innovative franchise. On and off the court.
Earlier in the season, The Golden State Warriors had just smashed the National Basketball Association’s all-time winning record for a regular season.
During a press conference at that time, Connected Futures asked NBA Coach of the Year and Warriors coach Steve Kerr how the organization’s culture and management style had led to the team’s success.
“I don’t think it was management philosophy that led to this point,” Kerr said.
“It was the players. We have guys who are unselfish and talented, an incredibly gifted group. They’re the ones who deserve the credit.”
But truth be told, the Warriors are a model of management and coaching. They’re a state-of-the-art franchise in the sports-business world.
You may be asking, “What does this great NBA team have to do with business transformation?” The answer: Everything.
While most teams struggle to win games and grow their businesses, the Warriors are a rare blend of both.
New Owners Take Warriors in Winning Direction
Co-owned by venture capitalist Joe Lacob and media entertainment mogul Peter Guber, the Warriors boast a collaborative, winning culture.
Kerr is a master motivator and strategist whose coaching philosophy is now emulated throughout the league.
Then there is superstar and two-time NBA MVP Steph Curry. A true disruptor whose revolutionary style of play is changing the game of basketball.
The NBA’s perennial losers a few years ago are now on a wild, record-breaking ride.
But it wasn’t always that way. Dennis O’Donnell, sports director at KPIX-TV in San Francisco, put it this way: “The new owner inherited one of the worst-run organizations in the NBA, and turned it into unquestionably the best-run organization in the league, from owners to coaches to players.”
And the numbers are hard to dispute.
After Lacob and his co-investors outbid rivals to buy the Warriors in 2010 for $450 million, the team’s value soared to $1.9 billion, according to Forbes 2016 ranking of NBA teams.
If the Warriors’ proposed sports and entertainment complex, the Chase Center, opens in 2019 in San Francisco as expected, the Warriors’ value may rise even higher.
And it gets better.
The Warriors have sold out every home game over the past three seasons. Fan loyalty is off the charts, with 99 percent of season-ticket holders renewing for the 2016-2017 season, according to Lisa Goodwin, director of corporate communications.
The Warriors’ marketing machine is world class.
The team has 14 million followers on social media platforms. Merchandise sales are up 423 percent over last season. To top it off, the NBA named the Warriors 2015 Co-Retailer of the Year.
As the NBA expands globally to basketball-loving countries such as China, the Warriors are well-poised to enjoy many successful seasons as a team—and a business.
“They’ve managed to do it completely differently from everyone else, and they’ve succeeded handsomely,” says Bob Dorfman, executive creative director at Baker Street Advertising. “Other teams are starting to follow that.”
So what’s their secret?
The culture of the Warriors is classic Silicon Valley.
In the same way that successful tech companies transform markets, the Warriors are breaking old models and traditional ways of thinking.
They’re embracing risks that might scare more cautious teams.
“They’re very comfortable being disruptive on the business side and on the basketball court,” said Marc Ganis, a sports-business consultant on many global sports and entertainment projects.
“They figure out what needs to be done, then they do it better than anyone else,” continued Ganis.
On the court, other NBA teams are copying their all-around play: a fast, free-flowing offense and tough, team-oriented defense with versatile players who fill different roles.
In earlier eras, coaches frowned on long three-point shots. Now more teams are playing long ball, encouraging good shooters to fire away.
One of Kerr’s innovative coaching methods is to show videos of soccer great Lionel Messi and his Barcelona teammates to illustrate team and ball movement.
Not surprisingly, some of Curry’s jaw-dropping dribble moves and slashing drives to the hoop resemble soccer players dodging defenders to score.
In the front office, the Warriors focus on everything from marketing strategies to leading-edge technology. They have a full time staff dedicated to player development, marketing, and sales strategies.
The team also leads the NBA in their use of data analytics.
The Warriors were among the first NBA teams to adopt devices such as Sport VU cameras, which study players’ movements and performances during games and practices.
This hard data also helps the Warriors track ticket and merchandise sales, food and beverage consumption—even the buying preferences of fans in pricey courtside seats or the less-expensive seats up high.
“We take our analytics very seriously,” said Chip Bowers, the Warriors chief marketing officer. “Ultimately, the information is shared internally so we’re better informed about what’s happening in our business.”
The fan experience is also top of mind.
At Oakland’s Oracle Arena, for example, the Warriors offer Wi-Fi for all 20,000 fans. The planned Chase Arena will also likely offer many leading-edge IT services, including a virtual reality experience for fans.*
Kenny Lauer, vice president of digital and marketing, told Small Business Trends that the Warriors measure themselves against not only other sports teams, but other businesses in different industries.
When one views the Warriors as “an entertainment marketing group that happens to play basketball, that horizon opens up tremendous opportunities,” he said.
Collaboration Cuts across Everything, Leading to Success
The success of the Warriors stems from “not one thing, but a hundred little things,” Warriors President Rick Welts told Connected Futures before a recent game. Among them is talent acquisition and collaboration.
During a talk at the University of California, Berkeley Haas School of Business, Welts said the Warriors had to dramatically change the team’s losing culture when the new owners arrived.
“They clearly have a very smart talent-evaluation process for bringing in the right kind of guys and getting them to mesh,” Dorfman said. “Each player and employee knows his role. In a league filled with egomaniacs, that’s a very impressive accomplishment.”
The Warriors’ managerial style also appears to strike a balance between collective brainstorming and strong decision making. For sure, the front office is no place for wallflowers.
Picture a pack of sharp, savvy executives who fiercely debate issues, yet come together for the greater success of the team.
Creative and driven people create open dialogue, a free flow of ideas and “a sense of collaboration,” said Bowers, in an interview with Connected Futures.
“The Silicon Valley mentality is to go for it,” Ganis said. “There’s no shame in failing here.”
In the complex planning for Chase Arena, for instance, design and development teams meet often with Warriors executives to air ideas. Questions fly around the conference room.
Everyone weighs in with his or her thoughts and insights. The give-and-take ensures that the Warriors vet different ideas and make the most educated decisions at the end of the day.
“No decision is made haphazardly,” Bowers said. There’s a great deal of trust [that] we’re all here collectively to come up with the right end solution.”
Open communication and transparency also apply to the Warriors’ coaching. The authoritarian, command-and-control approach may have worked in earlier eras, but not with today’s star athletes, who often carry more clout than coaches.
The most successful NBA coaches, from Kerr to Phil Jackson, are open to ideas from all quarters.
“We try to empower them and give them a voice,” Kerr said at a recent press conference. “I think that has been effective for the last couple of years. The players really own the team. Management and coaches are there to try to guide them.”
New Breed of Owners Put Business Strategy First
Even team ownership is evolving, becoming more innovative. Old-school sports owners typically were tycoons who tended to run their teams as money-losing hobbies.
No more. Today’s new breed of owners are technology executives and entrepreneurs who view their teams as full-fledged businesses and lucrative investments.
Consider these owners. Lacob, a partner at Kleiner Perkins Caufield & Byers, and Guber. Steve Ballmer, the Los Angeles Clippers owner and former Microsoft CEO. Mark Cuban, the Internet billionaire and owner of the Dallas Mavericks. Robert Pera, founder of Ubiquiti Networks and the Memphis Grizzlies’ owner.
“It’s great for the league,” Bowers said. “The new guys made money by rolling up their sleeves and being intimately involved in the success of their (tech companies), and they treat their ownership of teams the same way.
It allows us to have a greater degree of business acumen, to be smarter in terms of the types of experiences we create for organizations and the fans.”
But team ownership evolution isn’t enough. The Warriors keep an eye on running like a startup. This includes taking a three-to-five-year snapshot of their business. The key is always planning ahead.
“As our success grows, the demands on our business grow,” Bowers said. “We need to be in a constant state of evolution.”
*Warriors utilize Cisco StadiumVision to deliver targeted HD video and digital content. This content includes promotions, menu items, upcoming events, and more to over 800 displays throughout the venue.
Edward Iwata is a business writer based in Silicon Valley and the author of Fusion Entrepreneurs: Cross-Cultural Execs and Companies Revolutionizing the Global Economy.