What Business Can Learn from Basketball


One of the more remarkable sentences I've seen in a long time appeared in an article by Michael Lewis on  performance measurement in the NBA:

“Battier’s game is a weird combination of obvious weaknesses and nearly invisible strengths. When he is on the court, his teammates get better, often a lot better, and his opponents get worse — often a lot worse.”

Michael Lewis wrote Moneyball, a best-selling book about understanding performance in baseball. The story was a powerful example of how to use analysis to uncover undervalued assets, in this case, underpaid baseball players. Players who performed well in remote statistical categories (think number of walks, not home runs) turned out to be creating tremendous value on the field (in terms of runs scored or wins, for example), much more value than conventional wisdom had led managers to believe.

The most incredible part of the story was that everyone had the same numbers.  Everyone knew every player’s stats, and yet the experts were simply ignoring some data and overemphasizing other data. This is a common phenomenon, where data is used largely to illustrate existing knowledge rather than as a source for new knowledge.  Moneyball highlighted the value of analyzing all of the data to evaluate performance. The approach is sensible in its ease of implementation and potential for impact.

But basketball is different. A baseball player's stats can be reflective of true impact. If you have a higher batting average, more home runs, and fewer errors, it's a safe assumption that you’re a better player. In basketball, that assumption is less safe because of the interaction of players throughout the entire game. With the exception of free throws, there are no solo-sport activities in basketball; it’s all based on what everyone else on the floor is doing. Even though analysts know this, they still rely almost exclusively on individual stats because it’s the best they have. This is where the Lewis article shakes everything up.

Lewis articulates how Daryl Morey set out to analyze the game differently to see if he could gain new insight into player performance. And the results are powerful. Daryl found that individual stats could be looked at collectively to learn how the presence of one player influenced the performance of others. This is new territory -- and it speaks to the essence of leadership, which is about making other people better as a result of your presence. Daryl measured how individual players performed on their own, and with the help of new data and improved processing, also assessed how other players' performance changed as the result of each player.

With this knowledge, Daryl could uncover the "hidden gems" on the basketball court, undervalued players whose presence positively influenced the performance of his teammates, but whose individual stats were unimpressive. It's an incredible shift in my mind, a way to begin measuring leadership that may have exciting application off the basketball court, in the domain of another team sport, namely business management.


Friday, February 24, 2012