World Series special: Lessons for investors from Branch Rickey
by Dan Luscher
The Branch Rickey strategy
As a decades-long San Francisco Bay Area resident, regional rivalry obligates me to loathe the Los Angeles Dodgers baseball franchise. But what I like to refer to as the “Branch Rickey strategy” originated with the Dodgers, and it holds important lessons for investors and businesses. Today’s Game 1 of the Dodgers/Astros World Series is a good time to remember this critical part of Dodgers franchise history, and baseball history more broadly.
Branch Rickey, the Dodgers general manager from 1942 to 1950, signed Jackie Robinson and thus broke baseball’s color barrier in 1947. Rickey signed several other black players in the ensuing years. According to the Negro Leagues Baseball Museum in Kansas City, which I visited earlier this year, Rickey did this primarily for business reasons; he wanted to give his Dodgers a competitive advantage by drawing from a broader pool of players, including the significant talent of the Negro Leagues. Put another way, he recognized that baseball’s unwritten code represented a labor market failure, and that the Dodgers could benefit by breaking that code.
This 2014 Sean Braswell piece in Ozy describes this phenomenon better than I can and provides more examples of the competitive advantage of equality in sports as well as business.
Lessons for investors
Investors can similarly gain an advantage by identifying and eliminating bias in companies and investment strategies. Public equities investors can seek out companies that attract the very best talent throughout their organizations with inclusive employee policies and diverse boards. Early-stage investors can look beyond their immediate networks to identify company founders with diverse backgrounds who may be overlooked by other investors. In business and in life, we can and should always look for ways to put the best team on the field.
That being said, I’m a lifelong Northern Californian who spent several formative, baseball-obsessed years living in Houston in my youth. So my own rooting loyalties this week are clear. Go Astros!
