The Moneyball revolution that transformed baseball just turned 20 years old. The principles applied by Billy Beane and the Oakland A’s have impacted not just baseball but multiple professional sports. However, two decades later significant opportunity remains for corporate America to learn from Moneyball.
The Oakland A’s parted from conventional wisdom by embracing data and analytics and targeting players who did not always look like stars but contributed to scoring runs and winning games. Data analysis identified undervalued players allowing the A’s to compete with significantly higher paid rosters.
The principles of Moneyball spread to the NBA where data analysis reinforced the value of 3-pointers and layups over long-range 2-point shots. The NBA shot locations show how data analysis changed the game from the early 2000s to 20 years later.
Credited to Ryan Soares, Tableau Public Ambassador
What Corporate America Is Yet To Learn and Apply From Moneyball
While multiple sports have applied the Moneyball approach, Corporate America has been slower to change.
Here are six areas where businesses can leverage the lessons from Billy Beane and the Oakland A’s:
- True experts do not always look the part. The principles the A’s leveraged were developed by a security guard, Bill James, while working the night shift at a pork and beans factory. Bill certainly did not look the part, but his sabermetric principles proved much more effective in evaluating talent than traditional methods of player scouting. The best ideas often do not come from those who are the most well-spoken, have the most prestigious title, or have the largest following.
- Analytics alone are not enough; they have to lead to action. Bill James published his first abstract in 1977 and ten years later his work was well known across the sport. However, it was not until 15 years later that a major league team acted on James’ well-known analysis. Improving a business’s analytics capabilities is an important step, but it is not enough to know what to do, insights have to lead to action.
When Billy Beane first read Moneyball he was furious. The book’s author assumed it was because he had shared too many of the A’s secrets. Beane was actually upset over his direct quotes including profanity which he knew his mother would not appreciate. Beane had no concerns over the ‘secrets’ in the book as he assumed no one in baseball would read the book and Bill James’ principles were already well known. The A’s advantage was not in knowing what to do, but in being willing to put it in place.
- Get metrics and incentives right. Baseball statistics first appeared in the New York Morning News in 1845. Teams tracked player statistics for 150+ years before the A’s implemented a better way of analyzing the same data. All companies use a set of measures to track their performance and ensuring they are measuring and incentivizing the right things can mean the difference between mediocre and top performance.
Getting metrics right can be an iterative process, even for a statistic as seemingly straightforward as home runs. In 2002 the A’s used their first-round draft pick on John McCurdy, a power-hitting shortstop from Maryland with impressive stats. The A’s didn’t realize the left field fence at Maryland was only 260 feet, inflating McCurdy’s college statistics. McCurdy struggled in the minor leagues, never playing in a major league game and the next year the A’s updated their analysis to include park dimensions. The same lesson applies to the corporate world. Leaders must ensure their metrics and incentives are aligned with overall objectives. As famed investor Charlie Munger said, “Perhaps the most important rule in management is to get the incentives right.”
- Team dynamics still matter. Even the analytics-driven A’s General Manager Billy Beane did not make his decisions strictly on the data. Beane traded for Jeremy Giambi who was statistically a great fit for the A’s. Despite the data, due to off-the-field issues and “having too much fun on a losing team,” Beane traded him away for a statistically inferior player. In baseball as in business, it is rare for a star employee’s contributions to outweigh the cost of negatively impacting the performance or morale of their team members.
- Get the right people on the bus. In “Good to Great” Jim Collins stressed the importance of getting the right people on the bus. Identifying and hiring the right talent as well as parting with the wrong talent is much of what led to the A’s success in Moneyball. Business teams are the same, while developing talent is important, it is critical to get the right people on the team first. Dedicating ample time and resources to the hiring process can seem restrictive and counterproductive, but the impact of improvements in the quality of hiring decisions is hard to overstate.
- You can win as an innovator and as a fast follower. Despite the A’s improbable success, their approach has not led to a World Series title in the 20 years since Moneyball’s release. The Boston Red Sox leveraging tactics modeled after the A’s paired with a higher payroll won the 2004 World Series two years after the A’s breakout season. The Red Sox’s success shows it is not just the initial innovators who can benefit from new ways of thinking. Even well-known innovator Steve Jobs famously said “Good artists copy, great artists steal.” Both innovators and fast followers can benefit from new ways of thinking.
At Ankura we have developed an approach to Strategic Planning and Transformation that incorporates each of the learnings discussed above and helps clients identify new ways of approaching their work. Please reach out to share your successes in applying these themes or talk more about how Ankura can help.
© Copyright 2024. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
