Jay Berwanger was the first winner of the Heisman Trophy and the first player chosen in the very first NFL draft held February 8, 1936. He was drafted by the Philadelphia Eagles, but they thought they couldn’t match his salary demands, so they traded Berwanger’s rights to the Chicago Bears.
When he and George Halas couldn’t agree on salary, Berwanger went to work at a rubber company. He never played professional football. Things have changed a lot since 1936.
Last year, the first pick in the draft was Jameis Winston. He was also a Heisman winner. Berwanger’s salary demand of $15,000 was too much for George Halas. Winston’s contract calls for $6,337,819 per year. But while much has changed, some things remain the same.
Every year there are dozens of trades of draft positions. On the night of the draft many of those are done on the fly, with only a few minutes between draft choices. That’s what led the Dallas Cowboys to ask minority owner Mike McCoy to come up with a way to evaluate trades of draft positions.
The year was 1991. Jerry Jones was the owner. He and McCoy had been partners in an oil and gas business. The coach was Jimmie Johnson. They loved to trade. They figured McCoy was good with numbers and they asked him to come up with a way to quickly assess the relative value of draft positions.
It took McCoy a couple of days and “only a few tries.” The result was the Draft Value Chart. McCoy started from the rules of thumb coaches used to value those draft positions. Then he built out his chart from there. He gave 3000 points to the first pick in the first round and descending values to other picks.
Originally the Draft Value Chart was a “secret” competitive advantage for the Cowboys. Now every team uses something like it on draft night. So what can we learn from the story of the Draft Value Chart?
Lessons about models
The best models are designed for a specific situation. McCoy developed a tool to help executives quickly assess the relative value of draft positions under intense time pressure. Essentially, he reduced the relative value problem to simple arithmetic.
The best models are easy to use. Team executives can use The Draft Value Chart with no training, even if the power fails or the computer crashes.
Lessons about competitive advantage
There are two kinds of competitive advantage. You can gain competitive advantage from innovation. That’s what the Draft Value Chart was. But that advantage goes away as soon as the competition steals your idea or comes up with something similar or better.
If you want sustainable competitive advantage you need a culture that unleashes the power of people. As Apple CEO Tim Cook has said: “You can’t steal culture.”