Here’s What Leaders Can Learn From the NBA’s 3-Point Line

Experimentation is messy, chaotic and uncomfortable. It can also be the best thing you do for your company.

Written by Elliott Parker
Published on Apr. 16, 2024
Here’s What Leaders Can Learn From the NBA’s 3-Point Line
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The NBA’s adoption of the 3-point line in the 1978–1979 season was the most consequential rule change in modern sports. It forever altered the game. 

At the time, many wondered if the rule change was a gimmick that wouldn’t last. The 3-point rule had been a staple of the defunct American Basketball Association, and some NBA coaches who had come over from the old league championed the change. Still, such a dramatic alteration to an established game was hard for many to accept.

Seattle player Fred Brown predicted that “a lot of teams are going to lose more games than they are going to win because of [the 3-point rule].” Unable to imagine the devastating shot accuracy of a future Steph Curry, Brown suggested that “there will be some guys who think they can make it every time, so they’ll be launching them all night.” Ironically, Fred Brown ended up leading the league in 3-pointers the first season the rule was adopted.

Will an organization rely on a strategy of 3-pointers? Or take more shots from inside the paint? Is it better at one or the other?

Regarding the rule change, Bullets coach Dick Motta said at the time, “It’ll prove to be interesting, but I don’t think the league will attract 10,000 more fans a week because of it.”

It has indeed proven to be interesting and has shown that prediction is hard. 

Since the rule change, the game has changed dramatically and attracted millions of new fans. The increase in the fan base can’t be attributed entirely to the 3-point rule, of course, but it is clear the change has led to more exciting — and high-scoring — games.

The last time an NBA team won without scoring a single 3-point shot was in 2016. In that game, the Miami Heat beat the Charlotte Hornets on the road while going 0-for-9 in 3-point attempts. It’s hard to imagine a professional basketball team doing that ever again. 

The 3-point rate (the percentage of all shot attempts that come from beyond the 3-point line) increased slowly at first after the rule change, as teams learned strategies for adjusting to the change. But between 2011 and 2021, the use of 3-point shots increased markedly, from 22.2 percent in 2010–2011 to 39.2 percent in the 2020–2021 season.

Teams have learned that mid-range shots don’t pay. Average points per shot are highest for shots taken near the rim or beyond the 3-point line. Three-point shots go in 36 percent of the time, and 10-foot shots go in 40 percent of the time. But those 10-foot shots, when they are successful, are only worth 2 points. One shot is worth 50 percent more than another shot taken, with a similar chance of success, only inches away.

In a game where efficiency matters and billions of dollars are at stake, teams have found a path to success: teams that make more 3-point shots are more likely to win. Half of NBA teams are taking more than 40 percent of their shots from beyond the 3-point line now, and there is no sign the trend is diminishing.

What matters more, the quality or quantity of shots taken? The answer to the age-old question is, “both.” Teams that win take more shots, but they also take them more strategically. 

Statistics on Innovation

According to a 2022 study by McKinsey, innovative companies overwhelmingly outperformed their peers. In fact, analyzing the economic-profit power curve reveals that two-thirds of innovative growers were in the top quintile.

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Leaders, What Does This Mean for You?

The implications for an organization that wants to innovate are obvious: create and take more high-quality shots on goal. In the face of an unknown future, the best way to maximize returns and minimize risk is to run as many experiments as possible at the lowest possible cost per experiment.

The solution to organizational sclerosis is more experimentation: faster, cheaper and weirder. About experiments, we have also learned the following:

  • Innovators are professional insight gatherers; their primary job is to convert assumptions to knowledge on behalf of the organization. 
  • Insights are a power law asset class; insight gatherers should seek variance in their insight portfolio (as many insights as possible across a broad range of topics). 
  • Experimentation is best done at the margins, at the equivalent of the organizational cell or organism, where failure is cheap but success can catch on. 
  • Decentralization empowers small teams and individuals to access expertise, capital and ideas. 
  • Pursuit of novelty without objective (but within constraints) is surprisingly the most efficient way to achieve outsized outcomes. 
  • Experiments should be designed to surface anomalies, to challenge — not reinforce — the status quo. 
  • The systems used by a scaled organization to run efficiently and safely — its governance, talent, incentives and processes — may not work well when applied to the management and execution of systematic experimentation, which is, by nature, capital inefficient. 
  • Experimentation, when done right, is chaotic, natural and messy — not hierarchical, planned or objective driven. 

It’s that last lesson that may be the hardest to apply. It’s not practical to manage a company without objectives. 

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Master the Organized Chaos of Experimentation

Let’s consider how learning (a.k.a. evolution) happens in the Amazon. Evolution in the Amazon is unmanaged — it’s not a top-down, hierarchical or planned exercise. But it is not a process without constraints.

Natural experimentation in the form of mutation is limited by how many resources organisms can access to grow and thrive, and competition determines which organisms are successful. Evolution has not resulted in polar bears or penguins in the Amazon because of constraints. 

The Illusion of Innovation cover

It is essential that organizations understand and clearly delineate the constraints that determine what kind of experimentation the team will pursue: how much, when and how. 

Experiments, when properly designed and executed, are like call options on a range of future possibilities. They help the organization learn and develop strategic optionality. This does not mean the organization should make a bet in every domain. Trying to reduce risk that way makes it nearly impossible for the company to achieve a big win and locks in the certainty of many failures. Variance is good, but only to a degree.

In the reality of an organization, the leadership team risks being spread too thin across too many bets if experimentation is not designed with a link to strategy or constraints. Leaders must set guidelines for where they choose to experiment. Will the organization rely on a strategy of 3-pointers? Or take more shots from inside the paint? Is the organization better at one or the other?

Innovation success depends on being very good at selecting which experiments to run — at determining how to manage and allocate limited resources against an almost unlimited set of possible experiments.

Excerpted with permission from The Illusion of Innovation by Elliott Parker. Courtesy of Ideapress Publishing.

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