Six Sigma Baseball
Spring is in the air and for many sports enthusiasts it's time for baseball. Now I'm not a big fan of baseball or the pages of statistics in the sports section of any newspaper, but I recently read the book Moneyball by Michael Lewis. If you have even a passing interest in baseball, you'll enjoy this book. The book is not only about baseball, but the power of statistics to maximize results at a minimum cost. In other words, it's Six Sigma baseball.
Baseball has had a limiting belief that you need lots of money to win lots of games. (Business has a similar belief. Ever heard anyone in your company say that if we just had more money we could do more, hire better people, grow revenue, etc.?)
While the New York Yankees had over $120 million to spend on players in 2002, the Oakland A's had less than $40 million. Poor teams like the A's can't afford star players or even average players. The only way for the A's to outperform their rivals is by finding undervalued players who's stats vault them to the top of performance. The A's realized that "it matters less how much money you have than how well you spend it."
Good Looks Ain't Everything
Finding players has long been the job of scouts who made most of their recommendations based on gut feel and on what they could "see". Sadly someone who looks good may not perform as well as some who doesn't "look good." The A's realized that "the mind plays tricks on you. There's a lot you couldn't see when you watched a baseball game." And every trick is a financial opportunity for people who can see through the illusion.
"The naked eye is an inadequate tool for learning what you needed to know." The difference between a .300 hitter and a .275 hitter is one hit every two weeks. Based on this inability to "see" performance, the A's began to combine the observations of their scouts with information found surfing the internet. "We're blending what we see, but not allowing ourselves to be victimized by what we see."
Systematic Scientific Investigation
The A's realized that scoring runs is a process, not an event. So the A's set out to analyze the game using statistics and insights compiled by a baseball outsider named Bill James. One of James insights was that baseball gives you "meaningful things to count." (Businesses do too!)
James said: "A great portion of the sport's traditional knowledge was ridiculous hokum." (The same is true in business. How many times do you hear people in your company say: "We can't because ..." then some combination of hokum and folklore?)
Everyone knows that clubs win ball games by scoring runs, but everyone also thinks that runs are a function of batting average (number of hits/at bats). It's not. James hypothesized that runs are a function of on base percentage plus slugging. One of his insights was that walks are important. Batters who got more walks scored more runs. James came up with a formula that was fairly accurate:
Runs = ((hits+walks)*Total Bases)/(at bats + walks)
Bad measurements can lead to poor performance. One of the things baseball counts is fielding errors. But you only incur a fielding error if you're near the ball. If you slow up so that you can't get to a ground ball, it can't be an error. Baseball statisticians have started to carve up the field into zones and measure response to the ball more accurately.
The A's star statistician was Paul DePodesta. "Paul hadn't played pro ball. Paul was a Harvard graduate." He sat in the room with a laptop looking at statistics. Where the scouts saw nothing, Paul saw on base percentages (i.e., runs). The A's found that instead of having everyone hit away, some players could control the strike zone, wear out pitchers and draw more walks. More walks = more runs. More runs = more wins.
The Oakland A's won more regular season games than any other team except for the Atlanta Braves. They went to the playoffs for three years in a row and gave the Yankees a run for their money. The A's paid about $500,000 per win and most of the other teams paid over a million per win, some as high as three million per win.
The A's found that baseball managers tend to pick a strategy that is least likely to fail rather than pick a strategy that is most efficient. (Isn't that true in your company? People avoid failure more easily than they seek success?)
The A's manager, Billy Beane, said: "Assembling nobodies into a ruthlessly efficient machine for winning baseball games and watching them become stars was one of the pleasures of running a poor baseball team." As Lewis puts it: "Superior management could still run circles around taller piles of cash." And isn't that the essence of Lean Six Sigma: using data to outmanage and outperform your competition?
"If gross miscalculations of a person's value could occur on a baseball field, what does that say about the measurement of performance in other lines of work?" Are you willing to shift from looks to measurable performance?
Too many people make decisions based on outcomes rather than process. Are you willing to shift your attention from results to process?
The A's had a willingness to rethink baseball. You need a "fierce willingness to rethink everything." Are you willing to rethink how your business works?"Heresy means opportunity."
You need an outsider to see what you can't.
What is your "ridiculous hokum?" What measures do you already have to see through the illusion? What measures do you need?
If a tradition as unscientific as baseball can learn to respond to the scientific method, why can't you?
Rights to reprint this article in company periodicals is freely given with the inclusion of the following tag line: "© 2008 Jay Arthur, the KnowWare® Man, (888) 468-1537, firstname.lastname@example.org."