Billy Beane, the General Manager (GM) of the Oakland Athletics, explaining how to change the team during the regular season, from “Moneyball” by Michael Lewis (page 193-194 if you’re interested):

• “No matter how successful you are, change is always good. There can never be a status quo. When you have money you can’t afford long-term solutions, only short-term ones. You have to always be upgrading. Otherwise you’re f**cked.”
• “The day you say you have to do something, you’re screwed. Because you are going to make a bad deal. You can always recover from the player you didn’t sign. You may never recover from the player you signed at the wrong price.”
• “Know exactly what every player in baseball is worth to you. You can put a dollar figure on it.”
• “Know exactly who you want and go after him.” (Never mind who they say they want to trade.)
• “Every deal you do will be publicly scrutinized by subjective opinion. If I’m [IBM CEO] Lou Gerstner, I’m not worried that every personnel decision I make is going to wind up on the front page of the business section. Not everyone believes that they know everything about the personal computer. But everyone who ever picked up a bat thinks he knows baseball. To do this well, you have to ignore the newspapers.”

Many observers, especially those in baseball, completely misinterpreted Moneyball. Moneyball was about strategy, not tactics: constantly measuring and re-evaluating tactics and alternatives, not about determining and defining the “winning tactic”.

Beane built (and continues to build) the Oakland Athletics by building a team focusing on under-valued players. What is under-valued, however, changes over time. In the mid-1990s, OBP (on-base percentage) and OPS (on-base percentage + slugging percentage) were under-valued statistics compared to more traditional stats such as RBIs, batting average and other counting stats. Beane was able to identify measurements of player performance that were under-valued by other teams (by player trade value and salary) compared to the contributions the player would have to the team’s performance (in wins and losses). Beane found, monitored and acquired players that fit his model and built teams that perennially out-performed their total salary expenditures; he created winning teams that were able to regularly compete against teams spending multiples more in salaries on players and teams. *

However, times changed. As other GMs picked up on the results, they started copying his tactics and bidding for the same players.

And over time, Beane adjusted. The metrics of value in the marketplace changed and Beane re-evaluated his tactics and identified new ways to value players and construct teams. He changed how he valued defense, draft picks, salary flexibility and pre-arbitration players; he changed how he constructed bullpens and timed acquiring and trading away players; and he made many other decisions that demonstrated his ability to measure, estimate and value player and team performance. It may not work every single year since many factors are difficult to model (e.g. freak injuries, personal matters), but over the long run Beane has demonstrated the ability to change tactics within an overarching strategy.

Lessons for all…

Also: more on GigaOm: What Startups Can Learn From Billy “Moneyball” Beane.

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* Of course, while the A’s out-performed in the regular season, they regularly under-performed in short playoff series post-season baseball. The averages of the long-season simply did not always work out over the small sample sizes of five or seven games. Beane’s infamous retort: “My sh** doesn’t work in the playoffs.”