Corporate Integration

Are the Oilers and Oil Kings on the same page?

Several years ago I started wondering if the Oilers and Oil Kings were sharing scouting information. It seemed like the logical thing to do; the Oil Kings would benefit from an NHL-quality scouting regime while the Oilers could then synchronize their draft selections such that some prospects might then play within a subsidiary branch of the parent club.

The more I thought about this the more it reminded me of a business marketing strategy called Integrated Marketing Communications. IMC is a strategy whose goal is to streamline and "synergize" every aspect of a company’s marketing network so that a customer receives a consistent and seamless experience throughout their entire interaction. One example of IMC in use is the way that Disney brands itself at every single level so that the customer knows they are working with the same corporation, the idea being that the experience will be positive and create a spinoff benefit for their other business interests, even if only in terms of perception. At the same time, every single employee of Disney knows the goals and perspectives of the organization as a whole so that the employee becomes, in effect, an extension of the brand identification and corporate ideology. Sounds a little borg-like, I know, but the actual execution of the strategy is akin to Google’s in how employees are perceived as valuable facets of the larger corporate gem.

The Oilers are, to my view, creating something like this in the way they have integrated their scouting, acquisition, and development of prospects between the CHL and NHL drafts.

The Oilers currently own the WHL’s Oil Kings and cooperate extensively with Bob Funk Jr., owner of the Oklahoma City Barons, through their AHL affiliation agreement. This provides an exceptional level of involvement and oversight when it comes to prospect development and scouting and one that stands in stark contrast to earlier draft and development models used by this organization. In addition to this, there have been several instances where the Oilers and Oil Kings scouting staff have worked together in determining player selections.

The Oil Kings drafted Martin Gernat and Kristians Pelss on the advice of Stu MacGregor and his scouting staff who told Bob Green that the players may not be high on as many CHL team’s lists because of the obscurity of their home leagues. Green credited his communication with MacGregor and the Oilers’ scouting staff with helping them draft so well in that import draft.

Both prospects had been selected by the Oilers only a few days earlier, so to some extent the word was out that they were potential NHL players. However, Gernat was a 5th round pick in 2011 and Pelss a 7th rounder the year prior. As draft pedigrees go, to an outsider they would appear to be draft-day long shots to make the NHL.

The Oilers, however, would appear to have been paying very close attention to the CHL and the import draft of late. That or Stu MacGregor is so attuned to prospect identification that he is ahead of the curve. Take a look at this site, and you’ll notice that the Oilers, partially by dint of pure lottery luck, have three of the top five CHL import draft players from 2010 in their system with another drafted 19th (Pelss). The following year Gernat was listed as the 8th ranked European by the same blog author.

The available integration of the NHL and WHL management has allowed the Oilers to secure an environment of more in-house development for at least two European prospects in Gernat and Pelss. At the same time, the arrangement has allowed the Oilers to invest scarce scouting resources in assessing local talent like Travis Ewanyk and Mitchell Moroz.

Where the integration truly begins to take place is following the draft, where these prospects can be developed and coached with an organizational framework in mind, from their time in junior through to their early professional career with the goal of eventually becoming an NHL player.

Now, the relationship has to go the other way as well, otherwise you are subsidizing a WHL team with NHL money, and that is simply not sustainable. So, the advantage for the Oilers is that Gernat and Pelss, 5th and 7th round picks, respectively, were put into an environment where they had every opportunity to succeed on and off the ice. This maximizes the NHL team’s return on a minimal investment simply by coordinating efforts and information. The Oilers may in the end get a useful second-pairing defender and a depth winger as a result of this integrated approach to prospect identification, acquisition, and development. Perhaps the players only ever become AHL-level/replacement-NHL talent. In either case, given their draft ranking and the resources devoted to their development, the system provides efficiency to the overall organization by maximizing internal assets.

It also has benefits for players drafted off of the junior roster. In this case, Travis Ewanyk and Mitchell Moroz. Ewanyk missed nearly all of last season with an injury, but Moroz, often considered a 3rd line energy-type player in the WHL, is rumoured to be moving up the proverbial food chain this season. He has started this season playing alongside Michael St. Croix, putting him into a more offensive role with more highly-skilled teammates. While the season is only just underway and there are many changes ahead, it is at least likely that the relationship between the scouting and assessment services for the two teams is at least partially responsible for this move up the depth chart. If Moroz has any success in this position it could do wonders for his development and provide a significant boost to the prospect depth of the organization.

This isn’t to suggest that the junior franchise is made to carry out the demands of the parent company unilaterally. There is a healthy separation between each level, WHL and AHL, which allows for the necessary levels of corporate autonomy to enable each franchise to pursue its own success. The integration comes in the form of information exchange, resource pooling, and organizational philosophy. As when the Oil Kings lobbied heavily for the Oilers to draft Laurent Brossoit in 2010, the Oilers had their sights set on Martin Gernat in the 5th round and did not have a 6th round pick to use on the goaltender and therefore passed. He is currently Calgary’s leading junior-level goaltending prospect and is expected to be a member of Canada’s World Junior team this December.

Photo: James Teterenko/Wikimedia/CC BY-SA 3.0

I decided to look around the league for other teams that might have similar NHL/CHL arrangements. I found five teams that have a CHL connection through ownership. The Oilers, the Flames, the Hurricanes, The Dallas Stars and, up until 2012, the Ottawa Senators. Murray Edwards of the Flames owns the Hitmen, The Hurricanes owner, Peter Karmanos, owns the Plymouth Whalers of the OHL. Tom Gagliardi owns the Dallas Stars and the Kamloops Blazers from the WHL, and Eugene Melnyk, of the Ottawa Senators, owned the St. Michael’s Majors until selling them in 2012. I also took a look at the Boston Bruins, Detroit Red Wings, Phoenix Coyotes and San Jose Sharks to serve as a sort of randomly selected control group.

The Oilers have obviously drafted Pelss, Gernat, Mitchell Moroz, Cameron Abney and Travis Ewanyk from the Oil Kings, in addition to having scouted and allegedly shown interest in Henrik Samuelsson, Keegan Lowe and Griffin Reinhart. There would appear to be a relatively high-level of cooperation and interest paid by the parent club to the prospects on the junior team. This is also partially due to the fact that the Oilers have been rebuilding for much of the time that the Oil Kings have been in existence and as such prospects and development have been a franchise priority. To that end, the Oilers have been organizationally aligned to optimize this relationship.

The Flames have owned the Hitmen since 1997 and in that time only twice have they drafted players from that WHL team. In 2000 they took Brent Krahn 9th overall and Wade Davis 141st overall. There appears to be virtually no hockey operations connection between the two organizations, aside from shared business management under Ken King. For an organization that is as involved in the sports landscape of the city as the Flames are (they own the Stampeders and Roughnecks as well), it is surprising that a business plan focused on integrated marketing does not extend to integrating some aspects of sporting operations.

The Hurricanes have been connected to the Plymouth Whalers since the old WHA squad moved from Hartford. There has been a significant number of draft picks spent on Whaler assets since 1997 with the Hurricanes taking eleven players from the OHL team. I think it is fair to say that the Hurricanes attempted to gain some advantage through their NHL/CHL ownership alignment.

The highest Whaler selected was Tomas Kurka in 2000, taken 32nd overall. To date, he is the most accomplished of any of their Whaler prospects with 17 gp, 3-2-5 and 2 pims. I think it is fair to say that while the Plymouth Whalers have developed some respectable NHL talent in players like James Wisniewski and Tyler Seguin, the Hurricanes have either been either unable to exploit the connection or to identify possible draft prospects from their OHL brethren.

In fact, of late, there appears to have been a detente of sorts with drafting from the Whalers as fewer selections in the last few years have been spent and those that have are generally in the later-rounds. There has been a dearth of talent crossing over in the import draft as well, as only one of the Hurricanes prospects would come over to play with the Whalers, Ondrej Otcenas. He would spend a season with Plymouth before returning to Slovakia.

The NHL/CHL partnership of the Hurricanes and Whalers has not yet returned any significant benefits to the parent club.

Tom Gagliardi owned the Kamloops Blazers prior to his taking ownership of the Dallas Stars and with so recent a connection between the two organizations there is obviously no long-standing relationship in terms of drafting. That being said, in the two draft years since Gagliardi took ownership, not a single player has been selected from the Blazers, nor has one found himself traded or otherwise acquired by that WHL team to the best of my knowledge. There appears to be little to no crossover between the two organizations despite the shared ownership, for whatever reason. This despite the Stars’ traditional drafting interest in the CHL. This may yet change but as it sits today, there appears to be no interest in coordinating the management staff of the two organizations.

The Senators have only ever drafted one player with a playing connection to the St. Michael’s Majors, Kaspars Daugavins in 2006, 91st overall. He was originally drafted out of Latvia and would come over to play in the OHL following his draft year. For whatever reason the Senators appear never to have chosen to integrate their scouting divisions between the OHL and NHL organizations, despite the shared ownership. Eugene Melnyk sold the Majors in 2012.

To contrast the above examples I’ll begin by looking at two teams, chosen at random, with no junior team affiliation through ownership, the Boston Bruins and Detroit Red Wings. I found that there were specific areas from which prospects were routinely drawn over the last few years, the OHL and QMJHL, respectively, but that there was no specific team from which either of those franchises had taken the opportunity to routinely draw.

Most organizations’ scouting services will focus on a geographic area or particular developmental league for their prospects. Under Jay Feaster and John Weisbrod the Flames have begun to focus on the US Developmental system and the high school/collegiate route on the East coast. The Oilers have, under Stu MacGregor, lately made a habit of running through Eastern Europe via the CHL import draft (Latvia, Slovakia, Germany) and the WHL for their prospects. That Boston and Detroit would have similar tendencies does not come as a surprise. Detroit’s history of drafting prospects from Sweden and Russia is near legendary.

Not content with that group I decided to look a little further and checked into the draft history of Phoenix and San Jose over the same few years. What stood out with Phoenix was that there was no discernible pattern of preference. In fact the Coyotes have drafted players from nearly every possible development model available, Sweden, Russia, Czech Republic, Finland, the US Development Team, WHL, BCHL, OHL, QMJHL, SEL, CCHA, even the Alberta Junior Hockey League.

San Jose is also quite widely distributed in their draft selections, though they would appear to be slightly more focused. They seem to spend at least one pick per year on two of the three CHL leagues, one on a collegiate player or U.S. high school prospect, something they do quite willingly, and have largely excluded European prospects with a few exceptions (Tomas Hertl this June, for example).

These two teams would seem to contradict the earlier statement that teams have usual haunting grounds. It could be that the scouting services, under advisement from management, were asked to search multiple leagues, never spending too long on one particular target, with the idea being that familiarity may cloud objectivity. I cannot say for certain, but in Phoenix’s case, they have not saved on expenditures as a result of their efforts and I struggle to imagine another possible explanation. If you have any I’d welcome them.

What I would argue is that most scouting services have areas of interest or investment and that there are a few teams who routinely scatter their scouts to try to draw from all the available sources. Both strategies have pros and cons, but that is another discussion for another day.

Photo: Audriusa/Wikimedia/CC BY-SA 3.0

This lead to my next thought about this new Oilers management structure. Drafting a strong group is all well and good, and developing them properly is terrific, but we’ve all seen what happens when good drafting goes bad; when high picks and enviable prospects fail to return on investment. So what steps can this management group take to try and ensure that they actually achieve their stated goals: to be like the Detroit Red Wings as a perennial contender? The trick would seem to be to draft well, develop that group, then draft well again and develop that group, then draft well again…you get the picture.

Remember when Steve Yzerman retired? Who was going to take over? Were the Red Wings going to struggle now that their captain and one of their best players had left the game? Apparently not, because Niklas Lidstrom, Pavel Datsyuk and Henrik Zetterberg were pretty much already there ready to take over. Now that Lidstrom is leaving the same questions are being asked. The Red Wings’ answer? We’ll just have to draft and develop some guys who can take over. They may not be as good, in fact it is almost a certainty that we’ll wait a long time to see anybody like Lidstrom again, but that is what a draft-and-development system is for.

So how have the Oilers moved towards emulating their model franchise? Interesting parallels can be found in the oil and gas sector.

Manoj Parmesh’s article on new recruitment and retention strategies in the oil and gas sector to combat increasingly difficult recruiting markets and a high attrition rate is a good read from the perspective of an Oilers fan. In fact, the cut-throat zero-sum game played by many NHL managers in talent acquisition has some similarities to the high-stakes world of international oil and gas development and extraction. Billions of dollars are at stake, with market shares, commodity prices, timelines, operating and capital costs, and the inevitable turnover of manpower all having a significant impact on an industry. There are NHL comparables here that I thought were worth mentioning.

I also believe that the point by point statement of necessary elements could be translated quite readily to the overall drafting and development strategy that appears to have been put in place under Steve Tambellini. On the left are Parmesh’s bulleted points, the right are the Oilers’ comparable actions corresponding to the philosophy.

✔ Specialized recruitment managers – Mike Sillinger, Billy Moores, and now Rick Carriere as well as adding Stu MacGregor, Duane Sutter, and others in the scouting and development ranks.

✔ Consolidating recruitment efforts on a global scale – This database allows the Oilers’ scouts to share information, even video, and notes on virtually any prospect from anywhere in the world with the entire scouting and management staff. The Oilers have also expanded their scouting presence to include the more obscure European hockey markets like Slovakia and Latvia.

✔ Raising company profile and aggressively brand building – The organization has made a concerted effort to improve their reputation as a place to play partially through drafting and developing a highly-talented core of youth. This area of the franchise was in such disarray following the departure of Pronger, the refusal by Nylander and Heatley, and the highly-publicized divorce with Sheldon Souray that nearly any movement in any direction would have counted as progress.

✔ Identifying new talent pools and countries where you can recruit massively – This goes back to the alluded-to interest in countries such as Latvia and Slovakia as well as looking into lesser-scouted Canadian leagues as they did with Jujhar Khaira and the BCHL this past June.

✔ Building long-term relationships with universities and technical schools – Yeah, I don’t really have anything to say to that one. If you can think of anything, please feel free to mention it in the comments section.

✔ Identifying and developing good headhunters – the improvement and continual addition of experienced voices to their scouting, development, and now management, staff has meant that a greater amount of thought and debate is going into the hockey decisions. These perspectives add to the larger whole.

✔ Developing strategic workforce planning – When Tambellini traded Andrew Cogliano he said that they needed to space out their draft picks, thus asking for a 2013 pick rather than 2012. He would appear to already be looking at the long term succession plans for the roster based on that comment. This is only one example of strategic workforce planning, but it shows an awareness and predilection for advanced planning that ought not to be overlooked.

✔ Looking for new recruitment technologies – the database that was designed for the Oilers and mentioned above as an example. As well, based on the reports from other media members, the Oilers have assembled a collection of advanced analytics specialists to help collect information.

✔ Improving candidate-selection methods – MacGregor’s drafting criteria appears to have improved over that used by the previous scouting regime. Hockey IQ (as unquantifiable as that is) and skill would seem to be considered paramount, with character (another unquantifiable asset) and work ethic also highly valued. The Oilers improved the voices in the room and then made better decisions on their "hirings". They still occasionally select a Cameron Abney once in a while, but at least we think we’re past the days of the Marc-Antoine Pouliot He-Made-Crosby-Look-Good thinking.

The article goes on to illustrate the enormous cost of attrition replacement in the conventional job industry. The cost for the loss of trained workers is obviously going to be different in an NHL roster situation, and for many teams there is an intentional replacement strategy whereby more expensive veteran players may be replaced by younger, and cheaper, options. So basically just like the real business world.

The rate of attrition for this young Oilers group is likely to increase as players benefit from working alongside an exceptional core and their salary demands become reflective of individual efforts regardless of them being a result of the collective accomplishment. As such, convincing many of those players to remain at a reduced salary in order to retain the structure of the team will become an important task. Failing that, replacement of those players will be crucial.

After their 2010 Stanley Cup win, the Blackhawks lost several key components to free agency. Their challenge since then has been to find the players to replace those positions and roles. To date they have been unable to promote that talent internally and seem to be struggling to find it through either free agency or trade.

The economics of the NHL under the previous CBA, and likely to carry over somewhat into whatever the next CBA will dictate, is that a contending team must take full advantage of cheaper entry-level contracts. In my opinion this need not necessarily be in the case of their higher-end stars but perhaps in the supporting complementary positions.

An NHL playoff drive is such a grind (or at least I think I remember they are) and injuries so common that by that time of the year roster depth often determines the winner as much as talent. The most significant indicator of depth is the availability and affordability of replacement level players. To this end, the Oilers would appear to have several prospects whose skills overlap to such a level that, should they all continue to develop on their current pace; they could provide enough secondary scoring and defensive depth that loss through attrition will not handicap the entire roster.

For example, behind Tyler Pitlick at right wing are Tobias Reider, and Kristians Pelss. Behind Devan Dubnyk there is Yann Danis, Olivier Roy and Tyler Bunz, not to mention Frans Tuohimaa and Samu Perhonen. Behind Teemu Hartikainen and Magnus Paajarvi on the Left-Wing there is Curtis Hamilton, Mitch Moroz, and Juhjar Khaira.

The 50-man reserve list places some constraints on a team’s prospect depth. However, it is far more affordable and effective to promote a younger player from within the organization to a depth role than to have to purchase one on the free agent auction block. Had Anton Lander been ready to step into the role last October, he might have played the minutes that Eric Belanger did this past season, allowing the Oilers to avoid a lengthy, albeit affordable, contract for a 4th line center.

Not all of the Oilers’ prospects will become NHL regulars so quantity must accompany quality at some level. The Oilers are headed in the right direction and management is trying to steer them into the same position as the Bruins, Red Wings, Penguins, Kings and Canucks to be Stanley Cup contenders. The final hurdle to overcome is often the most difficult and teams can be tempted to make drastic changes in the belief that they are only a system or a player away from a championship. This is where depth and a degree of interchangeability of assets can come into play.

The Oilers have assembled a hockey operations team that has synchronized their NHL and junior-level drafting to the effect that information is gathered and prospects assembled under a single organizational philosophy. That more teams haven’t either exploited this resource or positioned themselves to adopt a similar corporate structure is interesting. As in the case of the Hurricanes, an NHL-CHL partnership between teams of a shared owner does not assume a successful partnership, however, it does open up opportunities in the crucial field of prospect identification and development.

Since the 2004-2005 lockout, the NHL draft has grown increasingly valuable as a source of talent acquisition. Any efficiencies and advantages that can be gained through a partnership are certainly worth exploring.

This isn’t to suggest that the Oilers necessarily have a tactical advantage in their junior hockey partnership, but rather that, having that relationship, the organization would appear to be trying to capitalize on it, and the early indications are positive for the benefits of such a partnership.

Taking a more integrated and thorough approach to their drafting and development process is evidence that the Oilers today are a more focused and collected group than they were even a few years ago. This could be due to new ownership, new management, or simply the maturation process of a franchise.

While incorporating their WHL connections does not indicate that they are necessarily drafting any better than other NHL teams or have struck upon a novel and ingenious idea new to the ranks of hockey minds, it is a promising and exciting development for an organization that has spent much of its history just getting by. It is still too early to determine the success of the partnership as it impacts the NHL team. However, we fans always want our teams to be the most innovative, the most cutting-edge, most intelligent in their approach to the game. I can’t say that the Oilers are exactly all of that, but they are doing something special with what they have and that deserves to be noted.