New competitive requirements for speed and efficiency are driving companies to rethink the way they operate to avoid existential threats. In a moment of similar significance, the Oakland A’s baseball team needed a new, more competitive, and transformative strategy. The strategy they invented, dubbed “Moneyball”, succeeded wildly outperforming traditional management approaches. Using it the A’s tied for most wins in Major League baseball, set a new record for consecutive wins in the 103-year history of the league, and did it all at a cost less than 20% that of the team they tied. The results and consequences are explained in this scene from the movie featuring the owner of the Boston Red Sox and the champion of Oakland’s strategy. There are many lessons to be learned.
Moneyball’s Big Insight Came from Outside the Game. Ditto Sente’s Solutions (aEAM and TRM).
A young man named Paul DePodesta (Peter Brand in the movie), an Ivy League graduate who had majored in economics saw the flaw in management’s way of thinking. He could see that major league baseball didn’t understand the true value of different skills or how the skills related mechanistically to runs and wins. He explains it to the GM of the A’s in this famous scene from the movie. We know the result.
Confronted with the costly habit of equipment hoarding, something industry had long accepted as “the way things are”, we ended it and, along with it, its negative effects on cost and speed. As with Moneyball, economic principles played a significant role in the development of our game-changing practices and, like Peter Brand, we’ve occasionally felt the need to explain ourselves to people who thought it impossible.
Eliminating hoarding increased asset utilization in engineering operations from 10% to over 60%, clearly a “Moneyball” caliber outcome. The philosophy and strategy required to produce these results also enabled reductions in asset support costs approaching 50%, reduced capital spend up to 75%, and produced improvements to the speed of asset-intensive processes by 25% to 50%.
Moneyball Required Appropriate Moods. Ditto aEAM & TRM.
While most baseball executives and managers were certain about what it took to win games and judge players, the A’s were not so certain. They knew that producing vastly different outcomes was impossible without vastly different ways of thinking about the game. They were ambitious in seeking a new way of thinking, new language. Their ambition combined with moods of openness and humility enabled the opportunity to appear to them where others in the game either couldn’t see it or disrespected and belittled it. To a baseball traditionalist, it wasn’t part of “baseball” to them.
The A’s leadership believed they had found something big and knew their only way to know for sure and ultimately succeed would be to go all in. Traditional ways of thinking guaranteed the same results so they knew not changing meant failure. Their mood of resolve and courage to follow through, in spite of criticism from their own manager, scouts, and coaches, was essential to their eventual success. As the Red Sox owner said to the A’s GM after the season, “The first guy through the wall always gets bloody, always.” He also said anyone who wasn’t adopting the A’s model would be sitting on the sofa in October watching the Red Sox win the World Series, and that’s exactly what happened.
Moneyball Transformed “Nobodies” into Stars. Ditto aEAM & TRM.
It always seemed the teams that won had all the best players who also happened to be the game’s most famous stars. Moneyball flipped all that making hero’s out of everyday players. “Win with nobodies and the fans showed up and the nobodies became stars. Lose with stars and the stars became nobodies.” Scott Hatteberg was a player no longer wanted by anybody in the league. He was undervalued. The A’s signed him. He became a star in this at-bat when he cemented the A’s record for consecutive wins.
aEAM and TRM teams produce significant improvements to speed and cost and, as a result, team members win enterprise awards, receive promotions, and, on occasion, have been sent on trips with their team to recognize their accomplishments. This is not what companies typically expect of their asset teams but this result is one of the things we love best about our work at Sente.
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