Main points of the reading
The book of Money ball is mainly concern with the idea of explaining way the Oakland Athletics (Oakland A’s), one of the poorest teams in baseball, won so many games in 2002.
The main character of the book, is Billy Bean, the manager of the Oakland A’s. Billy with the help of his assistant Paul DePodesta’s and inspire by Bill James tries to find ways to rethink the game of baseball and create new knowledge that helps as a basis to measure the baseball players and determine their respective value.
Billy wanted to change the way traditional baseball has been thought until this moment. He hired Paul DePodesta’s, a Harvard economics graduate a and mathematician, with his help, both started analyzing statistics of baseball to decide which players are the most undervalued.
The Scouts tendency was to analyze players for what they could see with their own eyes and predict their future (including the way they physically look. Ex: Jeremy Brown), in the other hand Billy and Paul thought that a player is not what he physically looks like or what they might become in the future, but rather, the players are what they have done.
Billy’s first contact to knowledge baseball was in 1993, when he joined the front office of the Oakland A’s manage by Sandy Alderson (an educated lawyer from San Francisco). Anderson with the help of Erik Walker and inspired by Bill James began to analyze and understand the knowledge of baseball.
Bill James is considered the father of Sabremetrics (The study of truth and reality of baseball), he started publishing since 1997 the Baseball Abstract, where he included statistical information of baseball. James thought that courting things was the only way to understand the truth in baseball, he wanted to change the way baseball statistics where measure today, they were one time established by a British Journalist called Chadwick. James created a model to predict how many runs each team makes:
This model was focus in the value of walks and extra base hits, instead of batting average and stolen basis. Bill James also concluded that “college players are a better investment than high school players”
In 1983 Bill James also described the law of competitive balance in his baseball abstract: 1.-Every form of strength covers one weakness and create another, every form of strength is also a form of weakness, 2.-The balance of strategies always favors the team behind, 3.-Psychologytends to pull winners down and push the losers upward.
There were other people interested in baseball, which also focus in the evaluation of the sport. Cramer and Palmer also created another model. Cramer demonstrated that baseball players didn’t perform different in different circumstances
Pau fund two statics that correlated mostly in a winning percentage that is based in the on base-percentage and the slugging percentage. He concluded that an extra point of the on-base percentage is worth more than 3 times an extra point of slugging percentage. This helped evaluate the offense.
The method to analyze the defense arose from financial market. Mauriello and Armbruster created a method evaluated the defense by quantifying every event. The Oakland A’s got the system and analyze it pitfalls to understand in a better way the value of the defense. With all this new knowledge, they replaced the loos of Damon’s defense with more offense.
The knowledge help Billy and Paul realized that if they could not afford a player, they could replace it by recreating its aggregate.
Another strategy that the team made was to replace Giambi with Hatterberg, who later in 2002, became the best offense in baseball. Hatterberg believe that every hitter had a weakness that needs to be found.
Another important part of Billy’s success, was his ability to trade. The Oakland A’s had a strategy for the second half of the season, that consist in the acquired of players whose price declined due to the reduce in cost of other teams who had lost. Billy had 5 principle rules in trading that he always applied: Change is always good, the day you say you have to do something you are screwed, because you are going to make a deal, Know exactly how much every player worth, Know what you want and go after it, Every deal will be criticize by public opinion.
Billy Bean made other changes and trades, like replacing Giambi by his brother Jeremy, trading with Omar Minaya, the Montreal Expo’s General Manager ( Arrojo, Seung-jun Song and Youkilis-The god of Walks).
The book also mentions the story of Chad Branford’s to introduce a way of analyzing pitchers. Branford was an undervalue player. Paul started being interested in him after reading the work of Voros McCracken (A paralegal in Chicago) who analyze baseball statics and came up with a measure called DIPS (defense independent pitch statics) to analyze pitchers.
In the regular season of 2002 the A’s won 103 games in the American League West. This showed that even with the lowest payroll a team can become successful. Billy bean and his new management style in baseball changed the way baseball organization is managed.
The regular season of 2002 the A’s won 103 games in the American League West this proved that even though the players with the lowest payroll can get the best players if they know how to choose. Billy Bean and his new management style, change the way organizations are being managed. An example of this is the Blue Jays and Red Sox, who adopted the Sabremetrics science.
As seen in the course, Jeff Hawks define intelligence as predictions, then business intelligence can be describe as the use of the data to better predict the future. We can see through Moneyball that Bill James, Billy Bean, Paul DePedesta and some others have used business intelligence to understand and predict the future of their players in the baseball game.
The book demonstrate that organizations with a data-driven culture and the use of business intelligence (BI) tools are able to create a competitive advantage. Taking the book like a basis we can see how Billy Bean went through a process of rational decision making that along with the use of BI applications led the Oakland’s to succeed. The rational decision process that he followed was the following
Identify a problem.-The Oakland A’s cannot afford recognize player, but they need to find ways to succeed
Think up alternative solutions.-Look for players that can create value for the team
Evaluate alternatives and select a solution.-Find the KPI or indicator that gives the best on base percentage and slugging percentage (measures to evaluate baseball)
The process of rational decision making along with quantitative tools can be used by many enterprises to become more efficient and improve their performance finding valuable indicators to analyze their resources. The book shows how Billy Bean changes the subjective analysis to an objective one.
Two important aspects of the book and lessons can be applied to any kind of business and industries:
It is very important to take into account the information’s that is hidden behind the business and find the data that will led to generate knowledge.
Business change is many times very difficult and complicated. Is hard for enterprises to change their habits and way of doing things.
The problem that many enterprises are facing nowadays is that we as people tend to relay in rules of thumbs, habits or traditions instead of finding ways to improve their organizations and to obtain knowledge through our data. Even though these organizations are reluctant to change, every time is more evident that change is imperative and analysis of the data will avoid subjective thinking and will bring success.
Due to the advance in technologies there has been and increment in the amount of tools in the market that help to create analytics and business intelligence, this makes it easier for more organizations to implement the idea behind the Moneyball book.
The future of business intelligence is very promising, many industries like health care, government, education and many more starting to understand the benefits of this tools and the importance of acquiring new type of knowledge.
Based in a news article (Gartner Reveals Five Business Intelligence Predictions for 2009 and Beyond, 2009) the future of business intelligence is expected to be as followed:
By 2010 20% of the organizations will have a BI tool.
Trough 2012 there is an estimated of more than 35% of the top 5,000 global companies, will falter in the decision process due to a lack of BI tools.
By 2012 the budget allotment for business intelligence tools will be at least of 40%
Opinion and comments
The book of Moneyball is really interesting and made me reflect a lot. Even though it is a little bit technical and some parts where hard to understand, the book broadens my perspective of the importance of using data and business intelligence as a resource to understand some hidden aspects of business without matter what type of industry business are in.
I believe that now that I am on my last semester of my MBA and I’m about to enter a professional world, it is really important to be aware of the benefits that statistics and analytical tools bring in a business environment. This awareness, will help me focus on the aspects of business intelligence, mainly the data gathering and statistic and quantitative analysis to create KPI that help in the measure of business performance
The book left on me the desire to analyze something new, to look for patterns in everything around me, in an effort to understand the world with a different perspective and create a change in people’s life.
“In God we trust; all others must bring data.” – W. Edwards Deming
Gartner Reveals Five Business Intelligence Predictions for 2009 and Beyond. (2009, 01 15).
Lewis, M. M. (2003). Moneyball: The Art of Winning an Unfair Game. New York.