MONEYBALL: THE ART OF WINNING AN UNFAIR GAME
Billy Beane, Oakland A’s General Manager and subject of Moneyball, discussed how your credit union can reinvent itself by identifying undervalued assets to create and sustain a competitive advantage.
He started out as a classic case of an overvalued asset as a player, rated #2 in the MLB draft. Scouts projected on him what he could do instead of focusing on his actual skills and records. As a player he learned that you have to stop fantasizing about assets and finding new ways to realistically value them.
“The road to truth is long, and lined the entire way with annoying bastards.” Alexander Jablokov.
Billy Beane relied on a math scientist to revise the collected wisdom of baseball insiders, and took advantage of more analytical gauges of player performance to field a team that could compete successfully against richer competitors in MLB. Rigorous statistical analysis showed that on-base percentage and slugging percentage were more effective indicators of offensive success, and the A’s were cheaper to obtain that getting players with higher rankings in traditional metrics. Baseball scouts and executives thought the A’s were on the wrong path and that these new data points flew in the face of conventional baseball. Visually, the A’s looked like a mediocre softball team but they got the results.
It’s obvious, but sometimes leaders need to make bold and unpopular decisions, and then stick with them.
Very few of us are willing to make these kinds of decisions. There were many mathematical variables, but the single one that they chose to focus on was called “on-base percentage” (OBP). This just means that by whatever means, whether by taking a walk, getting hit by a pitch, or hitting singles, the player gets to first base. If you don’t have players on base, there’s no way to score runs. This variable defined their strategy, and importantly what they wouldn’t focus on. For example, they were defensively just “good enough”, but focusing on one thing helped them to dedicate their limited resources.
What can credit unions learn from Moneyball? What metrics should we call out more, which should be less important for us?