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Data Analytics

Moneyball was an eye-opener.

Today, it is a widely popular theory. But unfortunately, widely misunderstood too.

Most people watch the movie or read the book and say, “Wow, we should use more of this analytics to solve our business problems”. And that’s where they are wrong.

Moneyball theory isn’t about the importance of using analytics. It is about how you use it.

Analytics was being used in baseball for decades. What Billy Beane’s Oakland Athletics did differently in the 2002 season was that they went against the collective wisdom of baseball scouts and analytics, made decisions based on previously overlooked metrics and went on to become one of the most successful teams of the season despite being one of the most underpaid ones.

Let’s dig deeper into it to figure out what businesses can learn from the Moneyball theory and how they can use analytics in a way that would allow them to experience growth beyond what conventional business wisdom would.

Understand the Problem (Really understand it)

If you have seen the movie, there’s a very interesting and very tense round table discussion between Billy Beane and a bunch of experienced baseball scouts about ‘what the problem is?’ Here is the clip:

The point here is – in general, our industry experience helps us make better business decisions. But it also influences how we see and interpret a given problem. And sometimes it influences us to the point where it prevents us from seeing the problem from a different angle even when the previously tried and tested methods don’t seem to work.

Evaluating a given problem from different angles allows us to see different possible solutions – some of which can be better than the original one we are inclined to stick. In terms of analytics, it allows us to consider previously ignored metrics, which might be the key to the solution for that particular problem.

Trust Your Data (More than your guts)

The challenge with new, unorthodox solutions (like the one in Moneyball) is that quite often it would appear absurd or too risky. So, it is likely that you might find yourself in a situation where you experience, peers, and even your guts would tell you to go otherwise. But if you can see the clear logic in what your data suggests, then just stick with it. It will pay off.

When you are changing something, especially a well-established legacy process or system, you’re going to face the resistance. Not everyone will understand its potential, let alone accept it. The important thing is to be right and stick with it until you deliver results. Because sometimes the best way to convince people is to show them not to tell them.

Involve Leadership (Because data guys don’t make decisions)

In his Forbes article on Moneyball, Florian Zettelmeyer of Kellogg School of Management wrote: “Moneyball succeeded for the Oakland A’s not because of data analytics but because of Beane, the leader who understood the analytics’ potential and changed the organization so it could deliver on that potential.”

So, it is imperative that leaders sit down with the data teams, brainstorm with them, and use their industry expertise to assist them in coming up with the best possible strategies. Leadership’s involvement will also mitigate the resistance towards change and will accelerate the process of making analytics a part of the organization’s DNA.

To wrap things up, here are two images showing Oakland A’s standings in the 2002 (Moneyball) season:

How they stood salary-wise: 

data analytics moneyball oakland a's salary

How they stood performance-wise:

data analytics moneyball MLB standings 2002

Have you seen the Moneyball movie or read the book? Do you think we missed something? Let us know in the comment section below. We will add it.

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