Moneyball , a book by Michael Lewis (2003), highlights how creativity, framing,

Question

Moneyball, a book by Michael Lewis (2003), highlights how creativity, framing, and robust technical analysis all played a part in the development of a new approach to talent management in baseball. It also exhibited great examples of the biases and psychological pitfalls that plague decision makers.

Review the article “Who’s on First?” by Thaler & Sunstein (2003) from this module’s assigned readings. This article reviews the book Moneyball by Michael Lewis.

Write a critique of the article including the following points:

Examine why sabermetric-based player evaluation is such a shock to other executives in baseball.

Evaluate why Beane is much more effective in his success by constructing a matrix of pitfalls and heuristics that highlight the differences between Beane’s team and other executives.

Moneyball highlights how people tend to overestimate the likelihood of success and end up facing financial loss—in this case, it meant forfeiting millions of dollars. Analyze a professional or personal decision (yours or otherwise) that highlights this predilection in spite of substantial losses.

Explain how you would apply Moneyball’s management lessons in your own endeavors.

Write a 3–5-page paper in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M1_A3.doc.

By the due date assigned, deliver your assignment to the Submissions Area.

Lewis, M. (2003). Moneyball. New York, NY: W. W. Norton & Company.

Hayashi, A. M. (2001). When to TRUST Your GUT. Harvard Business Review, 79(2), 59–65.

Explanation / Answer

Explained why sabermetric-based player evaluation is a shock to other executives in baseball

The game of baseball has been played for a very long time still carrying many traditions of its origins. So too of peoples’ perspective of what makes a great baseball player and team. For much of its existence, the few statistics thought to matter were runs batted in and batting average, however, Billy Beane and Paul DePodesta were able to develop a method to gather and analyze many other statistics in which they could forecast performance results for a winning season . Based on the principles of statistical thinking in which the data analysis is an interconnected process involving unique variations others do not use drives improvements of performance . Beane and DePodesta brought a unique advantage to the Oakland Athletics baseball organization.

Managers and executives around the league were shocked to the success of Billy Beane’s process as its methods and decision-making model was significantly different than the traditional one. Without taking away from the traditional statistics of runs batted in and batting average, Beane simply used other statistics that DePodesta was able to compute to establish a successful combination of skills .   It was mention that Michael Lewis found several reasons why other baseball executives were reluctant to innovative methods of baseball analysis such as basing values off their own experiences and, most significantly, were biased to their own perspectives. The bias views place the human element and error over that of statistical and factual findings.

Evaluate why Beane is much more effective in his success by constructing a matrix of pitfalls and heuristics that highlight the differences between Beane’s team and other executives.

Billy Beane understood his own pitfalls and how team executives and scouts’ heuristics quickly singled him out as a player with outstanding possibilities based strictly off his appearance and recent performance which Michael Lewis notes was certainly not the case .These decisions were based off what the executives thought of great baseball players as and finding that in their physical physique. After a not so successful, short career as a baseball player, Beane proved more effective as a general manager.

By incorporating mass amounts of statistics and mathematical probability, Beane was doing something other team executives do not. He proved much more effective by not using the same heuristics other teams have used for so long. Using these traditional rules-of-thumb heuristics will not permit Beane to develop a successful team due to the team’s salary budget .Beane still used heuristics in his decision making but not to the same extent as they still possess bias and create errors . Understanding when to rely on mathematical statistics and analysis of probabilities and when to use intuition and judgement or even a combination of both can significantly reduce intelligence risk. Differentiating themselves from the rest of the team executives, Beane and DePodesta accepted the risk to do something new based off statistics which forecast situations and best-case scenarios for the team to find its players on a low budget that other teams want no part of.

The sabermetric-based player evaluation method used by Beane and DePodesta used statistics rather than an observer’s point-of-view of a player’s performance. The human point-of-view significantly increases the risk of bias affecting the cognitive processes and judgement for decision-making. With the statistics method, Beane’s human factor is primarily associated with his negotiating skills, knowledge of the game, and factoring in the team’s budget.

Moneyball highlights how people tend to overestimate the likelihood of success and end up facing financial loss—in this case, it meant forfeiting millions of dollars

As Thaler & Sunstein (2003) describe, job interviews introduce vast amounts of bias and permit judging of applicants’ character through race, gender, and age biases. Interviews for possible new mechanics are done over the phone to prevent any visual discrimination and discomfort from the applicant by being put on the spot. I base employees’ performance off their results and work recorded on the work orders to include derogatory reworks. This is done without perceiving a grudge as was done with the previous manager by consistently bringing up employees’ mistakes or the one large project his favorite completed. Additionally, the management method mentioned in Moneyball could be benefited by all maintenance managers. For example, if a mechanic has troubleshot five headlight problems, each needing a new headlight, he or she is likely to think every headlight problem will be fixed by replacing the headlight. The fault must be thoroughly troubleshot each time to prevent replacing headlights when it can be the switch or wire harness. This is similar in that all the facts associated with the situation should be gathered and properly analyzed to prevent wasting resources that can be used elsewhere.

Conclusion

In all decision making, the human element presents bias which if left uncontrolled, can greatly affect the decision to be made. The bias may be set from experiences or the tradition of the situation, yet better decision can sometimes be found using statistics. In the Moneyball situation, Billy Beane proved successful incorporating the sabermetric-based evaluation system to provide an array of statistics and the ability to forecast a player’s value to the team (Thaler & Sunstein, 2003). While other team executives maintained traditional player selection methods using their scouts’ perspective and large budgets, Beane gave the Oakland A’s the competitive advantage by searching for talent where others do not. Incorporating the use of statistics prove valuable for decision-making in just about every industry, it is the matter of taking the risk that others do not to find the advantage.

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