More than ever before, baseball and business are intertwined, and fans are acutely aware of the economics of the game. They debate the merits of locking up a young player with a long-term contract, worry about whether the unbundling of cable subscriptions will diminish their team’s future spending, and pay close attention to the amount allocated to their team’s draft pool. The last great baseball movie, “Moneyball,” was more about exploiting undervalued assets on the free agent market than about actually playing baseball.
As opening day approaches, it’s worthwhile considering what baseball has to teach us about business. The people that hold the jubilation or despair of an entire fan base in their hands often know something about how to run an organization. In any case, as April 6 nears, I spend more and more of my day fixated on baseball.
Baseball fans have long been fixated on statistics. The common stats of yesteryear were batting average, RBIs, ERA, and saves. But these statistics are imperfectly correlated to how valuable a player is. Students of the game dug deeper and developed a range of statistics to try to isolate a player’s contribution to helping their team win, including Wins Above Replacement and Fielding Independent Pitching. Fans also developed stats that better-quantified performance. For example, Weighted On-Base Average (wOBA) is an attempt to express in a single figure a player’s offensive value by focusing on the value generated by each baseball outcome – single, double, sacrifice fly, bunt, etc. In this way, wOBA gives you a more complete picture of offensive performance, than, for example, batting average, which values a player that hits 3 singles in 10 at-bats the same as a player that hits 3 homers in 10 at bats.
The same lesson applies to your business. If you aren’t measuring an activity, you won’t know whether it is succeeding. A fantastic take on how to utilize metrics in the startup context is this blog post from David Skok.
Your business should constantly look for new benchmarks for measuring performance. Avoid reliance on a single metric. Instead, analyze activity using different statistical measures in order to gain deeper insight into the factors that drive performance. Further, look for new ways of measuring an activity. In baseball, teams track the velocity of batted balls in order to get a better sense of whether a hitter is driving the ball with authority, even if he may not have hits to show for his work.
Everybody should know their role
Baseball players’ roles are highly specialized, particularly in the bullpen. Teams have closers, set-up men, long men, left-hand only relievers, and sometimes even right-hand-only relievers. Some fans believe that this system is too rigid and that a team’s best reliever should be called in to pitch in the toughest spot, even if that spot isn’t in the ninth inning. But relievers like to go to the ballpark knowing the situations in which they will be called in to pitch. It’s good management.
Similarly, each member of your team should know her role. Ill-defined roles can lead to the duplicated effort, turf wars, botched execution, and general confusion. A failure to provide guidance as to what everybody should be doing can also lead to a loss in confidence for management. This isn’t to say that responsibility can’t be flexible. After all, pitching staffs have utility men and pitchers that can relieve and spot start. The point is to make sure that you properly leverage the skills of your team to meet your business needs.
Grow your own talent
Over the past few years, baseball teams have come to realize that it is not only very expensive but inefficient, to build a baseball team through free agency. Instead, teams have offered extensions to their homegrown players, locking them up through the primes of their careers. Gone are the days (sadly gone for this Yankees fan), when a team could buy its way to the playoffs. Free agents have become scarcer and, with that scarcity, the price for their services has risen, making it even more difficult to get value when a team signs a free agent to a contract.
It’s been well-documented that it is cheaper to retain your own employees than to fill positions by recruiting new employees. This is particularly true as the labor market has heated up, putting upward pressure on salaries and compensation packages. Now is the time to be concerned about employee engagement and job satisfaction. Fortunately, especially amongst Millennials, keeping employees happy is not necessarily about raising salaries, but about making employees feel valued and giving them opportunities to develop and advance.
Information is power
Many factors have contributed to the decline of offense in baseball, but one factor is the increasing prevalence of the shift. In a shift, players move out of their regular positions to occupy positions where a batter is more likely to hit a ball. Now, if a left-handed pull-hitter comes to the plate, it’s not uncommon to see three infielders to the right of second base, with one of those infielders in the shallow outfield. Baseball teams can do this because they have information about where a player has hit every single ball from every single at-bat for the past several years. They can, therefore, arrange their players in the positions most likely place where the ball will be hit.
The landscape of technology in the business world is constantly changing, but more and more information becomes available online. In order to make use of this information, your company needs to be able to effectively access, analyze it, and find effective ways to exploit it. An increasing number of tools from CRM software to accounting tools to web traffic analytics software. We go through a few these in a recent blog posting.
Play for one another
The ethos of baseball tends to focus on the team, rather than a particular individual. As with any cultural question, it’s difficult to explain how this came to be. Maybe some of it has to do with the fact that the baseball season is 162-games long and the regular season takes place over six months. That’s a lot of time that players spend together. Part of it may have to do with the fact that most everybody in the game gets a turn. At least nine different plays bat each game, rotations consist of five pitchers, and (as discussed above) the relief corps consists of a number of pitchers, each having a distinct role. Everybody has something to contribute. On many of the best teams, players pull for each other and are invested in each other’s success.
There are parallels to the day-in-day-out lifestyle of baseball and the lives of individuals in the workforce. After all, George Will entitled his book on baseball, “Men at Work.” The importance of teamwork and camaraderie is no less important in the workplace than on the baseball field. When your employees root for one another and respect the role that each person plays in how your company performs, your company will likely perform better than if employees root only for themselves.