What I learned from ‘Moneyball’

Outside of analytics, one of the other things I enjoy is watching sports, so it’s always interesting when both worlds collide, to see how the sporting industry views and utilises analytics in what they do. Over the past few years my interest in baseball has grown significantly mainly for this reason, as they appear to be the most sophisticated users of analysis data. (It’s also helped by the fact that every interaction within the game itself is an individual one, but that’s another discussion).

For some context, US baseball currently operates without a salary cap, and each franchise has affiliated minor league teams, so they are able to develop talent from within their own ranks. In theory, it should operate a lot like professional soccer in Europe: the teams with the deepest pockets should inevitably come out on top. But it rarely works out that way for a number of reasons. As a matter of fact, the 2011 World Series was contested by teams in the middle third of current payroll, and Tampa Bay, with a $42 million payroll managed to beat Boston for a playoff spot on the last day of the season (Boston’s payroll was $161.4 million).

With this in mind, I’d been meaning to get around to reading the copy of “Moneyball” I bought when I last travelled to the United States, as it is essentially this whole premise in action. I was so engrossed in the story that I ended up reading the book without stopping. I enjoyed the movie, but you really need to pick up a copy of the book to truly understand the strategy and use of analytics in driving it forward. To give some background, the book focuses around Billy Beane, the General Manager of the Oakland A’s, a franchise which it is fair to say is one of the ‘have not’s’ in the MLB. With this in mind, he realises that he can’t get into bidding wars for players against other franchises as it is a battle he will never win, so he realises that he needs to take a different tack when it comes to building a successful team. The basis of his strategy is determining what really plays a role in determining overall success (ie – winning a baseball game), then seeing if there are ways to acquire these key components ‘on the cheap’. In essence, we’re talking about an optimisation problem here: how can I get the maximum number of wins given my current budgetary restrictions?

Of course, there wouldn’t be a story without there being some element of success in the strategy that was used. So what can be taken away from this in regards to other businesses? As I read the book, here are the thoughts I had.

A challenger needs to challenge, in essence, everything – you can’t compete with the ‘big boys’ on their terms because, well, bigger is better. The ‘big boys’ base decisions on talent, which in itself is a somewhat intangible metric (handing out large contracts to middle of the road players is part of the reason why the NBA nearly didn’t have a basketball season this year). So put the focus on what can be measured that is meaningful, and make decisions with that in mind. Einstein said it best “Not all the numbers that can be counted count.”

Manage change management – you need to have buy-in throughout the entire organisation. This was important for the Oakland A’s at all levels: the scouts needed to understand what was important to look for when evaluating prospects, the minor league feeder teams need to teach players to play a particular way, and the managers need to ensure that their way of thinking was embedded throughout the entire team. Keep everyone aware and informed around what you are looking to do, and ensure compliance with the plan is being met by holding everyone accountable for their actions.

Understand you can’t have it all – if you did, you’d just be competing in the big boy field. In essence, this means that you are competing in areas they are ignoring because the trade-offs are either too high or you’re making a decision with an element of risk attached to it. Keep your focus on what you are looking to achieve, and where you can get true value. In Moneyball land, this means that you are willing to trade off fielding errors for a higher extra on-base percentage. (Interestingly, Tampa Bay, as discussed earlier, have zigged here and put their time and energy into fielding, because people like Billy Beane were seen to be undervaluing it.)

It’s a war, not a battle – give yourself time to evaluate the strategy, and don’t be tempted to give up on it too soon. Make sure you re-evaluate success against the metrics you have set out to be important, but stay nimble enough to adapt your game plan along the way if things aren’t working. The Oakland A’s did that by trading players that didn’t quite fit their plans or weren’t performing as expected. Notably this wasn’t solely about cutting their losses, but by recognising what other teams overvalued they were able to make deals that turned out to be advantageous for them.

Glenn Jamieson is the Head of Data Integration and Efficiency at Metrix Consulting. He is also a passionate fan of sports.

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