Have you watched the movie Moneyball? No? Then please watch it before continue reading.
As a business owner and in parallel provide consulting service to my client, I would like to use this article to talk about my key learnings I got on MoneyBall released in 2011. This movie inspired me in various way, especially on the way to manage a company and the use of "data"
MoneyBall movie is the true story of Oakland’s Athletics known as Oakland’s A general Manager Billy Beane role played by Brad Pitt who challenges the old conventional system of selecting Base Ball Players for his team. He gave the list of undervalued players who were there in the team’s budget and can become the wining team in the league championship.
I will talk about this movie in 6 key learnings for you, especially the way I handle my day to day task and project challenges.
1. The business challenges/ Identify the Scope:
Billy Beane the General Manager says “There are rich teams and there are poor team and there is 50 feet crap and then there is us. Its an Unfair Game.“ In 2002, the team lost 3 of their Main Players Giambi, Damon and Isringhausen to Boston Red Sox and NewYork Yankees and were in great trouble. When Billy Beanes asked for more Money to recruit new players, the owner refused to increase the budget. The team had a tight budget of around $38 million dolllors against Rich team Budget with $120 million dollors.
In reality, you won't get unlimited resources and it is very important to identify the key challenge and define a scope with time limit to resolve it. In other words, it’s very important for you to understand what challenge or problem and limit/ restriction you have and things you are going to solve. In most failure task, the common mistakes are the scope is too big (under-estimate the effort) or not providing adequate resources. Carefully identify the scope, divide it and solve or by Phase is best approach I learn.
2. Build your own strategy / Identify your Goal:
Billy Beanes met with Peter Brand an Economics Graduate from Yale University in a meeting. Peter did not believe in the conventional method used by the baseball scouts to evaluate and select the players. Peter Brand the Economist said
“Your goal shouldn’t be to buy players. Your goal should be to buy wins. In order to buy wins you need to buy runs.”
In the movie, the traditional approach, players were overlooked for variety of biased reasons and perceived flaws such as age, appearance, personality, average or ugly looking girlfriend etc, Peter used the formula given by Bill James the Mathematician to score the baseball players objectively.
In your business, you always receive various level of "noise" from suppliers, customers and staffs. It is a very common topic when you look busy at work, your friends and family would tell you "hire someone". From my experience, unless you are clear to your own operation and able to illustrate to a person jobs/ responsibility, you shall never "hire someone".
Your mind must be 100% clear and determine to achieve your goal. You must have an out of box thinking capabilities and should be able to challenge the conventional methods and give innovative solutions which may not exist till date.
3. It is all about DATA and see it objectively
Peter Said “Out of 20,000 notable players for us to consider I believe there is a championship team of 25 people that we can afford because everyone else in the baseball undervalues them like an island of misfit toys.”
Peter talks about a Player named Chad Bradford, who is the relief pitcher in the movie. He said he is the most under- valued players in the baseball. His defect is that he throws funny. No body in the big leagues cares about him because he looks funny.
In your day to day business, you must aware there is no perfect candidates nor perfect solution, you need to spend time and effort to coach/ adopt and build the result together. How do you judge if the changes is success or not, you can review from the data you got.
Example: my first start-up was chaotic on Sales Invoice, it is definitely ironic as there is business but no one in the start-up go and collect the money from the client!
The team and I sit down together and immediately they asked for hiring an admin to follow-up. I calmly explain to them I won't accept this as a solution simply because at that time, we only issue 10-12 invoice per month, in others words, each invoice would simply cost the company $1,000 to do collection!
Instead, I review the process together with the team, identify the key challenges why it is difficult for anyone in the company to create an sales invoice. We found that it is because the contract signed was not communicate properly within the team. Thus, we change the process as follow;
1. Contract Signed, Sales Team need to create the first Invoice
2. First Invoice being review with Project Team and look at ALL possible variation.
3. Sales Team communicate the DRAFT with the client, once client accept the format and the way to present, Project Management Team take over the Process
4. Every end of Month, it is now Project Management Team to prepare the invoice (they know the best) and sent to client directly
5. Sales Team use the tool to review any invoice has overdue in a daily basis and communicate to client right away.
We did NOT add any headcount, we resolve the problem by identify the issue, and resolve it and assign to the right person. Currently, our time spend on Invoice is down to 3 minutes per invoice per person. We are able to process 150 invoice per month without adding any headcount. The money we saved converted as a bonus to both Sales and Project management team.
We used the client Time-to-Pay data and automate the task, we automate to sent out Sales Invoice DRAFT in advance to ensure the client won't come back to us when they receive Official Sales Invoice. This Kai-zen approach make our business more scalable without adding cost to the business.
Internally, we used these data as a basis to review operation efficiency performance in a monthly basis.
4. Process to make changes within company
The process of change within a company is difficult one, especially when you have lots of staffs working in your company for many years. In the movie, Billy had to face lot of criticism from inside the team from scouts to team coach and from outside from media to critics. Everyone thought that Billy has become mad and critics even said that he has bought the tickets of Titanic.
But in reality what differentiated the Oaklands A’s under Billy Beane was the commitment to an evidence-based approach and a preparedness to question conventional wisdom rather than relying on gut instinct. He was so much convinced with Analytics led Decision making that he even took in confidence his team owner and said to have faith in his work.
He said to his team owner that he would get to see the winning matches by July 2002. The same thing happened. In between he also took players in confidence and motivated them time to time to mingle with each other and perform well.
It is CRITICAL for a owner to push for changes, especially if your objective is to make your company successful. You must have believe in what you and your team do and must be consistent with your work.
5. Know your tools available
Peter Brand wrote a computer program to do year on year projection and he did scoring for each player. Time to Time he also visualized the performance of each player using Data visualization tool. He discussed with Billy and Players about how the performance of players could be improved, and which line up of players could lead to winning matches.
As a IT business owner, I do know the tools available and how to use it in effectively manner. You may leave the data science to MERCURY, However, you (as a business owner) must have background knowledge of computer programming, statistics, business, and logical reasoning skills.
MERCURY evaluate new tools/ technology in a weekly basis, we have a culture to "do it automatically, thus we can leave early from office" We therefore evaluate new tools available.
6. People and Skillset
In the movie it was seen that the Peter Brand (is a nerd) with Excellent skills in handling numbers, and had excellent Presentation and Communication skill.
From my perspective, It does not matter you are from which education background. Weather you are introvert or not, Presentation and Communication skill are essential for you to move up the ladder. Steve Jobs is not just a great leader, but also process a strong charisma and presentation capabilities to convince everyone. You must have excellent communication and convincing skills because you have to present your ideas/ product/ service to different stakeholders and management team. Once they get convinced then only right decisions can be implemented.
Identify your key challenges, your goals and share with us!