Lessons from moneyball

The appetite for stats has been fuelled by the global success of Michael Lewis’ book, Moneyball.


Cricket’s annual bible, Wisden’s Cricket Almanac, comes complete with the averages of all the players as well as score sheets from all last year’s games. For aficionados it is essential reading. To discover that Kevin Pietersen’s average is 50.48 in test matches yet only 49.93 in first class matches is important.

The appetite for stats – however obscure and arcane – has been fuelled by the global success of Michael Lewis’ book, Moneyball. It was originally published in 2003 and is now a movie starring Brad Pitt. Never have analytics appeared so powerful or worthwhile.

In Moneyball, Lewis tells the story of how the unheralded and poorly supported Oakland Athletics (the As) baseball team figured out how to beat the better financed big boys of baseball. The gulf is illustrated by the fact that at the time of the book the As shelled our some $41 million in salaries to players compared with $125 million paid by the New York Yankees.

To bridge the financial gulf the As used sophisticated analysis to identify what really mattered in team performance. The club championed the use of sabermetrics. This was pioneered by Bill James who defined sabermetrics as “the search for objective knowledge about baseball”. The name itself comes from the acronym SABR from the Society for American Baseball Research.

This turned conventional baseball wisdom – embodied by the troops of baseball coaches and decades of received thinking – completely on its head. Instead of being fixated on batting averages and stolen bases, sabermetrics suggested that on-base percentage and slugging percentage were key, and largely overlooked, measures of success.

The As recruited Paul DePodesta, a Harvard-educated statistician, and led by the indomitable Billy Beane, executed on the analytics perfectly. Beane, a former player with a restless desire for improvement and new ideas, recruited players who excelled at the key measures. They were helpfully cheaper and, even better, delivered results. The As won 20 consecutive games in 2002 and reached the play-offs in four consecutive years.

Now, as others have caught up on the analytical side, the As are finding life more difficult but are still performing way above their resources – their most recent stats show a great defensive performance.

And the business lessons? First, accepted wisdom is often wrong and competing on the same basis as competitors with more resources doesn’t get you anywhere. You have to take a different route.

Second, retaining successful people is incredibly difficult. Paul DePodesta was recruited to become general manager of the Los Angeles Dodgers and is now with the New York Mets.

The final lesson is perhaps the hardest. Once you are ahead, staying there is even harder.

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