What can business learn from Moneyball?

Money ball

Brad Pitt once brought to life the importance and value of metrics when he portrayed Billy Beane in the movie Moneyball.  “Sabermetrics” as it is widely known today has really changed the way scouting in baseball was performed.  It elevated the process from tribal knowledge that had been in place for over 100 years to analytics that could measure performance creating a contender out of a small market team.  Just like Sabermetrics, almost all companies today use some sort of data analytics to measure performance.   But just how effective are those measurements and where did they come from?

When used properly, metrics work to support strategic initiatives and provide feedback to all stakeholders regarding the performance of the group quickly and effectively.  However, when they don’t they just become another number.  They quickly become irrelevant and people will just tune out.

Here are 5 ways to make sure your metrics are relevant and adding value to your organization:

  1. The metric fits into higher strategic goals

All metrics must align with your strategic focus.  Every metric created must support the higher goals of the organization.  No metric should be created without it fitting into the bigger picture.  Any metric not in proper alignment quickly losses value and can becomes irrelevant.

  1. Ownership

Metrics must have the proper ownership within the organization so that the individual/group responsible can have as much control over the process as possible.  It is unrealistic to hold anyone accountable for areas outside of their control.  Positive changes cannot be expected by individuals without the ability to change the dynamics of the input.

  1. Simple data

Making the metric as user friendly as possible is the best method.  The most useful data is when everyone can easily understand it and interpret the data instantly.  A great example of a simple metric is in the airline industry and on-time departures.   This is simple, to the point and everyone can easily relate to it.

  1. Publish regularly

However you designate the publication time, make it relevant. Whether it is weekly, monthly or quarterly, the measurement should be on time and relevant.  Data ceases to become relevant if it is outdated.  There is not much relevance to reading old news.

  1. Don’t be afraid to adjust

Keep in mind that not every metric is set in stone. I recently was asked the best way to measure fill rate for a distribution company.  The simple answer is that how you measure is irrelevant if your customer base disagrees with you.  Never forget to check with your customers. They will certainly have an opinion of your performance and how you should measure it.  Ultimately, keeping your customers happy is the goal. Don’t be afraid to get their input.  If your customers disagree with your metrics then you end up looking like you are out of touch.

While there is no denying that effective metrics help guide companies to higher performance, the development of the metric itself can be more about trial and error than pure science.   Constant improvement is the goal in any organization and metrics are no different.  Keeping your metrics, strategy and customer satisfactions in alignment takes constant adjustment.  Relevant metrics are often a work of art in the end.

If you or anyone you know would like more information regarding the use of metrics in their organization please email info@atssoutherncal.com.

Question:  What are some of the most useful metrics you have used?

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