“My job,” says Michael Lewis, “is to come in after the war is over and shoot the wounded.”
There’s no doubt that “shooting the wounded” has been good to Lewis, but that’s an overly simplistic take on his talents. The best-selling author takes some of the most complex financial and economic topics on the planet and explains them in simple, entertaining, and easy-to-understand terms — and sells a ton of books in the process.
It wasn’t finance or economics that took center stage during Lewis’s appearance at Oracle’s Modern Finance Experience in Chicago, though — it was baseball.
Lewis spent much of his interview speaking about his best-seller Moneyball and how it relates to today’s data-driven business world.
Moneyball, you’ll remember, is the story of the Oakland A’s of the early 2000s, a small-market team that couldn’t compete for high-priced talent with the likes of cash-rich teams in baseball’s biggest markets. Instead, the team’s general manager, Billy Beane, turned to analytics and hard data to find highly productive players at bottom-of-the-barrel prices. The result: The A’s made the playoffs in 2002 and 2003 with a fraction of the payroll of larger-market teams like the New York Yankees. In short order, nearly every team in the league was using Beane’s data-driven strategies to evaluate talent.
There are a lot of parallels between Moneyball and today’s Big Data environment, Lewis said. Here are some of them:
- The first step in the strategic use of data is this: “You have to want to use it,” Lewis said. The numbers are there; you just need the will and the means to interpret them. “You can’t compete today if you don’t have people who can find their way around a pile of data,” he said.
- Not everyone is going to be pleased by your data-driven strategies. Every new strategy is meant to replace an old one … and a lot of people will refuse to give up those old strategies. “Data is a much thornier subject than you think,” Lewis said. “New ways of doing business inevitably replace old ways, and not everyone is going to like that.”
- Ignore the new stuff at your peril. Regardless of what the naysayers believe, Lewis said new technologies will eventually impact every corner of the business world. The focus on data and analytics may have started in the sports world, but it now impacts employees and businesses everywhere.
- Abandon the old stuff at your peril. Once Beane and the A’s proved that data works, the rest of the league quickly fell in line. Today, every team uses some form of Beane’s data-driven formula. The result? Money has returned as baseball’s competitive advantage. For small-market teams like the A’s, it’s back to the drawing board.
Anyway you look at it, Moneyball is a parable for the importance and strategic use of business data.
In an era of Big Data dominance, it’s one we all should take to heart.