The movie is based on the book by Michael Lewis, Moneyball: The Art of Winning an Unfair Game. It describes how the Billy Beane, the general manager of the then poorly performing Major League Baseball Oakland Athletics, applied analytics to convert a perennially losing team into a champion based on a low budget.
Beane, almost out of desperation, became intrigued by the use of analytics by Peter Brand, a young statistics buff who loves baseball. Together they used computer-generated analytics to draft young and up-coming players. Their approach discounted what baseball scouts had been doing for over a century – just using their intuition and judgment.
Sports and analytics
In my article Baseball + Analytics = Improved Performance I provide several examples of analytics in baseball that have a parallel with organizations who are struggling to improve their performance. Analytics are all about gaining insights to make better decisions. A problem in business and government is that decisions are often made on gut-feel, on misleading or flawed information, or on politics. There is always some level of uncertainty with decisions. When decisions are made it comes down to asking “Do you really know, or do you think you know?” Analytics provides fact-based information without biases.
In my article I reference the NY Times article Digital Eyes Will Chart Baseball’s Unseen Skills. It describes how technology will collect real-time baseball game data. With the analytics it produces dozens, possibly hundreds, of baseball debates (such as the rangiest shortstop or the quickest center fielder) will soon shift from argument to mathematical equations. The camera and its associated software records the precise speed and location of the ball and every player on the field. It dynamically digitizes everything allowing a treasure trove of new statistics to analyze. Which right fielders charge the ball quickest and then throw the ball the hardest and most accurately? Guesswork and opinion will give way to fact-based measures.
Imagine if organizations have the same power to better understand what contributes to better performance.
Using money wisely
Today the margin for error in decisions is getting slimmer with increasingly adverse consequences of being wrong. Further, austerity is the new buzz word implying to do more with less. Was Billy Beane on to something in being economical in how he managed relatively lower salaries than just buying the allegedly best and highest paid players? Look at this graph. It illustrates how over a decade that baseball teams above the regression line won more games despite lower team player salaries. Below the line teams with high salaries won less games.
Moneyball describes how the use of analytics can turn the odds on a casino. That is, rather than place big bets with uncertain outcomes, analytics increases the likelihood of winning – making better decisions.
By Gary Cokins, from: http://blogs.sas.com/content/cokins/author/garycokins/
Gary Cokins is an internationally recognized expert, speaker, and author in advanced cost management and performance improvement systems. He is principal consultant of global business advisory services involved with performance management solutions with SAS, a leading provider of performance management and business analytics software headquartered in Cary, North Carolina. Gary received a BS degree with honors in Industrial Engineering/Operations Research from Cornell University in 1971. He received his MBA from Northwestern University’s Kellogg School of Management in 1974.
Gary began his career as a financial controller and operations manager for FMC Corporation, and he has been a management consultant with Deloitte, KPMG, and Electronic Data Systems (EDS). Gary’s third book, Activity Based Cost Management: An Executive’s Guide has ranked #1 in its topic on Amazon.com. He has written Activity Based Cost Management in Government (ISBN 1-056726-110-8). His two most recent books are Performance Management: Finding the Missing Pieces to Close the Intelligence Gap (ISBN 0-471-57690-5) and Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics (ISBN 978-0-470-44998-1).
Mr. Cokins can be reached at [email protected]