The wonderful book, Moneyball: The Art of Winning an Unfair Game (2003) by outstanding author Michael Lewis, profiled baseball’s Oakland Athletics and its creative General Manager, Billy Beane. Made into a major motion picture (starring Brad Pitt as Beane) in 2011, the innovative theories described have since permeated far beyond baseball and sports, generating new management advice.
A new addition to the English language, Moneyball also introduced another concept that has since transcended sports analysis, moving to business leadership theory: Sabermetrics. The primary foundation of this management advice began with the assumption that the wisdom (opinion?) of baseball experts was subjective, often flawed and based on statistics that we were no longer relevant.
Casting aside the usual statistics (batting average, RBIs, hits, stolen bases, etc.), as archaic, Moneyball theory based assumptions that more important analytics, e.g., slugging percentage or on-base percentage, better define the most effective offensive players. Since these players could be signed for less money than those with "traditional" statistical superiority, these analytics were critical to the Oakland A's as they were—and remain—financially challenged.
Adapting Moneyball from Sports to BusinessManagement survey respondents indicate that the emphasis on analytics and sabermetrics in the business community, particularly among aspiring and newer business leadership rising stars, is growing rapidly. Hiring managers, personnel committees and HR gurus are also using variations of this technique in growing numbers to identify and evaluate candidates.
Noted author and professor emeritus at Harvard Business School, James Heskett, addressed this issue in his latest book, The Culture Cycle: How to Shape the Unseen Force that Transforms Management, (New York, The FT Press, September 2011). Professor Heskett explores the existence or absence of a management "Moneyball generation" in the business leadership community. His research indicates that there is an expanding group of managers, particularly younger members of the management fraternity, that embraces Moneyball concepts.
Further, many management advice aficionados are expanding these concepts and contending that using analytics properly involves much more than just analyzing data. Some believe that the real key to using analytics is to know what you are looking for. Much like baseball, while anyone can compile statistics, only players have the expertise to effectively interpret their significance. Similarly, managers lacking proper skill sets or valid experience have difficulty interpreting the inherent meaning of the analytics at their disposal.
Junior and senior business leadership must have a thorough understanding of their company, its culture, competition, priorities, and objectives to effectively use the potentially potent weapon of analytics. This combination assumes that the data offered is also high quality, accurate and reliable.
Survey respondents indicate they believe that managers will use analytics more and more in the future. Their Moneyball mentality convinces them that much of the traditional criteria and data that was the foundation for decision-making have become anachronistic. Many believe that the depth of Moneyball techniques now used will pale in comparison to those employed in the future.
The Future of Moneyball ManagementAs the application of Moneyball techniques grows, different variations and incarnations should appear. The phrase "deep indicators," referring to analytics and its use, is becoming a growing part of the business leadership lexicon. Aficionados appear to be designing new and innovative methods to integrate analytics into the decision-making process.
Thinking outside the box is generating some interesting variations. For example, some companies now use puzzles on Facebook, of all places, to select candidates they decide to interview. This is not just a forward-thinking exercise. Many of those responding with innovative solutions are invited to interviews—and subsequently hired—regardless of the qualifications noted in their resumes.
Yet, there are still numerous unanswered questions surrounding the future paths Moneyball management advice may take. For instance, consider the hallowed halls of higher education. Should highly regarded institutions offer degree and non-degree programs that incorporate Moneyball-style analytics and instruction on how to use this sabermetric data? Will the education community embrace the Moneyball philosophy and offer some student options to learn more?
Will devotees adopt innovative applications like the HR puzzles already used on the Facebook sites of potential candidates? Should the apparent success of Moneyball theory replace many classic, proven theories of analysis and evaluation in the critical decision-making function of senior executives? Should a proficiency in analytics become a pre-requisite for acceptance to respected B-schools?
Most importantly, should a proficiency in Moneyball analytics become an important—or required skill set for new managers and/or those targeting the C-level suite? As you might expect, there is debate whether this theory will succeed long-term in the highest levels of management. Even with the respect and exposure Moneyball has generated, the Oakland A's have not enjoyed a World Series appearance in years. Is Billy Beane's theory more effective in business environments than in the sports arena? As more new and senior managers apply sabermetric theories to strategy and decisions, we will all see just how effective Moneyball management can be. Source: //hbswk.hbs.edu/item/6787.html