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What “Moneyball” Can Teach Us About Analytics

The Academy Award nominations were announced this week and, being a big movie fan, I was excited to see which of my favorites had made the cut. Most of them were there – although how anyone could choose a winner between the nostalgia of “Midnight in Paris”, the exuberance of “The Artist” and the existential depth of “The Tree of Life” makes me glad I don’t have a vote. Seeing that “Moneyball” was on the list made me revisit the enthusiasm I felt when I read a book that was actually entertaining about a subject – analytics – that causes many people to glaze over.

“Moneyball” for those who are unfamiliar with it, tells the story of how the general manager of the Oakland Athletics, Billy Beane, managed to pile up wins with an operating budget much less than that of his competitors. How did he do it? In a sport with more than a century of traditional thought, he utilized business intelligence based upon algorithms built on baseball statistics, called sabermetrics. In short, Billy Beane and his organization were able to select better players for his team based upon the strategy he set (“win the last game of the year”) and discovery that a player’s on base percentage (OBP) and slugging percentage were better predictors of wins than any other statistic.  He found value in undervalued players and turned
conventional baseball wisdom on its head.

But, you say, although they win more than they lose, the Oakland Athletics have not won the World Series since 1989.

So – what can we learn from that? Is the hype about analytics essentially flawed?  The answer is “no”. Baseball can only have one team that wins the last game of the year. For businesses, it’s about the consistently delivering value to your customers in a way that is efficient and effective. Many organizations can exist in the same space and be successful. Analytics can help drive your success.

In the case of baseball, analytics has become table stakes for most of the successful operations in the last ten years. And, in business, more and more organizations have adopted analytics to support their strategy and have mined their data for competitive advantage.  The question is not whether you should use analytics in your business operations but how you use analytics to uncover that competitive advantage. It’s about challenging the status quo and being open to what analytics say about your business.

As you are thinking about your strategy and goals, think about the tools that will help you get there. Think about your organization and your customers’ needs. And finally, think about how you move up the analytics maturity curve.

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