moneyball: an orgtheory review
I take a special interest in the Moneyball movie because I used to teach the book in a class. Before I get to the academic comments, I’ll give the movie a thumbs up. It’s a fun movie and, as usual, Brad Pitt puts in a believable performance as a conflicted manager. It’s slow for a modern film, but I liked it. If you are a sports fan and you have a tolerance for chatty films, then you’ll probably like this.
Anyway, the reason I went to see the movie is that tor a while, I taught IU’s course on organizations and work. I used Moneyball to explain two concepts – market imperfections and organizational culture.
Markets are imperfect when buyers and sellers do not incorporate all the available knowledge. Moneyball is really about taking advantage of the fact that most sports team managers don’t use some very basic data to choose players. Organizational culture simply means the shared ideas in an organization that are used to interpret things and motivate behavior. Moneyball is about the conflict between people who think baseball can be successfully quantified and those who think that good coaching should be based on experience and gut feelings.
What I found interesting is how the movie actually explains these concepts and engages in an argument. For example, in class, I would often have to fight the “World Series Fallacy,” which is that a strategy fails if it doesn’t help you win the top honor. A new coaching strategy is useless unless you win a Gold medal at the Olympics or the Super Bowl. We can think of other fallacies. You are a failure unless you are as big as Google, or you get elected President, or publish in the #1 journal, or so forth. The point is that good management is often about shifting the average performance, not getting all the variance. Not winning the World Series is besides the point.
In the movie, Brad Pitt has a monologue where he deals with this. After he took a bargain basement team to the league playoffs and loses, he gets depressed. The assistant asks why. He says it out loud. No one will believe in the quantification of baseball until you win the World Series. Until then, people will discount everything you did.
That’s right. By any reasonable measure, Billy Beane’s strategy was a mind-blowing success. It’s the professional sports equivalent of scaling Mount Everest with nothing but a rubber band, but until you get that symbolic victory, you are a loser. Professional managers, sadly, make the same logical errors as college sophomores.
The movie, in my view, caves by correctly observing that the Red Sox won the World Series by using a modified version of Beane’s strategy. Hollywood needs happy endings, so I can’t blame the studio. They aren’t quite right by appealing to the Red Sox. The scriptwriters imply, albeit indirectly, that it was mainly Beane’s strategy that won the day. Sort of. It was really the combination of Boston’s much larger pay roll and Beane’s strategy. The gap between Boston and New York in pay is much smaller than the New York/Oakland pay gap. Even a few modest sabermetric adjustments would yield big benefits. The bottom line is that the naysayers will continue to make false arguments by saying that sabermetrics can’t take the worst teams to the World Series. But, well, as any college teacher will tell you, not every student is ready for the lesson.