Spring is in the air and for many sports enthusiasts it is baseball time. Now I’m not a big fan of baseball or the statistics pages in the sports section of any newspaper, but I recently read the book Moneyball by Michael Lewis. If you have a passing interest in baseball, you will enjoy this book. The book is not just about baseball, but about the power of statistics to maximize results at minimal cost. In other words, it’s Six Sigma baseball.
Baseball has had a limiting belief that it takes a lot of money to win a lot of games. (The business has a similar belief. Have you ever heard someone in your company say that if we had more money we could do more, hire better people, increase revenue, etc.?)
While the New York Yankees had more than $ 120 million to spend on players in 2002, the Oakland Athletics had less than $ 40 million. Poor teams like the Athletics cannot afford star players or even average players. The only way for the Athletics to outperform their rivals is by finding underrated players whose stats take them to the peak of performance. The A’s realized that “it matters less how much money you have than how well you spend it.”
Good looks aren’t everything
Finding players has long been the job of scouts who made most of their recommendations based on their instincts and what they could “see”. Unfortunately, someone who looks good may not perform as well as someone who doesn’t “look good.” The Athletics realized that “the mind plays tricks on you. There are a lot of things you couldn’t see when you watched a baseball game.” And each trick is a financial opportunity for people who can see through the illusion.
“The naked eye is an inadequate tool for learning what you need to know.” The difference between a 300 hitter and a 275 hitter is one hit every two weeks. Based on this inability to “see” performance, the Athletics began combining their scouts’ observations with information found while surfing the Internet. “We are mixing up what we see, but we don’t allow ourselves to be victims of what we see.”
Systematic scientific investigation
The Athletics realized that scoring runs is a process, not an event. So the Athletics set out to analyze the game using statistics and insights gathered by a baseball outsider named Bill James. One of James’s ideas was that baseball gives you “meaningful things to count on.” (Businesses do too!)
James said: “A lot of the traditional knowledge of the sport was ridiculous nonsense.” (The same is true in business. How many times do you hear people in your company say, “We can’t because …” and then some combination of nonsense and folklore?)
Everyone knows that clubs win ball games by scoring runs, but everyone also thinks that runs are a function of batting average (number of hits / at-bats). It’s not. James hypothesized that runs are a function of percentage on base plus slugging. One of his ideas was that walks are important. The hitters who walked the most scored the most runs. James came up with a formula that was quite accurate:
Runs = ((hits + walks) * Total bases) / (bats + walks)
Bad measurements can lead to poor performance. One of the things baseball counts is fielding errors. But you only make a fielding error if you’re close to the ball. If you slow down so you can’t hit a ground ball, it can’t be a mistake. Baseball statisticians have begun to divide the field into zones and measure the response to the ball more precisely.
The A’s star statistician was Paul DePodesta. “Paul had not played professionally. Paul was a Harvard graduate.” He sat in the room with a laptop looking at statistics. Where scouts saw nothing, Paul saw on base percentages (ie runs). The Athletics found that instead of everyone hitting, some players could control the strike zone, wear down pitchers and get more walks. More rides = more races. More races = more wins.
Results
The Oakland Athletics won more regular season games than any other team except the Atlanta Braves. They went to the playoffs for three years in a row and gave the Yankees a run for their money. The Athletics paid around $ 500,000 per win and most other teams paid more than a million per win, some as much as three million per win.
Management strategies
The Athletics found that baseball managers tend to choose a strategy that is less likely to fail rather than choose a strategy that is more efficient. (Isn’t that true in your company? Do people avoid failure more easily than they seek success?)
Athletics manager Billy Beane said: “Bringing anyone together into a ruthlessly efficient machine to win baseball games and watching them become stars was one of the joys of running a poor baseball team.” As Lewis puts it, “Top management could still roll around higher stacks of cash.” And isn’t that the essence of Lean Six Sigma – using data to outperform the competition and outperform it?
Perspectives
“If large miscalculations of a person’s worth could occur on a baseball field, what does that say about measuring performance in other lines of work?” Are you willing to move from looks to measurable performance?
Too many people make decisions based on results rather than processes. Are you willing to shift your attention from results to process?
The Athletics were willing to rethink baseball. You need a “fierce will to rethink everything.” Are you willing to rethink how your business works? “Heresy means opportunity.”
You need an outsider to see what you can’t.
What is your “ridiculous nonsense”? What measures do you already have to see through the illusion? What measurements do you need?
If an unscientific tradition like baseball can learn to respond to the scientific method, why can’t you?