Moneyball and Management

Did I mention that you should go see Moneyball?  Oh, that's right, I did.

In an earlier post, I discussed why this movie is useful as an example of a failed strategy --- despite the fact that the team had a few great seasons.  The important idea is simply that a great strategy is one that insulates a firm from margin-destroying competition, and this means strategy must deliver ways of creating value that rivals cannot emulate.  Rivals had a pretty easy time of emulating the A's, and this is why their advantage dissipated over time.

I'd guess, in fact, that the rivals had an easier time emulating the A's than the A's had in implementing the strategy in the first place.  And the movie --- with its made-up dialogue, fictionalized situations, and, yes, the dreamy Brad Pitt --- illustrates the issues far better than any Harvard case study could.

There's a wonderful, wonderful scene where the A's General Manager lays out his reasoning:  We can't compete with the high-payroll teams if we keep doing things the way we've always done them.  We need to find ways to identify the opportunities that others are missing.  And we're going to do it by out-analyzing them.

This is, as I wrote last week, an amazingly good idea.  And it was completely dismissed by the team's old guard.

The "old guard" had made large investments in skills that were specific to the "way we've always done it."  The scouts had spent their entire careers honing their abilities to determine, by watching, whether a young ballplayer had the potential to grow into a productive major leaguer.  The scouts hadn't spent a minute figuring out how to organize data, how to run regressions, or how to devise good quantitative measures of future ballplayer productivity.  Given this, it's no surprise that the old guard tried to paint these new ideas as crazy, nonsensical, and radical.  Success of these new ideas would reduce the old guard's value to the organization, and threaten both their earnings potential and job security.

In the film, the A's GM explains his reasoning...  over, and over, and over.  And he completely fails to rally the troops; he utterly bombs at building consensus in support of the new ideas.

It's a tough situation. What do you do, as a leader, when you come across untested ideas that you think will be good for the organization, but will require employees with markedly different skills than what your team currently possesses?  Do you keep trying to build consensus before making changes?  Do you push ahead with radical change without internal agreement?  Or do you simply make do with the status quo?

If you're a manager, you'll probably have to make really difficult decisions like this sometime.  So when you watch Moneyball, don't think about the baseball.  Think about the human resource management, and how you'd try to implement change in an organization that you are or will be running.