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Moneyball And Finding The Real, Ongoing Competitive Edge

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If you are a geek, you can get excited about the new math Billy Beane put into play.

By Nan Hickman (Author, Open Strategy)

“I mean, this is why I’m here. This is why you hired me. And I gotta ask you… what are we doing here if it’s not to win a championship? That’s my bar. My bar is here..” – Brad Pitt as Billy Bean, Moneyball

Moneyball opens to scenes of loss and emptiness. Brad Pitt as Billy Beane sits in a ghostly stadium that should be alive with game. He sits in a gutted team, with the other teams using them as “organ donors,” a talent farm. By the prevailing wisdom, the field was already sorted into winners and losers before the next season started.

The movie anchors with the audience when Billy goes to appeal to his boss (Guitar Hero CEO, Robert Kotick, in a cameo role). Billy wants to win the championship. His boss is satisfied with a lower bar. And how many people working in companies large and small feel the same way? Who want to win but feel held back by the weight of the game’s prevailing system? Could one manager really affect the game?

Moneyball, winner of the American Film Institute movie of the year, is based on a true story about how the Oakland A’s changed their strategy and competed head to head with the number one team, New York Yankees, although the New York Yankees far outspent them. Hollywood’s been adding business-adventure movies to their mix in the last few years, where a hero and a team hacks out something extraordinary, like 2010′s The Social Network.

In the Social Network, you could imagine what a tech startup might be like in the time that social networks were a green field. Moneyball is a story about what happens after the green field; it’s about staying competitive in the slog of season after season. Watch it, and you’ll see the four keys to competitive strategy.

#1 – What’s The Problem?

“The problem we are trying to solve is that there are rich teams and there are poor teams and fifty feet of crap and then there’s us. It’s an unfair game…and now we’ve been gutted…we’ve got to think differently.” – Brad Pitt as Billy Beane, Moneyball

Measured by conventional math and dollars, in 2001, the Oakland A’s faced insurmountable odds to rebuild after losing key players. But in the team conference room, stating out loud the real unfairness that the A’s were cannon fodder for the league was blasphemy. After all, the pull of baseball is the noble game and the rolling green of a young man’s potential. The task from year to year was plain: pick as much potential as they could afford. The approach from year to year was pretty much the same across all of baseball’s teams.

Beane hacked out an edge by getting beneath the problem and demanding difference. It was a problem he had spent years thinking about, which is not shown in the movie. What defines a winning team and how do they get there? Out of his driving curiosity came his experiments using a new math in baseball called sabermetrics.

If you are a geek, you can get excited about the new math Billy Beane put into play. You might look at your own business and leap to ask: what’s our math to win? What is the math to unlock greatness? What’s the reproducible algorithm? But you replicate the math, it spreads and quickly become table stakes and not a competitive edge.

Seasons come and go, and you have to win again against competitors that may be slower or dumber, but they can copy the math to some pale copy of success. Then the game continues. So, the key to competitive edge is not the math.

Math is a tool, but it’s not implementation. It’s not the data either. Data is an empty stadium without plays being made in it. The real competitive edge is what comes before the math and the leadership to see it and put it into play.

#2 – Courage

“If we try to play like the Yankees in here we will lose to the Yankees out there.” – Brad Pitt as Billy Beane, Moneyball

How do the A’s get a competitive edge against rich teams with momentum? If they tried to match every move, they would still be outgunned. But matching the moves flows with the conventional tribal wisdom and it is a strategy unlikely to put your job at risk. To shift strategy in an innovative way requires courage to go to a place outside the common textbooks and outside the reassurance of to the mapped conquered territory.

“Baseball thinking is medieval. They are asking all the wrong questions. And if I say it to anybody, I’m ostracized. I’m a leper.” – Jonah Hill as Peter Brand, Moneyball

If you are a great strategist, you’re a hunter first. And just like a hunter, you’ve got to go out into the wild, the under-hunted field. You must have a drive to find that edge where advantage may be taken.

In real life, Billy Beane read and latched onto cybernetics through his own manager. Early in his management career, Billy had been in an office where he was lead by questioners and seekers. Ex-marine, Sandy Alderson, who held Billy’s manager job before him from 1983 to 1997 kept an eye for interesting ideas. He studied, buying one of the few copies of the low-print run book Baseball Abstract of Bill James explaining a new perspective on the dynamics of the game.

As an outlier, Bill James could not be quirkier. He wasn’t in pro baseball; he was a night watchman at a bean cannery in Kansas. He wrote the first book of his observations during quiet nights on the job. It wasn’t in the movie, but the ideas around the 2002 strategy percolated between Billy and others on the management team longer for a few years.

However, it was Billy’s relentlessness and courage that drove a new strategy to a practical implementation. When putting a strategy into play, he had to have key team members who had a similar courage. He sought out guys like the character Peter Brand (Paul DePodesta and others in real life).

“Aw, cut the crap, man! Would you have drafted me in the first round?” – Brad Pitt as Billy Beane, Moneyball

In the movie, when Billy vets his new assistant GM – would he tell him the truth or flatter him? When he scouts Scott Hetteberg for his new first baseman, Billy tosses the ball to Scott and asks how’s his elbow. Would the desperate man tell him the truth?

When making a new team to set a new course, you must have people who will tell you their opinion, because math only goes so far. Human beings captain the data and human beings navigate the field. They are the ones that keep you from being blind in the state of play.

“It’s just you and me Pete, we’re all in.” – Brad Pitt as Billy Beane, Moneyball

#3 – Recognizing that Bias is the Enemy

If you have courage, you can spot bias. A real competitive edge is the ability to see the blind spot, the undervalued person, the undervalued opportunity, the way no one else sees. Competitors don’t see the edge perhaps because they are slower and dumber, but most likely, because they are biased. You can codify the math of leveraging the blind spot, but first, you’ve got to have the courage to admit you see something when everyone in the tribe behaves as if is not there.

Smashing conventional scouting wisdom – what does success look like? What is the competition doing? What is the blind spot?

“People are overlooked for a variety of biased reasons and perceived flaws. Age, appearance, personality…” – Jonah Hill as Peter Brand, Moneyball

Value no one else sees. What does success look like? Bias is getting locked into a story that success-bringers look a certain way. In baseball, there was a tribal value on a young man’s beautiful potential. Billy Beane demanded that his scouts snap out of their Man Crush bias. He mocked any crush bias by asking his recruiters if they were “selling jeans.” Billy was about recruiting for a different set of needs, and deploying in a way without bias to their last played position or conventionally perceived flaws.

Like hires like and if you want to hire differently, bring in different value, your team may not have a peer consensus on that. In fact, it’s likely they will not. Peter Brand was the wrong type for assistant manager. The new players Billy wanted – the team balked at his choices. If Billy would have had peer interviews, his winning choices would have been soundly rejected. The first baseman, Scott Hatteberg, was wrong.

Even Billy himself, back in the day, would not have been first pick as a new scout. Peer interviews are likely to just have the outcome of reinforcing team weaknesses and prevailing bias. When taking a new tack, it begins with not having consensus and showing leadership for making new value happen.

What creates a man who can challenge conventional bias? Is there an algorithm? A degree doesn’t create such a man. Loving the game doesn’t. A successful career as a ball player doesn’t create such a man either.

“Nobody in the big leagues cares about him because he looks funny but this guy could not be just the best pitcher in our bullpen, but the most effective relief pitcher in all of baseball.” – Jonah Hill as Peter Brand, Moneyball

When Billy ended his playing career, it’s arguable he wouldn’t have been in a first draft pick for the position of team scout or rated as a potential future general manager. Beane’s personality had an explosive quality, particularly when he was down and losing. As a player, he’d throw bats and it’s said his team mates would slide down the bench when Beane was in a stormy mood, giving him a wide berth. These days, they’d probably put the young Billy on medication. As a player, Beane took loss to heart and loss focus.

To powerfully manage negotiations, you can’t upturn the table in a meeting, because the deal’s not going your way. Yet, Beane had what you would charitably call a passion throughout his career. With only a high school formal education and a passionate temperament, on paper, he wasn’t the golden potential boy of baseball management. Yet later, Beane changed the game of baseball and even went onto the board of directors of software giant NetSuite.

As he got older, Beane had three powerful factors at play preventing him from being a hostage of tribal bias. One, an incomparable drive and emotion about winning, and he took this passion and harnessed it for the new game of management. Second, Beane has a wide curiosity and capacity for study and analysis. Third and most important, he had his illusions broken so that he could no longer be hypnotized again by conventional wisdom. He had experienced loss that wasn’t supposed to happen.

As a young man, Billy could have been a Disney character in story. The plotline was: good-looking, with beautiful skills, becomes a legend. At the time, he was heir apparent according to the culture of baseball with the great Darrell Strawberry being his second. An impressive quarter of a million dollars was on offer to him. And then, he entered the field and failed as a Major league player. The glory in the loss wasn’t seen for years.

The glory here is that his loss in swinging the bat caused him to change how he could swing his mind. Beane was totally devalued by his sport and it broke a spell in how he saw baseball wisdom. He also declared that the decision to sign on as a major league player was the last time he’d make a decision based solely on money.

Sharply dumped on his head early in his career, Billy could see through the real values and fundamentals of the game and winning in ways that a man who did not question the culture could not. He now had a flexible mind not tied to tribal reasoning.

#4 – Tune the Whole Way

“Adapt or Die.” – Brad Pitt as Billy Bean, Moneyball

Having a great core strategy is not enough. Courage is needed for the haul, but great leadership is not so dogmatic that it can’t tune the course. During the A’s spectacular 2002 season portrayed in the movie, they did hit last place early in the season. Eventually, they won twenty games in a row. But they had to tune the whole way.

“Adapt or die” is a flamboyant thing to say for the guy who came up with the new strategy and imposed it on the team, but it wasn’t just a command to a direct report in a movie, Beane had to adapt the strategy as it played out and deal with his own mistakes.

This is a different kind of hero than the guy who comes up with a rousing speech and charges into that one decisive battle. It’s the geek hero, the inventor, the strategist that takes up the new idea and the journey to changing the world. Instead of dodging spies, aliens, or bad rom-com weddings, it’s a different kind of hero’s journey, on the job, but it’s the world where most of us spend our courage.

“I know you are taking it in the teeth, but the first guy through the wall always gets bloody. Always. This is threatening not just a way of doing business but in their minds, it’s threatening the game. Really, what it’s threatening is their livelihood, their jobs. It’s threatening the way that they do things. Every time that happens whether it’s a government, a way of doing business, whatever the people who are holding the reins they have their hands on the switch ..they go batshit crazy. I mean, anybody who’s not tearing their team down right now and rebuilding it using your model…they’re dinosaurs. They’ll be sitting on their ass on a sofa in October watching the Boston Red Sox win the World Series.” – Arliss Howard as Redsox Owner John Henry, Moneyball

Editor’s note: Got a question for our guest blogger? Leave a message in the comments below.

About the guest blogger: Nan Hickman is a technology strategist for cloud and mobile in Seattle. She is writing a book entitled “Open Strategy” about how companies can develop competitive technology strategy. Follow her on Twitter at @nanhickman.