Can Your Company Play Moneyball?

I never saw the movie, but I knew the plot. The cash-strapped Oakland A’s routinely out-performed Major League Baseball’s big money teams by defying conventional, even hallowed, wisdom and recognizing what others did not.

Professional sports is an undertaking where success has seemingly always been something to be purchased at auction.  As true as that may be, there is a caveat – a pre-condition, if you will.  Success issomething to be purchased at auction, but only in the presence of perfect information.  If every bidder not only possesses accurate knowledge of the elements of success but also an equally accurate method of spotting those elements, success would go to the highest bidder.

But information is rarely perfect.There is always an inequity. Assessments of critical elements are always either partially or wholly flawed.  Therein lies the essence of commerce.

I think a stock is more valuable than its current asking price; you think it’s less.  A trade ensues.  I think this player has a few more years left in him, you think he’s washed up.  I believe X is the key to success and that this person can deliver it in spades.  You believe that other skill sets and strategies render X obsolete.  The market decides who’s right and who’s wrong.

To my mind, however, there is something worse than getting it wrong, and that is not getting it at all.  As I wrote in last month’s Good Counsel column for SmartCEO, when the phones were ringing off the hook, I was a genius, regardless of what I did when managing the business.  Unfortunately for that perception, phones ringing off the hook is an outcome and genius lies in the process.

The genius (or folly) of the Oakland A’s lay in identifying those few elements of performance that would translate to success.  For the A’s, it was getting on base, no matter how.  That one metric rippled through every strategic decision.  A run was as good as a single.  Those things unlikely to put or keep runners on base, such as bunts and steals, were outlawed.  Success, it was thought, would follow.

But many companies fail to give even a passing glance to the lesson reiterated (not invented) byMoneyball:  the importance of identifying in your endeavors that one true thing and then designing your organization and teaching everyone in it to strive for it.

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