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.

Written by fabiorojas

October 5, 2011 at 12:16 am

16 Responses

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  1. F Ro: Nice review. I used the book as well (even though I really don’t care for baseball, but that’s of course beside the point), in a one-off class I taught a few years ago. (I need to go see the movie this weekend.)



    October 5, 2011 at 12:28 am

  2. I think there’s a similar movement going on in football – has been doing really innovative statistical work with football and they are spawning copycats



    October 5, 2011 at 8:43 am

  3. I’ve been dabbling in a research question that is kind of the reverse of this: to what extent are successful stock picking strategies a skill that exceeds objective, quantifiable analysis, including hard-to-articulate “gut feelings”? That is, is stock picking more like a scientific card-counting strategy or is it more of a subjective/art-like skill (say, like good advertising)?

    Does the book touch on this inverse question?


    Robert Couch

    October 5, 2011 at 10:37 am

  4. In real football (“soccer”), the owners of Red Sox have bought Liverpool and pronounced they intended to implement moneyball techniques to Liverpool. Remains to be seen, but skepticism is high and probably quite warranted. I am not an expert on baseball, but I suppose it is the sum of individual efforts more than a team effort that determines success? In football individual skill goes only so far because of very important interdependencies. Also, human assets in football seem to get better (and worse) over time, so its more important to predict future development (based on e.g. how motivated and hard working the player is).

    Since Liverpool was bought they have acquried one great striker (Suarez) and one really abysmal one (Carroll). The bad one was also really expensive (35 million pounds transfer fee).



    October 5, 2011 at 11:02 am

  5. Thanks for the suggestion! It reminds me of The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us by Robert H. Frank and Philip J. Cook. An easy cliche is that the perfect is the enemy of the good. What makes a successful organization (or individual) depends on how you measure what you measure. Ultimately, your own feelings at the end of your life might be the only thing that matters.

    ri: “… it is the sum of individual efforts more than a team effort that determines success?”

    That cuts to the core of the problem of organizations. In the 80s it was Silicon Valley versus IBM, maybe Athens versus Sparta (and Athens lost the war, but won the future). Democracy versus totalitarianism is another expression. Baseball today is not what it was 50 years ago, but ultimately, it remains a game where individuals must have a mix of skills and where, as noted, winning comes from cooperation among individuals. Football – American or World – is a collective effort. But neither mode seems to own the philosopher’s stone. There are many paths to success.


    Michael E, Marotta

    October 5, 2011 at 12:54 pm

  6. Since Liverpool was bought they have acquried one great striker (Suarez) and one really abysmal one (Carroll). The bad one was also really expensive (35 million pounds transfer fee).

    Attempts to bring sabremetric-style analysis to soccer/football have so far been pretty weak. Proponents have included Sam Allardyce, Arsene Wenger, Damian Commoli, and John Henry. However, no one (including Opta) has come up with a good way to measure player impact on- and off-the-ball. The Carroll purchase was an odd one, though Henry (Fenway Sports Group) claimed it shouldn’t be considered expensive as they had just offloaded Fernando Torres and just spent that money. Seems a strange statement for a successful businessman — money spent is money spent.



    October 5, 2011 at 5:04 pm

  7. A few comments:

    1. The Moneyball startegy worked fairly well because baseball has discrete actions that are easy to evaluate. For example, the outcome of the “at bat” is determined mainly by the pitcher and batter. Most of the time, on defense, only one person catches the ball. Base stealing is also another easy to measure activity. These actions can then easily be correlated with wins or runs.

    In contrast, football (North American or otherwise) is wracked by interdependency. Say a QB gets sacked – whose fault is it? Hard to tell. In soccer, it’s worse. That’s probably why progress is slower than in other sports.

    2. @Robert Crouch: Moneyball doesn’t discuss stock picking, but Lewis’ other writings do. Liar’s Poker and his article on the autistic stock picker/fund manager are good examples. Lewis probably recognizes that maybe a few people can “artfully” pick stocks, but most can’t. Analysis usually wins the day.



    October 5, 2011 at 5:34 pm

  8. Thanks, Liar’s Poker is near the top of my list. Also, the art I have in mind is how to apply model, not just art-separated-from-analysis…..


    Robert Couch

    October 5, 2011 at 5:49 pm

  9. Fabio: Largely agree with the discrete instances, but Lewis talks about this with respect to Bill James in Moneyball as well; fielding and defense (player positioning, etc.) are the Achilles’ heel of these analyses. It’s the same for football — it’s very hard to estimate the counterfactual play if player A hadn’t been positioned in position X. One fo the reasons Barcelona are so unstoppable with their ‘tiki-taka’ football (other than having a ridiculous number of once-in-an-era players) is the philosophy of pass-move-receive-repeat in which positioning is always key. Unfortunately, statistics in football are still largely of the superstitious or meaningless kind — “Team A is 3-0 with Player X on the pitch, but 1-2 without.”



    October 5, 2011 at 7:00 pm

  10. Fair enought, Trey. But the interdependency of football or soccer is way, way larger that baseball. For example, how often does a catcher affect the center fielder? In contrast, at least a couple of times in *every game* you probably get serious interdependency. Take for example, the strategy of weaker teams in the FIFA World Cup, where you stack up on defense, then on selected attacks, the whole team switches to offensive.

    In other words, interdependency in baseball is probably something you can ignore once you understand the key issues – on base average, quality pitching, and the modest importance of defense (e.g., most pro athletes can probably hand the outfield or first base). Basbeall endogeneity is an ignorable round off error.



    October 5, 2011 at 7:06 pm

  11. In American football, though, you are seeing strategies within the game changing based on statistics and advanced metrics. Decisions about when to go for it on fourth down and at what position of the field are now using expected points from the based on down and distance. Others use these advanced statistics to help them determine how often they run the ball on third and short versus pass the ball on third and short or whether or not they should go for two points and when.

    Coaches are using metrics to help them make all sorts of decisions in the game that used to be based in tradition or gut feelings. It’s definitely changed the game in that regard. As Fabio pointed out, moneyball strategies were about taking advantage of information that wasn’t available to the rest of the baseball world. The above examples in American football are similar. Using statistics and advanced metrics to make decisions differently than other teams, who go solely on gut.

    A lot of the Football Outsiders stuff is pretty good and they are fairly good at using their metrics to predict future performance. While this might not help strategists inside the game, it can be used to keep certain fan bases grounded.

    I find the stuff interesting to use in my methods and statistics classes. Real world examples of using research to inform decisions. But obviously good application for org. theory as Fabio points out.


    Scott Dolan

    October 5, 2011 at 7:49 pm

  12. It may not feel quite like the classic baseball movie others have achieved, but it’s certainly pleasant enough to be enjoyable even by non-sports fan, and features great performances from Hill and Pitt. Good review. Check out mine when you get a chance.



    October 5, 2011 at 10:58 pm

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