On the Money

Is outdated thinking affecting your organization’s success?

In his fascinating and highly influential 2003 book, Moneyball, Michael Lewis chronicles Major League Baseball’s remarkable transformation and progression in the area of player stats that best predict a team’s success. A handful of small-budget and progressive-thinking organizations, such as the Oakland A's, led the shift, putting cutting-edge statistical analysis to work on the field and in the front office.

Figuring out the true drivers of success

As Lewis explains, old assumptions as to what makes a good ballplayer have been upended, thanks in no small part to Bill James, a master statistician and admitted baseball geek. Beginning in the late 1970s, James used robust and comprehensive statistical analysis of players’ past performance to predict future results with consistent accuracy. Furthermore, James argued, the stats that most teams looked upon most significantly when gauging talent—namely, home runs, batting average and RBI—were not as indicative as they were thought to be. Instead, he countered, less-valued (at the time) stats like on-base percentage and slugging percentage were much more important in determining players’ true values.

James built a loyal following over the years—but almost exclusively among his fellow observers of the game. Conversely, the tradition-steeped (some might say hidebound) Major League Baseball hierarchy ignored his findings for decades. That ignorance slowly but surely started to change. Big-market teams like the Yankees overpaid for underachievers, while small-market organizations such as the A's based decisions on James’ findings and fielded talented, successful teams for a fraction of the payroll.

As their success—and the reason behind it—became known, other teams began grudgingly following suit. Indeed, Moneyball is considered de rigueur for an ever-increasing number of organizations, including some of the game’s biggest spenders—like the Boston Red Sox, who hired James into their front office a few years ago.

Are you on the Money?

Is your industry challenged in the same way as MLB? Industries such as aviation, automotive, health care and many others are in the process of transformation right now. What was considered common sense or conventional wisdom for decades is being challenged by new schools of thought and new approaches. Change and progress are in the air.

What about you? Perhaps it’s time for you to look a little deeper, do some careful analysis of which measures actually drive value for your company or for your industry. Then put that research to work—shift the metrics. Make sure the numbers or the information upon which you base your decisions are the most valuable and vital ones.

If you want to break through and prosper, follow the lead of the Oakland A’s—don’t just trust your hunches about what metrics are most predictive of success. Be on the Money with your thinking and your approach.

Submit your opinion on this article. (0 comments)