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Performance Reset

Performance Reset

Business Lessons From Baseball

September 23, 2011
Related Topics: Strategy and Management

As "Moneyball" hits theaters today, there’s more to the hype than Brad Pitt. Watching it, or reading the book on which it’s based, will help you learn something every manager should know and understand, but most don’t.

Although I have yet to see the movie, I have touted the book in most every management seminar I have spoken at since it was first published. Behind the story of a team that had great success despite its pauper payroll, the book validates one of the most important principles of applied behavior analysis: You must only manage behavior – not results. There is no way you can look at the stats of shortstop Alex Gonzalez of the Atlanta Braves, currently batting .233, and understand his value to the team. However, if you watch him field a ball that few shortstops can get and make a great throw  to the first baseman for an out, or turn a difficult grounder into a double play, only then can you begin to understand his real value.

Billy Beane, general manager of the Oakland Athletics, was forced to field a team using a budget that was a fraction of what the best teams had, and therefore had to look for undiscovered talent or undervalued players. Beane’s success comes partly because of meeting up with Bill James, a self-proclaimed baseball nerd. By focusing on the on-field behavior of players, James saw valuable behaviors that either were over- or under-valued by managers, coaches and scouts.  Capitalizing on this information, Beane was able to field a competitive team at a fraction of the going cost.

What the book shows very clearly is that baseball has been rewarding the wrong behaviors for 134 years. Teams pay for numbers that are only tangentially related to the true value of a player – batting average, earned run average, pitchers' won-loss record, to name a few.

The Beane/James approach allowed coaches to focus on valuable behaviors that were not particularly valued at that time. For example, they defined the mission of a batter as “to extend the inning,” and there were four ways to do that: get a hit,walk, get hit by a pitch or take the pitcher deep into the count. Once these four things had been pinpointed, it was easy to provide positive reinforcement to increase them.  That leads me to a part of the "Moneyball" story that has received little comment and attention.

Beane fielded a competitive team using relatively little money. Management in baseball is like many business managers who believe motivation is about the money. As a result, every year salaries tend to get higher. However, Beane has demonstrated that money is not the essential variable for acquiring highly motivated, highly competent players. The fact that players leave the A’s for more money elsewhere does not invalidate the point. It was a part of Beane’s plan. When the player’s performance commands more money, trade him for someone who is undervalued. Of course, if people are offered several times their current salary to leave and do the same thing elsewhere, almost all will take it. However, if that option is not available, most will be perfectly happy to play for much less. Moreover, even if they balk and quit, as Beane has demonstrated, there are many others waiting for the chance to play in the majors. This can happen because the number of positive reinforcers built into baseball and sports in general far exceeds those of almost all jobs in business.

Here are three bite-sized takeaways from "Moneyball":

1. When you have pinpointed behavior, it is easy to increase it.

2. There are many undervalued people who only need the right environment to excel.

3. It’s not about the money. Have you heard about the “love of the game?”

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