Skin in the game

Why sport needs to engage in creative destruction to meet the challenges it faces.

The National Sport and Physical Activity Convention ran over two days in July at the Melbourne Exhibition Centre. The convention attracted a range of domestic and international speakers discussing topics pertinent to the sport and physical literacy industry. Rather than trying to summarise the sessions I attended, I will try to capture the key themes and, where relevant, offer some of my own thoughts across a series of short articles, here on Clubland. The first is skin in the game.

Skin in the game

Like many areas reliant on public funds, sport must adopt the mantra of the day and reflect the prioritises of its main funder, government. Over the last twenty years this has included (but is certainly not limited to) provisioning environments for high performance sport, facilitating increases in participation, activating venues, philanthropy, delivering better health outcomes, underpinning community wellbeing, championing diversity, inspiring the community, and finding a route through politically sensitive issues without being seen to take sides.

Private businesses are no different in that strategic aims change over time as companies realign their priorities. The difference between private businesses and sport, however, is that in the former, old priorities are replaced with new ones rather than simply added to a long list of things they are trying to achieve. Spotify is not trying to maintain a market in compact discs (CD’s) whilst growing their streaming service. Sport, on the contrary, is the industry equivalent of a hoarder, keeping all its old strategic aims whilst adding in a range of new ones to what is becoming an increasingly long list. The result? A lack of clarity on what sport is trying to achieve combined with a misalignment between the skill set of those in the industry and their objectives (I’ll return to this later).

Recent strategy documents in both Australia and England signal another change of tact, moving away from high performance and toward participation and access. These are plans that have responded to a disquiet in public funds being used to support activities very few people engage in, especially at a time when there are more deserving causes. Sport has realised that to remain relevant it cannot see itself as a means in and of itself, but a facilitator of other, more socially beneficial outcomes. This shift, although welcomed in some circles, will not placate those responsible for delivering medals at the Brisbane games in 2032.

Nassim Nicholas Taleb, in his book ‘skin in the game’ suggests a method by which companies can regain their focus on efficiency and align resources to stated objectives. He advocates for layers of the business being stripped away in pursuit of the most efficient operational model. At some point, and with enough resources removed, the business can no longer meet its core objective and you can start to rebuild with a focus on efficiency. This starting point from which a company rebuilds is represented by the equation n+1 with n being the minimum resource required to deliver the intended aim, a case study in creative destruction. Perhaps President Trump and Elon Musk has the book in mind when they established the Department of Government Efficiency (DOGE) in the United States?

Sport can learn from this approach in three ways. First, by deciding what it wants to achieve. That might be any one of the objectives detailed in strategy documents published over the last 20 years, or in fact new ones not yet conceived. Whatever is chosen should be targeted and concise. Second, develop an operational and governance structure that allows you to achieve the objective(s). Third, exercise discipline in pursuit of your objectives, resisting the urge to change to your path of travel. If change is required, do so with caution.

If sport can follow these three steps it may find itself better placed to respond and answer some of the big challenges being faced by the industry. I found myself at various points throughout the NSC convention considering ‘how’ some of the well-meaning initiatives were going to be achieved? This, perhaps, is because sport has become too top heavy. We are awash with those whose superpower (sorry, I really hate that phrase) is strategic leadership and communicating with clarity. Even the smallest of organisations have job titles that would not look out of place in the land of big corporate business. The problem is that there aren’t enough people doing the doing. For all the clammer to suggest participation and inclusivity is now top of the agenda, most sports will have more full-time staff in office jobs than coaches tasked with creating an environment that is fun, safe, and inclusive. Further, if the aim of sport is to deliver better health outcomes, there are too few people with a background and expertise in health science to ensure sport is steered in that direction. Both examples represent a misalignment between how resources are allocated and the stated objective. Time, perhaps, for some creative destruction.

Government and other funding bodies can help too by being clear on what their expectations are when money is allocated. If funding is to achieve better community health outcomes, the industry needs to change and employ people with a specialism in this area. Equally, if the aim is to get as many people being active as possible, we will need are more qualified, experienced, remunerated, and passionate coaches to deliver programmes at the local level. With a clear and concise set of priorities, sport can ensure its operational model is better aligned to delivering successful outcomes.

Achieving this is not beyond the capability, experience nor expertise of sport. The change however needs to start with a reimagining of what sport exists to do and how best this can be achieved. We need some more skin in the game.