Thursday, October 13, 2011

The Challenge of Changing a Sports Culture: Review of Moneyball

The amazing success of the 2012 Oakland A's to win the American League West leads me to re-post my essay on Moneyball and how to use data analysis and human intuition to build a winning team despite smaller budgets and stacked odds. It continues its relevance because the Boston Red Sox continue to implode after a brilliant utilization of the principles.

The success of the movie Moneyball  provides a remarkable juxtaposition with the implosion of the greatest success of Moneyball’s lessons, The Boston Red Sox. Both the movie’s story of the 2002 Oakland Athletics and the crumpling of the Sox provide strong lessons on the challenges and perils of trying to change a culture, in this case baseball. As is often the case with the sports, the story of Moneyball presents a deeper lesson about society and us.

Changing a culture is hard, very hard. A culture possesses great resilience and is supported by a self-reinforcing world of recruitment where people are socialized into its norms, rise in the ranks and then succeed. The insiders then recruit and train people who replicate them and if the organization  succeeds, all these norms and languages and rituals reinforce each other.

Every organization possesses this inertia but few possess such a staggering array of accreted norms and rituals and self-reinforcing clubs as baseball. Moneyball, the movie version of Michael Lewis’ brilliant book Moneyball: The Art of Winning an unfair Game  tells a powerful tale of an attempt to confront and change the culture of baseball.

People in organizations spend most of their life evaluating other people. They do this every day even in so simple an act as deciding whether and how to answer someone’s email. The key to a culture lies in self-replication of the people and creating a common set of understandings and judgments. Moneyball sets the stage of professional baseball that bares daily judgments through the relentless competition that exposes players and managers to ruthless culling.If you can change how people see and evaluate others, you can change the culture. This is the story of Moneyball.

Moneyball makes clear evaluating players and building teams has three components. The first involves decisions to draft a player and invest in them through the minor league and bonus system. The second comprises whether to get rid of a player by cutting or trading. The trade involves both a decision to get rid of a player but also to add a player. The third dynamics grows from the decisions involved in trading but plays out as decisions to release or sign a free agent. Baseball teams like any large high performing organization incessantly evaluates, hires, fires and brings in new talent build a high performing team.

The movie introduces Billy Beane the General Manager of the Oakland Athletics. The Athletics represent the dilemma of all baseball where some very rich clubs dominate long-term talent and few clubs eke out an existence with budgets 25 percent the total of the rich clubs. Despite this difference, Beane’s teams have done well and in 2002, the year of the book/movie exceptionally well. That year the Athletics, like the Rays last year, their three top players—Beane must perform the impossible task of replacing his best players in two ways through the new draft and with free agent signings or trades.

The movie does not have time to examine Beane’s revolutionary strategy in the draft where he knows he cannot sign a number of players coveted by the Yankees or represented by Scott Boras who will hold them out. Common wisdom called for drafting very young live arms or statuesque can’t miss hitters with “high upsides.” He faces down his own senior scouts who talks about a player who “looks like a player” “has a great upside” has “five tools.” They blather on but Beane has lived the life of a failed can’t-miss five-tool player. Remember these scouts are not idiots and had helped find Oakland’s famous stable of pitchers like Barry Zito , Mark Mulder and Tim Hudson. But Beane has developed an abiding distrust of the wisdom that had such a low prediction rate.

More important Beane must draft in a world of immense inequality of resources where teams like the Athletics and Royals and Brewers and  Rays are now farm teams for the rich teams. Here he pursues aggressive decisions to go after college players rather than high school players based upon their higher probability of success in professional leagues. He also goes after players who have unique and undervalued skill sets such as the ability to get on base, walk, avoid strike outs etc. In each case, looking for a different profile enables him to discover undervalued players that other teams are not pursuing. It also permits him to make trades where he can trade a player who looks valuable by traditional standards and get a player who is more valuable by sabermetric standards. This became one of his hallmarks.
The movie focuses its narrative of how he clashes with his scouts in whom he hires as a free agent or trades for. The movie employs an incessant TV/radio background commentary to confirm the animus the baseball world  holds towards his approach. The key lies in Beane’s willingness to deploy the power of statistical analysis first pioneered by my fellow Kansas Citian Bill James.

Writing alone and in isolation James developed a wide range of statistical pictures of baseball that gave very powerful insights in such things as the natural rise and decline of the average player or the distorting value of playing in different parks or how positional hitting changed the odds of getting on base so that the percentage of getting a hit rises tremendously if a player gets a first ball rather than a strike. Literally each at bat represents a swing in probabilities. This raises the value of players with plate discipline and raises the value of not giving away outs on things like steals or bunts.  The point is that James and an emerging group of young passionate statistical analysts were developing a new way of seeing baseball and creating tools to evaluate players and team construction in new ways.

Unable to compete head up with the rich teams and distrusting the conventional wisdom of his own scouts, Beane converts to this new way of seeing by hiring Paul De Podesta from the Cleveland Indians and relying upon Podesta’s statistical and economic training to rethink how to evaluate players. Well played with tightly wound and guarded intensity Jonah Hill plays him as a character called Peter Brand in the movie. De Podesta believes in algorithms that demonstrate games are won by scoring runs and that run scoring and getting on base are the major variables in the capacity of team to win games. This de-emphasizes pitching, speed and relief pitching and changes the focus to skills like plate discipline, walks, avoiding strike outs and not giving away outs.

More importantly this new way of seeing baseball provides a way to xray players and see their skills in a new light. It enabled Beane for several years to find undervalued players and create a team organized around getting on base and scoring runs which succeeded extremely well at a cost per run one-fourth that paid by the Yankees.

The move manages to inject all these insights in a remarkably well written screenplay with both snappy and insightful dialogues. This really comes to bear when Beane and De Podesta take on the gathered scouts representing a phalanx of insider and established knowledge about what a baseball player should be and look like and think like.

The movie powerfully conveys why rethinking players evaluation matters. The economics of the game without hard caps has escalated salaries and rich teams with strong media markets can now wait upon other teams to develop players and swoop in the take them as just happened to the Rays this last year. The economics has also changed because baseball does not slot players and prices so that agents like Scott Boras have created huge bonuses for high draft rounds like Stephen Strasburg’s 15 million signing salary. 

In the status quo that Beane confronted, the highest traditional evaluated talent would get to the richest teams immediately or in five years. A small team like Oakland with an owner who would not spend money, must maximize value. It cannot play the same game other teams are playing. Neither can they play the game of paying exorbitant salaries for eight-year contracts for 31-year-old players who are already on the statistically risky side of their careers.

In Moneyball Oakland changes their draft approach and the movie hones in on how they  significantly change their free agent and trade approach. They do not try to replace the lost star players with their full array of talents. Instead Bean and De Podesta seek to replace their totality with a group of players who can get on base and produce runs. This means scanning the horizon for “damaged” players who may not be great all around but manifest the skills at producing on base percentage and runs that the team needs to compete.

This leads to serious conflict with his scouts who cannot and will not understand what he is trying to do. They reflect battles that still occur today in some organizations and certainly in the blog sphere between people committed to evaluate players and teams by statistical approaches that James pioneers and those who reject it in favor of classic personal scouting and broad gauged character analysis.

With the amount of money invested in modern players and with a very limited budget Beane needs higher probability returns than traditional scouting and building upon high school players can provide. He also needs a more granular analysis  of particular and unique skill sets that can produce maximum return in runs and game. This is all prelude to the modern game’s obsession with terms based upon value over replacement where players are seen as radically fungible producers of certain necessary skills and outputs.

Oakland's perilous economics and the new market conditions leave  with little room for error also requires that Beane act ruthlessly when things do not work out. In this he must essentially usurp the function of his manager in terms of player assessment and team assessment. When Jeremy Giambi does not work out, he trades him. Art Howe, an almost unrecognizable and spot on Philip Seymour Hoffman, plays his imperial manager who gets all the credit for the success and blames Beane for the failure. When Howe refuses to play Beane’s choice for first base, Beane trades Howe’s preferred player. When Howe will not start one of Beane’s projects, he trades the pitcher Howe was using. In essence Beane redefines the role of the manager as a subordinate to a game and team plan that focuses upon maximizing a  production function. It also gives the manager a large number of new tools such as a ball by ball breakdown of the probabilities of hits or outs which can open an entirely new world to a thoughtful manager.

 The movie demonstrates Beane and De Podesta slowly educating and changing some of the players approach to the bat by explaining to them the reality of what happens when they are 1-0 rather than 0-1 at the plate. Suddenly not overswinging makes concrete sense in terms of how it increases a person’s chance to get a hit or get on base. Players slowly began to change As they educate and change the culture of the players and club house, they are aggressive to remove players that do not fit or disrupt the model.

The team sets a record with a 20 game winning streak after some disastrous starts. More  importantly the success comes in the face of an incessant attack by most of the baseball establishment and insiders on Beane and this new approach. If he had failed, it would have set back the cause of analytic assessment of talent by a decade. Instead it jolts the mainstream, and one year later finds one of Beane’s admirers Theo Epstein reconfiguring the Red Sox by Beane’s principles to bring them two world series and end the “curse.”

Notice that I did not mention once that the movie stars Brad Pit who does an intense but winning star turn as Billy Beane. Pitt makes the movie but does not dominate it. For the movie tells a deeper and powerful story—any culture can become closed and blind to its own weakens. It reminds us that outsiders and good data analysis can reveal hidden patterns and important insights that anecdote and insider common knowledge miss. Too often cultures without clarity of analysis about what it is looking for resemble echo chambers repeating wisdom that sort of worked but may be less relevant for new conditions. Beane saw this and Epstein proved what happens when you couple that analysis with real money in the Red Sox success.

The movie works and reminds us that it takes courage and commitment as well as decisiveness to inject data and analysis into a self-referential and closed world. It helps to add some desperation and urgency to adapt to a new world. Serious culture change also takes a willingness to fail and take the slings and arrows of abuse. In Beane’s case it helps to have a daughter to give him perspective and keep him sane.

I find it ironic and hard that after Billy Beane  turned down the General manager of the Boston Red Sox, one of his disciples and admirers, a very young Theo Epstein, deployed the same statistical acumen and focus upon run scoring and bat discipline aided by money to win two world championships. Now exhausted after triumphs and living in the intense world of Boston sports, he may be ready to move on for very human reasons.

Theo Epstein brought two world series and revified a town and region. He ended a curse and held the team together a couple years ago when it might have gone south. Yet his team collapsed last year. Now his manager has left and it looks like Epstein will also leave Boston to go to the Chicago Cubs and see if he can exorcise another curse.The whole Boston mess saddens me but also reminds us about how a culture must be sustained even if the analytic foundations are laid. Remember Beane moved out players who did not work or perform and usurped his manager when he needed to. That did not happen in Boston's nose dive.

No one is quite clear what dynamic lead to the implosion of the Red Sox, but they represented in many ways the best the traditional and sabe metric analysis can buy. But in the stretch, the team fell apart and spun into an emotional tail spin that lead the team to come apart at the seam in terms of cohesion and performance. It happened fast, in less than six weeks. Now ugly stories are leaking out and the blame game has started, but we have some sense that levels of discipline, commitment and focus within the team may have changed.

It may be in modern athletics or in any organization, ten years of leading is enough. The Red Sox owner John Henry  saw the power of integrating statistical analysis but mused on the human reality of trying to lead a well assembled team. "The fact is that being general manager in Boston, being manager in Boston, is a terrifically tough job." There may be a "shelf life" to leading in such intense crucibles as Joe Torre or Pat Riley and others have illustrated over the years.  It may mean that the community has forgotten what it gained. It might mean that the team forgets what brought it success. It might be that the leader no longer has the energy to see through the emotional craziness—although no one claims the Cubs fans are sane.  Epstein’s leaving after the collapse of the Red Sox has its own somber logic.

Luck, culture, contagion, momentum all can play their roles. Good leaders can use fine analysis to assemble a team that should work on paper, but the analysis  only changes the probability, humans have to do the rest. 

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