For the past year a friend had been suggesting I read the book — Moneyball: The Art of Winning an Unfair Game. Recently, I came across Tom Davenport’s blog which refers to the movie Moneyball in discussing the use of analytics in business. Do you use analytics in your business to gain a competitive edge? If so, please leave a comment on what analytics you utilize.
Of course, Moneyball isn’t just a baseball movie; it’s Michael Lewis’s account of the transformation of an industry by analytical decision-making. That’s a transformation that could take place in any industry, including yours. In fact, I see at least six ways in which your organization, whatever it is, is like the 2002 A’s, who won 20 games in a row and made the playoffs—though not the 2002 World Series—despite a very low payroll. Here’s what you have in common with them:
- Analytics can provide you with a competitive edge. Just as the A’s used analytics to find undervalued players who got on base at a disproportionate rate, your company can crunch data to find the offers your customers will respond to best, the price points that will move the most products, or the supply chain configurations that will wring out most cost. The success you achieve with analytics may even transform your industry, as we’ve seen in professional baseball.
- Analytics can help you recruit your best team. Competing on analytics has been a focus in management for a few years, but the hottest area of the field right now is HR analytics. Just as the A’s learned to spot a player with a superior OPS (on base plus slugging percentage) or WHIP (a pitcher’s walks and hits per inning pitched), you can home in on the particular strengths that would raise your organization’s game, and direct your recruiting efforts to the potential employees who have them.
- The change to an emphasis on analytics will require strong leadership. You (or someone in your organization, but why not you) need to lead with the same visionary determination as the A’s General Manager, Billy Beane (and his predecessor,SandyAlderson, who hired Beane and should have been mentioned in the movie). Organizations don’t simply wake up to the notion that they will succeed with analytics; they need leaders to show them why and how to seize this new source of competitive advantage. Perhaps, like Beane, you aren’t highly analytical yourself. That’s not required. You just need how to appreciate how the tools can improve your decision-making. Beane’s role is played byBradPitt, who does a heck of a job playing an analytical executive who chews tobacco.
- Getting an edge requires special skills—and sufficient attention. You may need a trusty analytical sidekick like “Peter Brant” in Moneyball, a thinly disguised version of Beane’s analytical protégé Paul DePodesta. Brant/DePodesta could run the numbers and explain them in straightforward terms to the decision-maker. Beane realized the value of a quantitative analyst like this and made him his assistant. The same kind of close partnership could work for you.
- You can count on opposition. For Beane and the A’s it came from the scouts, the media, and even the team’s on-the-field manager. Beane toughed it out, and he’s still GM of the A’s a decade later.
- Analytics alone can’t carry the day. The insights generated can provide an edge, and sometimes that’s all you need. But the A’s didn’t win the World Series in 2002, or any year since. Even when they were the only team aggressively using analytics, they still found it difficult to overcome the disadvantages of a small-market team with a small budget. Later, when other teams adopted their analytical innovations, they had more money to act on what they discovered. Even the New York Yankees (AKA the Evil Empire in my household) (Yankees Fan) now use analytics. In business as in baseball, the companies that are adopting analytics now are those that are already successful, and they will become even more so.
This brings us to the question of where your resemblance to theOaklandA’s of a decade ago ends. Depending on the industry you’re in, it may be too late to use analytics to best competitors with deeper pockets. (Safe to say you’ve definitely missed your chance to haveBradPittwill play you in a film about your heroic analytical leadership.) That doesn’t mean you should ignore the great story of what Beane achieved with the A’s. The power of competing on analytics doesn’t remain a secret for long, but your team can always play the game better.
- 3 Lessons Every Manager Can Learn From “Moneyball” (fastcompany.com)
- Your Own Kind of Moneyball: The Metrics that Measure You (blog.hbr.com)