With Major League Baseball Spring Training just around the corner, let’s look at what one of the most interesting books I’ve read in a while that can potentially help manage your business, whatever that business may be.

One of the most enjoyable books I’ve read lately is Moneyball: The Art of Winning an Unfair Game by Michael Lewis. Lewis describes how Major League Baseball’s Oakland Athletics, with a “measly” $41 million roster payroll in 2002, figured out how to compete with the “big boys” like the New York Yankees with a $125 million payroll.

Moneyball puts forth the notion that the collective wisdom of baseball experts (players, managers, coaches, scouts, and the front office) over the past century is mostly subjective, and even worse, often unsound. For almost as long as baseball has been around, scouts venture out and evaluate players all over the country, not paying particular attention to statistics, but rather base decisions on the five tools: speed, quickness, arm strength, hitting ability and mental toughness. Add in the nebulous “he looks like a baseball player” in the mix and the odds of finding the next Joltin’ Joe or Hammerin’ Hank are slim to none. This is not to say that scouts don’t look at statistics at all, but the ones they do look at such as stolen bases, runs batted in (RBIs), and batting average were each a bit flawed in their own way.

The Oakland Athletics’ front office took advantage of more empirical gauges of player performance to field a team that could compete successfully against richer competitors in Major League Baseball. The A’s focused their future player evaluation on Sabremetrics, an analytical, evidence-based approach, in an effort to assemble a competitive baseball team, despite Oakland's obvious disadvantage in revenue. As a side note, Sabremetrics is a term derived from the acronym SABR, which stands for the Society for American Baseball Research. The A’s management created an analytical literacy that included both “what to measure” and “how to measure it”.

For hitters, they focused on a wider set of metrics instead of the traditional metrics such as batting average and RBIs. They evaluated offensive effectiveness with an additional two metrics: (1) on-base percentage (OBP) and (2) slugging percentage. Combining these two stats, they formed a new statistic called on-base plus slugging (OPS). In short, they went from a viewpoint of “Can he hit?” to “Can he get on base?” The underlying theory is that the more runners that get on base will yield more runs scored. Of course they also looked at pitching and defensive statistics, but I don’t have time to go into that here.

The A’s believed this causal relationship should improve the chances of winning. And it did. The A’s won the American League West Division title in 2002. Unfortunately they lost the Division Series in the 1^st round of the playoffs to the Anaheim Angels.

So how does all this relate to your business? Regardless of what business you are in, there are some traditional metrics that have been used seemingly forever to define “success”. For example, “on time” and “on budget” are the two mantras typically used to define success for project managers. But deep down there may be more metrics that can define success that goes beyond what’s included in the PMBOK.

The challenge for you is to take a critical look at your industry and company to establish an analytical literacy that gives your organization a competitive edge. Good luck on your adventure to find out “what to measure” and “how to measure it”.