Numbers that count
I have just returned from an exhilarating family holiday road-tripping in California. One of the many highlights was an all-American night out at a ball game, watching the Oakland Athletics take on the Los Angeles Angels in a top of the table baseball clash.
The Oakland A's were made famous a few years ago in the book 'Moneyball' and the subsequent film starring Brad Pitt. These told the story of how general manager Billy Beane overturned the conventional approach to the baseball transfer market through innovative statistical analysis of player performance and value.
Although very much on holiday, I still couldn't help myself thinking about some of the lessons of the Moneyball saga for marketers as they face the challenging world of big data.
The numbers that mattered on the night of the match itself were that Oakland beat the Angels 2-1. But over the past 15 years in which Beane has been in charge, his team have achieved the fifth highest winning percentage in Major League Baseball with the fourth lowest payroll. Based on this impressive performance record, ESPN's FiveThirtyEight website estimates that the failure of the Boston Red Sox to capture Billy Beane in 2002 has cost them approximately $300 million in the intervening period.
In a recent Sunday Times article, Ed Joyce, the former Middlesex and England cricketer, made an important point about Billy Beane's leadership success. His breakthrough was not in introducing statistical analysis to baseball. Indeed far from it - like cricket, an obsession with scoring and strike rates, averages and other facts and figures has always been at the very heart of the sport. The innovation he brought was more in the way he looked at the data and the way he then used the insights that resulted. For example, he challenged the conventional wisdom that matches tend to be won by pitchers, a belief in the game which had led to their market value reaching far higher levels than that of apparently unflashy but still very effective batters. He was therefore able to assemble a team with a different skill, experience and cost profile, but one that was at least as capable of winning matches consistently.
The implications of this story for marketing leaders are compelling. Firstly, it is clear that data alone cannot provide competitive advantage. It is the quality of that data and the way it is used that really matters. The focus must be on what drives results - in our case, the inter-relationship between different aspects of the customer experience, customer attitudes, behaviours, and ultimately business performance. Where we lack the data we need, efforts must be made to capture it. And in designing statistical models, we must be prepared to challenge traditional ways of thinking and never let over-complicated analysis let us lose sight of what our common sense could have told us all along.
Perhaps most importantly, the Oakland A's story tells us that the mindset we bring to the use of data is vital. Billy Beane once said "we try and open our minds and say it's not about perception and what you think you see". A curious mind and a desire to look at patterns differently and creatively is the route to competitive edge. Oakland may have enjoyed a 2-1 victory on the night, but their real win has been finding a way to use numbers that drives this kind of success sustainably and very cost-effectively over time.
Originally posted on the Marketing Society blog.