*Editor’s Note: CC Biz Buzz is a monthly column series that features insightful commentary from a member of the Columbia College Robert W. Plaster School of Business faculty.
Earlier this month, I was able to take in a Cardinals baseball game against the Cubs at Wrigley Field. This was my first time at Wrigley, and I was really excited to take in the history of the game that the field represents. See, I am a lifelong baseball fan. I don’t care if it is Little League, instructional league, Columbia College or the pros; I just love the game.
So, sitting in my seats at Wrigley before the game started with a beer and some peanuts was an absolute thrill. However, after an inning or two, I really began to notice something different about this game that I have loved for so many years. The game has changed dramatically.
I think it began when the National League teams finally acquiesced to the designated hitter. It seems that “fans” no longer have the time to enjoy the game’s nuances, including a genuine pitching duel. Many claim that people have been driven away from watching baseball because of the game’s pace, yet people are still willing to watch poker (go figure). The result of lost audiences and reduced summer entertainment market share were several rule changes for the game of baseball, including pitching clocks, larger bases, and no defensive shifting allowed. Has this sped up the game? Yes. Will it make a difference for market share in the long run? Only time will tell.
As I was driving back to Columbia from Chicago, I had time to reflect on the game, a Cardinals win, and how these changes to the game of baseball are a metaphor for business and some business struggles at the moment.
As a populace, we all seem to want things to happen quicker these days. Our motivations for change seem to be reactionary for a short-term fix rather than thoughtful, forward long-term progress. We have become a nation of “I want it now, fix it now, I don’t have time to wait.” This mindset is not just for the individual who thinks that quitting their 9-to-5 job in pursuit of the next TikTok trend is a good idea. Businesses are “functioning” this way as well.
Let’s look at a couple of examples. First up, Netflix, whose stock price soared to an all-time high of $690.31 in October 2021 from $267.62 in September 2019. Just as quickly, the stock price dropped from its high in October 2021 ($690.31) to a low of $174.87 in June 2022. The concern from shareholders was that Netflix was losing more subscribers than it was gaining between the high and low dates. How did Netflix respond? It raised the monthly subscription price from $13.99 to $15.49. Netflix seemed to not fully understand that COVID-19 restrictions had been reduced to the point that people could get out of the house and do things other than binge-watch TV for entertainment.
The same can be said of the recreational vehicle (RV) industry. Pent-up demand to get out of the house but do so safely translated into a 39.6 percent increase in RV sales from 2020 to 2021, which has since seen a decline in sales of approximately 33 percent from 2021 to 2023 (using projections for the 2023 change).
Lastly, we can look at what happened in the technology and retail sectors over the past three years or so. As COVID engulfed the U.S. population, people began working from home, and the kitchen table would no longer serve as a proper office. Additionally, we all had to increase our internet speeds to keep up with the demands of work, school and play, all happening from the “comforts” of our homes. The result was a tremendous increase in the demand for technology. So how did Silicon Valley respond? The technology firms had a hiring boom full of expansion that was financed with very low-interest loans. These were good times, and they would never end. Finally, the populace was embracing what technology could do for efficiency in the workplace. But alas, the C-suite has begun to demand that employees come back to the office, students are returning to the classroom, and the need for all of that technology has leveled off.
The result of this has been a series of layoffs within the technology sector, a run on banks for funds to cover the debt incurred during the good times and the failure of two banks and counting. As for the retail sector, just-in-time inventory had become the hallmark of retail efficiency pre-COVID. However, with the onset of COVID and the resulting supply chain problems that ensued, many retailers were caught off guard during the 2021 holiday season with a lack of inventory to satisfy the consumers who just wanted to return to “normal.” The retail industry responded in 2022 with unrealistic increases in inventory that led to a tremendous surplus followed by “fire sales” and the pending bankruptcy of several well-known retail stores.
What does this all have to do with baseball? Companies and consumers alike are all responding to current economic conditions like baseball has responded to lost market share in the entertainment industry. We are all looking for that quick fix, and we are acting in a reactionary way that is doomed to neither fix the problem nor allow us to get to the root cause in the first place.
One last example that I hope brings this home: I often tell my students that Sears was the original Amazon. They look at me with a “You are kidding, right?” look on their face until I explain how the Sears catalog brought the world to those who did not have easy access to retail stores. Just think about a Sears that would have continued to innovate for the long term, embraced technology and not gotten caught up in the short-term demands. What would Sears look like today?
Will baseball’s new rules endure? Will the game increase the league’s market share in the entertainment industry? Only time will tell, but I’ll continue to watch because I love the game. I’ll also continue to tell my students the Sears story in hopes that future generations of business leaders will become less reactionary and more thoughtful forward thinkers.
Dr. Mary Dorn is an assistant professor of finance in the Columbia College Robert W Plaster School of Business.