Blog Feature

Moneyball: Business Lessons on Value Creation

Image of Moneyball: Business Lessons on Value Creation


Professor Shannon W. Anderson is an expert on the design and implementation of performance measurement and cost control systems. Her research spans the fields of management accounting and operations research. She has been using the “Moneyball” case in her MBA classes for several years. In this post, she offers an overview of how she applies it to business today.

Moneyball has become a metaphor for everything in business today: it touches heavily on concepts related to budgeting, data analytics and productivity. The movie is about how Oakland A’s General Manager Billy Beane revolutionized the process of scouting new baseball players on a budget by employing computer-generated analysis to sign new players and when best to put them in the line up. Brad Pitt was recently interviewed by NPR about making Moneyball and his role as Billy Beane. The interview provides snapshots of critical moments in the film that help put my points below in perspective.

Typically, we tend to think about budgets and constraints as the enemy of creativity. There is a sense that you need to think big thoughts, and not be constrained by an accountant looking over your shoulder. The Moneyball demonstrates that the hard budget constraints the A’s faced were the cause of creativity—it forced Billy Beane and his managers to come up with new ways to get the most out of their dollar. 

Analyze This: Data, Data, Data

Too often people watch Moneyball and only come away with a sense of the power of data analysis, which is a prominent theme in business today. Data analytics are everywhere. New technology makes sophisticated data analytics and data mining possible, and it’s being used by so many industries now: healthcare, crime prevention, the education sector, social media, you name it.

The subtitle of Moneyball (the book, by Michael Lewis) is “The Art of Winning an Unfair Game,” which illustrates a key point for business leaders. The “unfair game” is that major league baseball teams play with different budgets and with different constraints. However, take note that Lewis used “art” not “science,” which would be more expected given the heavy use of statistics and data analytics. There is an art of management that goes hand in hand with science and making data useful.

Innovative Productivity: Moving Beyond “The Way it’s Always Been Done”

Businesses today are focused on driving productivity. Using Moneyball, we can explore the concept of behavioral economics extensively. It also shows us how our behavioral biases, observational biases and decision-making limitations lead us to make systematically bad decisions.

Reviewing the history of baseball, scouts used a “5 tools” system to judge potential players. Ultimately, we see that those criteria became cognitive blinders because they were more of a tradition rather than an accurate way to predict success. Billy Beane’s system generated data that made possible a more dispassionate look at what predicted success in the industry.

On one hand, experience can be a wonderful thing as far as learning and becoming more efficient. But experience can also condition you to look at things as always having being done a particular way. Managers need to question if “the way it’s always been done” is the best way, and if not, how to break that frame.

Moneyball showed us how Billy Beane got more for his money because he learned what it  means to be productive in baseball, and then built models and tested them. The lesson learned: Knowing resources that are in place to work with, the question becomes how do we redesign processes to be able to be more productive.

Image © Sony Pictures Digital Inc. All Rights Reserved.

Comments

Post new comment

201303653850 » If you have a visual disability, please type the numbers two one three three into the box. Your submission will be promptly reviewed by a validation service and sent to the site administrators.
By proving you are not a machine, you help us prevent spam and keep the site secure.

Commands

Twitter Feed

Loading tweets...

News Release

UC Davis Part-Time MBA Ranked in Nation’s Top 9%
Fourth Consecutive Year among U.S News & World Report's Premier Programs

Image of UC Davis Part-Time MBA Ranked in Nation’s Top 9%

(Davis, CA) — The UC Davis Part-Time MBA program offered in Sacramento and the San Francisco Bay Area is ranked among the top 9% in the U.S., according to U.S. News & World Report’s latest graduate business school rankings.

At No. 29, this is the fourth consecutive year the UC Davis Part-Time MBA program is among the top AACSB International-accredited part-time MBA programs surveyed. This year, there were 323 part-time MBA programs surveyed.

News Release

UC Davis Full-Time MBA Ranked among Nation’s Premier Programs for 20th Consecutive Year
MBA Programs among Top 10% in U.S.
Record Salary and Bonus

Image of UC Davis Full-Time MBA Ranked among Nation’s Premier Programs for 20th Consecutive Year

(Davis, CA) — The UC Davis Graduate School of Management’s Full-Time MBA program is ranked among the premier business schools in the nation for the 20th consecutive year, according to U.S. News & World Report’s latest graduate business school rankings released today.

U.S. News’ latest ranking places the Full-Time MBA program at No. 48, placing it among the top 10% of the 464 Association to Advance Collegiate Schools of Business International’s accredited full-time MBA programs surveyed.

Key statistics from the School’s Full-Time MBA ranking include:

News Release

UC Davis Graduate School of Management partners with Lawrence Livermore and Sandia National Labs to drive technologies from lab to market

Image of UC Davis Graduate School of Management partners with Lawrence Livermore and Sandia National Labs to drive technologies from lab to market

(Davis, Calif.) – With a joint goal of speeding the transfer of new technologies from the laboratory to the commercial marketplace, the UC Davis Graduate School of Management, Lawrence Livermore National Laboratory and Sandia National Laboratories have announced a new partnership for researchers to develop their entrepreneurial skills.

Spotlight Story

Vickie Sherman MBA 13 Finds Her Passion, Her Career—and Herself

Image of Vickie Sherman MBA 13 Finds Her Passion, Her Career—and Herself

What opportunities, decisions, events have shaped your professional life?

My career path has been a climb across a jungle gym rather than a tangent up a corporate ladder. As a child, I used to thumb through the three-inch JCPenney catalogue, picking out the professional women who I would grow to be. I wanted to rule the world from a corner office in a suit and heels. I wanted to shed my humble origins and become Corporate Barbie.

Spotlight Story

MBA Student Consultants Make an IMPACT
Projects Put Business Needs Front and Center

Image of MBA Student Consultants Make an IMPACT

Agilent Technologies’ Electronic Measurement Group is a $3.6 billion business that over the past decade has seen a dramatic shift in its customer base from U.S., and Western European customers to predominantly Asia-based customers. Today, the majority of the division’s revenues are generated outside of the U.S., with an increasing concentration in China.