Posted by: pberry | June 29, 2009

Moneyball for the rest of us

Moneyball: The Art of Winning an Unfair Game A couple years back, my brother-in-law loaned me Michael Lewis’ Moneyball. Matt pitched in college and is a pretty smart guy, so I gave it a read. It was another instance of his typical brother-in-law awesomeness. It was so good that I neglected to give it back. I think Matt has already purchased another copy. (If not, Matt, let me know and I’ll buy you a new one. Your old one is falling apart.)

In 2002, the Oakland A’s spent $40 million on player salaries. The New York Yankees spent about three times that amount and three and a half times as much as the lowest team that year. Baseball has a luxury tax, but it does little to keep teams like the Yankees, Red Sox and Angels from spending amounts that small market clubs could never dream of while still making a profit. (On a side note, the problem continues: The Yankees spent nearly 10 times more than the Florida Marlins in 2008.)

Moneyball tells the story of A’s attempt to win inspite of the inequity of team salaries. Through the research of a night security guard in Kansas, A’s GM Billy Beane focused on different success indicators. This lead Beane to draft and sign players that no one else wanted and trade players other teams valued that he didn’t. Beane and the A’s executives weren’t asking if a .300 batting average was still a good batting average. They were asking if batting average was as good an indicator of success as other statistics. Are walks valued enough? Is a player who makes a diving catch a better fielder than the one reads the ball better off the bat? Do RBIs matter at all? Are closes over-valued? How can we exploit all of this?

For the baseball fan, Moneyball is a fascinating read about how to win games in the modern era. Moneyball isn’t about redefining success. This book is about reevaluating the way you achieve success. Baseball fan though I am, I took a lot more away from the book than the importance of OBP. It got me asking questions about achievement indicators in business (and ministry). What things point toward a successful employee? Are policies based on this? Do we hire based on this? Do we compensate based on this? Do we discipline based on this? Do we fire based on this?

All the questions this can bring up for you boil down to two things. In my context:

1. What conventional wisdom is actually folly?
What thing is traditionally valued in my context that has no bearing on my success or failure? What measure am I using that doesn’t really accurately reflect how well I’m doing?

2. Knowing this, how can I use it to my advantage?
What should I be valuing instead? How can I change what I measure?

I’ll leave an idea or two in the comments. Please add yours.

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Responses

  1. Idea 1: Dress codes

    1. Do dress codes actually produce better results?
    Maybe. If you have employees you can’t trust to dress appropriately for their position, then a dress code is probably a good idea. But if you can’t trust them to dress themselves, then can you really trust them to do your business? Dress codes usually don’t help morale. Is it worth it to have low morale if you can make sure everyone is dressed nicely?

    2. How can we use this information to our advantage?
    Perhaps the focus should shift to hiring practices. If the job requires certain attire to be performed well, we should hire people who will dress appropriately on their own. However, if the position doesn’t require it, can we increase morale by letting employees dress how they would feel most productive?

  2. Three things:
    * I’m blushing.
    * El redesign del blog es bueno.
    * When I managed an industrial gas plant, we had sign in the control room that read “Sometimes the things that are measured don’t count, and sometimes the things that count aren’t measured.” A frequent topic of discussion was bemoaning the fact that our key performance indicators had nothing to do with how our plants were operating and whether they were actually profitable. You (and Billy) hit the nail on the head: it’s paramount do figure out what leads to success and focus on those things. The size of an organization may make it tough to officially implement on a broad scale, but you still may be able to implement locally. James’ research gave Beane a new vantage point and now everyone and their labradoodle are trying to come up with the next hallowed metric that will make advanced scouting a cinch.

    (I have to admit, the first thing that popped into my head when my eyes were drawn to your first question in bold letters was “6 month free financing.” I’ve never tried it, but it smells like folly to me. The obvious answer to question 2 would be save your money first, then buy.)


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