It’s not too often that a Sunday afternoon at the movie theater results in a business epiphany. But that’s exactly what happened to me at a recent viewing of Brad Pitt’s latest blockbuster, “Moneyball”. “Moneyball” is a dramatization of Michael Lewis’ 2003 best-selling book of the same name, which presented an inside look at the inner-workings of the Oakland Athletics font-office operations and the team’s General Manager, Billy Beane. The A’s, despite being one of the most cash-strapped organizations in the Major Leagues, were one the winningest teams in baseball in the early 2000s.
In his book, Lewis detailed the unconventional methods by which Beane assembled his rosters in those years. While other teams focused on more qualitative methods of player evaluation (“the ball really pops of his bat”, “he’s got a good ballplayer’s body”) and filled their front offices with scouts and ex-ballplayers, Beane surrounded himself with statisticians and economists. Beane and his cohorts sought to exploit market inefficiencies in player evaluation through advanced statistical analysis to find and sign undervalued players in order to allow themselves to be competitive within their (relatively) severe budgetary constraints. In 2002, the A’s supplemented their core of MVP shortstop Miguel Tejada, third-baseman Eric Chavez, and the terrific “Big 3” starting rotation of Tim Hudson, Mark Mulder, and Cy Young Award winner Barry Zito, with a brand of low-risk baseball that placed high-value on performance metrics such as on-base percentage and slugging percentage. That year, the A’s amateur draft strategy also reflected a similar philosophy and focused primarily on statistical analysis and undervalued college-level players. Beane’s strategy worked wonders; the A’s won 103 games (costing an average of $388,349 per win, whereas the New York Yankees would pay more than $1.2 million for each of their 103 wins that season) and enjoyed another trip to the post-season.
It is important to remember that in 2002, the season featured in “Moneyball”, performance metrics like on-base percentage (vs. traditional metrics such as batting average or runs batted in) were obscure and largely overlooked by the rest of baseball. Thus, players who excelled in these areas were undervalued and available at a cut-rate to the small-market A’s. After the release of “Moneyball” the A’s philosophy was thrust into the limelight and caused sweeping change throughout Major League baseball. Other teams quickly adapted the A’s model of quantitative analysis, a philosophy that has been dubbed the “Moneyball” style.
The “Moneyball” style isn’t without its critics. The most notable of whom is Hall of Famer and broadcaster Joe Morgan. Morgan has incorrectly determined the “Moneyball” philosophy to be synonymous with the A’s 2002 brand of low risk, high-OBP baseball, which is in stark contrast to the hard-nosed “small ball” style of play championed by Morgan’s own “Big Red Machine” teams of the 1970s. What Morgan fails to realize is that “Moneyball” is not just about players drawing walks and getting on base, it is about getting the greatest amount of wins out of each dollar spent, and identifying value where other teams do not. Think about it, as other teams have caught on to the “Moneyball” philosophy, statistical measurements exploited by the A’s in 2002 are probably now overvalued and consequently no longer actually a pinnacle measurement of “Moneyball” style teams. The “Moneyball” philosophy isn’t about drawing walks and getting on base, it’s about maximizing ROI.
The Oakland A’s were essentially forced into the “Moneyball” philosophy because of economic circumstances. A team like the New York Yankees, the richest and most valuable franchise in baseball, can afford to overspend for high-priced free agents when building their roster. If the Yankees sign a player who performs poorly, they can sign someone else. They can afford to be inefficient. In contrast, if a team like the A’s inaccurately evaluates a player, and misallocates money to a poor performer, the results can be disastrous.
Today’s marketers are faced with a situation that is very similar to the one faced by the Oakland Athletics. The recession following the 2007 financial crisis, and subsequent stagnating economic condition, has left many businesses cash-strapped and has forced them to rethink the way they spend their marketing money. In the past, businesses may have conducted certain marketing activities because “that’s the way it’s always been done” rather than looking at any specific performance metric. If a marketing campaign didn’t pan out, businesses simply tried something else. Obviously, this is a poor approach than can also yield disastrous (if not fatal) results.
Why then do marketers still behave this way? Do we still do things like send out promotional materials to everyone in our CRM, without really evaluating whether or not every contact on our distribution is actually a good prospect? Do we spend resources re-designing our website so that it “looks cool and modern” without actually analyzing user experience through performance metrics? Do we conduct direct marketing campaigns without an accurate way to effectively measure impact, reach, and effectiveness? Do we hire someone to help us jump on the Social Media or Mobile Marketing bandwagons without pausing to develop an in-depth strategy? Let’s be honest with ourselves, we’re all guilty of some level of inefficiency in our marketing. We are trying to act like the New York Yankees, when our financial statements tell us that we’re the Oakland Athletics.
After the 2002 season, Billy Beane was courted by Boston Red Sox to become their next general manager. The Red Sox were tired of being also-rans, and were ready to make drastic changes to their management and adapt the “Moneyball” philosophy. This situation is superbly portrayed in the film version of “Moneyball” when Pitt’s Billy Beane meets with Red Sox owner John Henry (played by Arliss Howard) at an empty Fenway Park. Ultimately Beane chose to remain in Oakland, so the Red Sox would hire “Moneyball” disciple Theo Epstein who would steer the Red Sox to World Series victories in 2004 (their first since 1918) and 2007. In the film, Henry recognizes Billy Beane’s genius, and accurately predicts that the “Moneyball” philosophy is about to spark a revolution. Of course this revolution won’t come without its controversy. The “Moneyball” philosophy represents a direct attack on established baseball philosophy and threatens the comfort and livelihood of those who refuse to adapt.
For someone like myself, who has a strong background in printing and publishing, this scene really hit home. For years, printers and publishers have been torn between two worlds; the ink-on-paper vendor-model establishment, and the electronic and online service-model frontier. For years printers and publishers have been told that they need to adapt and diversify. The goal, we’ve been told, is to recognize that traditional ink-on-paper is no longer our product, but simply one mechanism by which we can deliver our true product; content. Sure, print still has its place, but it is only one piece of the puzzle along with other forms of conventional and digital communication channels. Why then, are so many of us struggling to adapt?
Just as the film version of John Henry explained to Billy Beane; it all comes down to livelihoods being threatened. Unfortunately, many of us don’t view ourselves as “Content Providers” or “Marketing Services Professionals” who are able to provide a complete communications package. It’s natural for humans to be uncomfortable with change. The problem arises when our discomfort prevents us from taking action necessary for our very survival. John Henry put it bluntly – those who don’t change their ways are dinosaurs, they’re extinct.
In June 2011, Printing Industries of America CEO Michael Makin made headlines when he published an open letter to the White House decrying a recent Obama Administration Executive Order that would, amongst other things, cease the printing of the Federal Register. Mr. Makin’s intent was to champion the print and graphic communications industry as a viable industry that is an important piece of the American Economy. However, amidst the applause for Mr. Makin one could find question as to whether his response simply constituted a defense of “print for the sake of print” that would portray the industry as backward-looking and arcane. Some asked if Makin’s response would have been more credible if he had been more aggressive in asking if a printed Federal Register was an effective use of taxpayer dollars for the purpose of effectively communicating information to members of Congress.
Those of us in the “Content Provider” and “Marketing Services” industries can learn from this episode. Do we stick to our production and delivery methods because they’re the most effective, or do we stick to them because they’re the most comfortable?
A paradigm shift for a business doesn’t come easy. The easiest way to overcome our resistance to change is by turning the unfamiliar into the familiar. For those of us in the “Content” industry, that means embracing technological change in our personal lives in order to better understand how it fits into our professional lives. Don’t be the ostrich who sticks his head in the sand whenever it feels threatened. Instead, educate yourself. Watch webinars, read blogs, subscribe to trade journals and magazines, and ask questions – you might learn something.
Similarly, surround yourself with the people and resources necessary to make the shift, even if they seem unconventional. Look at another example from Major League Baseball; The Tampa Bay Rays, who are lead by another “Moneyball” disciple, Andrew Friedman, and are one of most successful franchises in recent history. Prior to becoming the Rays GM, Friedman wasn’t a professional ballplayer, he was an analyst for the investment bank Bear Sterns – a true agnostic in the eyes of a baseball puritan.
If we are to take one key lesson from “Moneyball” it is this; be brave enough to do something bold. Whether you work in marketing, printing, publishing, or any other business, you certainly feel pressure to change. Take a hard look at your operations; are you doing everything efficiently and effectively? Opportunities exist. Now seize them.