What Moneyball Teaches Us About Sharing of Best Practices

Posted on January 22, 2012 | in Baseball, Employee Knowledge, New Ideas, Sports | by

As previously discussed in another blog post, Moneyball is the story of how the Oakland Athletics challenged conventional baseball wisdom by eschewing heavy reliance on scouting reports in favor of statistical analysis to find inefficiencies in the game of baseball.

In 2001 the Athletics lost to the New York Yankees in the playoffs. The Athletics made the playoffs again in 2002, winning 103 games with a phenomenally low cost per win, using this unique strategy.

Unfortunately the Athletics again lost in the playoffs, this time to the Minnesota Twins. The detractors were all out in full force when the book detailing the 2002 season came out, about how Moneyball was a farce.

“Well sure, the Athletics had stellar starting pitchers Tim Hudson, Mark Mulder, and Barry Zito, none of whom were featured prominently in the book.”
“Miguel Tejada won the AL MVP and Zito won the Cy Young award, plus they had Eric Chavez! Of course they’re gonna be great!”
“The Athletics haven’t won anything since – use of statistics is overrated!”
“Moneyball couldn’t help them in the playoffs!”

I was driving home last night and heard one of the guys on the MLB Network channel on SiriusXM arguing about how the Athletics’ success was just a blip.

If that’s the case, why are so many other teams now using statistical analysis to virtually duplicate the Athletics’ strategy?  The Boston Red Sox won the 2004 World Series continuing what Billy Beane pioneered, only with a much larger payroll.

The biggest downfall for the Oakland Athletics’ strategy? THE PUBLISHING OF THE BOOK!

Moneyball essentially spilled the beans (Beanes?) on the Athletics’ front office game plan and every other team in baseball copied it (to varying degrees). Now just about every team has an in-house statistical analysis wing to their baseball operations department.

Had Moneyball not been released, the Athletics would have had a couple more seasons (if not more) of being the exclusive users of this secret approach. They would have a longer stretch of having the market cornered on exploiting the inefficiencies of the game.

In few instances has the phrase “victims of their own success” ever been more true.

Other teams are using this approach now because it works. Michael Lewis writing and publishing Moneyball was the sharing of a best practice on a grand scale. Now the Athletics’ secret was in the hands of their competitors.

So the reason the Athletics haven’t won the World Series since the book was published isn’t because Moneyball doesn’t work – it’s because it’s now working for everyone else with larger payrolls.

(And to the folks who say the Athletics haven’t won anything at all since the book came out? The A’s made the playoffs in 2006 and even swept those same Minnesota Twins in their first playoff series before succumbing to the Detroit Tigers.)

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4 Responses to “What Moneyball Teaches Us About Sharing of Best Practices”

  1. Mark Graban says:

    In the movie (I’ve long since forgotten details of the book), John Henry was trying to hire away Beane after the 2002 season and he had already hired Bill James. So, the cat was already out of the bag, right?

    Baseball seems like a very small industry where everybody knows each other, so word spreads and “best practices” will be copied.

    By comparison, healthcare is a huge industry and the proven “best practices” for things like preventing surgical errors or hospital acquired infections aren’t be copied with the same zeal.

    Maybe it’s because healthcare’s daily successes and failures aren’t featured on a 24 hour news network? And healthcare has room for many “losers” because they aren’t seen as competing directly against other hospitals much of the time?

    • Chad Walters says:

      During the movie, there are scenes where Billy is listening to talk radio, and in one a host is interviewing fired scout Grady Fuson and in another the hosts are skewering the use of statistical analysis during the early season struggles of the team. That could be the first suggestion that the secret was out (although I don’t remember this from the book and it might have been added to the movie for dramatic purposes).

      The cat was going to be fully let out of the bag eventually – yes, baseball is a small industry but there was so much opposition to new ideas like this that it would have taken a few years for it to really take hold, but the book helped speed the transition along and effectively limited the Athletics’ window for exploiting the inefficiency. The best practices would eventually be shared, but this was zagging when the paradigm of baseball strategy had been zigging for over 100 years.

      Bill James had been doing advanced statistical analysis (“sabermetrics”) for years before being hired, and John Henry had just assumed ownership of the Red Sox in 2002 so maybe he felt that it was a good time to change the direction of the team to be more forward-thinking. That said, Bill James wasn’t hired as the general manager and still isn’t a general manager today. Also remember that “Peter Brand” was already on staff with the Cleveland Indians providing the same type of analysis even if he wasn’t fully utilized.

      As an outsider to the healthcare industry (other than being an infrequent customer, knock on wood), the mirror image of what the Athletics have done would be a hospital CEO driving the use of lean principles down through the directors, managers, and staff. Maybe there are more levels of management in a hospital than a baseball team? Maybe it’s as simple as flipping a switch in baseball (start this guy, not that guy) and easy to measure (wins and losses) than in a hospital?

      I agree that there is some degree of “sexiness” that comes with winning in such an exclusive industry like baseball, especially with the multiple-channel coverage 24 hours a day, so the need to change and adapt comes with pressure from having millions of sets of eyes on you every day.

      I won’t pretend to know what some of the biggest challenges you’ve seen or experienced would be, so I can only hazard guesses. Reading your book would certainly help in that regard. 😀

      • Mark Graban says:

        As a quick aside, I still have my copy of the 1984 Bill James baseball abstract, a book I must have read a dozen times.

        Hospitals are way more complex than a baseball team. There might be 7 levels of management between a front-line staff member and the CEO of a moderate sized hospital of a few thousand employees. That might seem like too many layers, but at the same time hospital managers might have 150 direct reports, which is arguably too many to be effective. Lots of managers and directors sitting in meetings and far too little time spent at the gemba. Lean thinking teaches a different approach.

        Didn’t mean to hijack the thread to healthcare.

        Many of these problems are pretty universal human nature. People get stuck in “the way our industry does things” and they don’t want to think there is a different way. Those who are successful with the new way will often get mocked for proving the industry wrong, as there’s a lot of pride and other reasons to justify the status quo as “not our fault.”

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