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Billy Beane on Making Better Decisions, Challenging Entrenched Thinking, and Avoiding Biases

Moneyball Billy Beane

Billy Beane was put in the spotlight when Brad Pitt played him in the movie rendition of Moneyball: The Art of Winning an Unfair Game.  Sports fans, however, knew long before Moneyball that Beane was special.

He’s the guy largely credited with taking a low budget team and turning them around by challenging the fundamental notions of a sport that had been around 150 years.

In this fascinating interview given on stage at the RSA conference in April, Beane offers an interesting perspective on decision making, challenging established norms, and using data to make decisions.

When asked about pushing through the way something has always been done, Beane replied:

I sort of represented that entrenched thinking in some respect, because I was the guy who came up in the business – a business that was 150 years old – as a former player. Quite frankly, I had a great mentor, a gentleman who didn’t come up in the industry, in Sandy Alderson.

When I hired, I made sure I looked outside at somebody who didn’t have the experience bias with my first, and maybe even one of the best hires I ever had was Paul DePodesta, who was a Harvard Econ major, didn’t play sports, and really, was able to come in and look at things with an eye that wasn’t biased.

We also took ideas from people outside the industry, guys like Bill James and Sean Cook and applied them.

On how biases creep into our thought process no matter how old we are or in what industry we operate, Beane  commented on taking the emotion out of the decision making process and making it more rational.

Your own experiences, particularly in sports, where that experience may also be tied to an emotion as well, you tend to say, in football or soccer, in soccer there’s a goal, and not all goals are created in terms of how you emotionally react to them. Baseball’s a little bit the same way. So you kind of have to take a blind eye and look at things from the start and not make assumptions.

For us, we ultimately wanted to take all the emotion out of our decision making, and that came, many times, with your own experience.

One way to do that is to let data help you make decisions.

But data is everywhere and cheap. How can we leverage data analytics and extract meaningful information? On this Beane advocates an approach that makes sure you have cognitive diversity in the room – in other words, people that wouldn’t normally be there.

[T]he book was really based on public information, as I said. Bill James had been writing for years, but because they didn’t come up in the industry, it really was never applied. Again, sports is very emotional. Very much, you have to come pass the eye test. What we wanted to do was make sure our eyes weren’t fooling us.

As far as today, the game and sports has changed dramatically. In fact, looking at the book now, it feels like you’re watching an episode of “The Flintstones” a little bit when you see some of this stuff. The only thing that I haven’t changed is making sure that I bring in guys that normally wouldn’t be in this room. The advantage I have is I have access to intellectual capital that normally would be in this room, but want to work for a sports team.

We have access to data, everything … was being measured, thrown into this huge vat of data, and it’s up to my staff to sift through what has relevance and which doesn’t as it applies to predicting player performance.

One of the keys to looking at data is to bring different lenses to the data to get insight. But you need to constantly analyze your process and have the feedback loops in place to make sure you can distinguish between luck and skill.

You’re constantly evaluating. Sometimes, even when you have success, there’s an assumption that that success was based on your process. Actually, you’re always analyzing your process, making sure that the reason you weren’t correct wasn’t through serendipity, but the reason was because you have a good process and you’re doing things properly.

It’s challenging because the business of sports has become very, very intelligent. Baseball teams, football teams, basketball teams, they’re all using this, and hiring, once again, guys that normally would probably be in this room.

Because the world is always changing, you need to make sure you continuously test your process.

Also, there’s so many variables in sports, too. We try and quantify things that you don’t think you can quantify, things that people…Once again, when you talk about challenging assumptions, things that people assume can’t be quantified.

You try and quantify them so, at least, you’re creating a process that, more than anything, when you are right or wrong, you can at least go back and look and see why you were right or wrong, similar to a mathematical equation.

Beane found a way to challenge assumptions and in so doing gain insight that he had the courage to put into practice. He had to change the way things were done. How did he do that?

Well, sometimes you don’t. Early on in our process, we lost employees because there certainly wasn’t a belief. Now, understand, when we started out we had a great platform. We were challenged from revenue standpoint, so it was an opportunity in some sense, and we really had no other way to operate.

Through the course of doing things this way, we certainly lost people, but in the same sense, another year later we would gain two more people who were interested in going down this road. For us, it was rational. It made sense, and we really had no other choice.

Billy Beane

But, as Keynes so aptly put it “Worldly wisdom teaches us that it is better for the reputation to fail conventionally than to succeed unconventionally.” And that path was not a linear story to success. There were moments when he doubted himself and operating in a cut-throat industry probably didn’t make things easier. All eyes were on him. Was there a pressure to go back to the way things were always done?

Unfortunately, probably for some A’s fans. They probably doubted me more than I. [laughs] I think the one thing about the process, it was like a math equation. At least we knew why we were doing something. Our other option, to us, didn’t make much sense. Certainly, you’re hoping you’re going in the right direction, and the assumption is that you are. We felt like that was the best road that we could travel.

I think, if anything, we certainly didn’t fear failure, because we felt like going a traditional path was certainly the surest of failure, based on our revenues and the payroll that we were on. We had a lot of autonomy, too. Autonomy within, we were given a budget. The only limitations we had in terms of our intellectual curiosity was really making sure we stayed in the budget our ownership gave us. “Listen, hey, do what you want to do, but make sure you stay within the lines a little bit.”

But again, the fear…We knew going down another subjective path, we were certain to fail. We weren’t going to consistently put something together that was on a year by year basis. The fear of going that route, there was greater fear going that route than going an objective route.

As a leader it was Beane’s job to make sure the strategy they were using to find under-rated players was embedded throughout the organization.

At times it was challenging, because we hired some really…I was a former baseball player, and a lot of guys who had come up in the business, the guys we were bringing in were guys with PhDs in behavioral economics and Harvard masters in statistics, and things like that. Bridging that gap initially was challenging because most, certainly a baseball player like myself, my default position isn’t to run a regression log.

We operate in a world with tremendous amounts of data and information but we’re not challenging the platform that we’re starting with to the extent we should be.

Even with a very young and progressive group of thinkers that are around me,  with a little bit of experience, you will always start at a platform that you assume to be true based on previous success. We always have to analyze our foundation because very quickly a culture and a tradition of doing things can get ingrained in a very short period of time. If you assume from a false platform that you’re correct, you can go really awry. For us, it is constantly…Also, not being wrapped up in your own hubris with success and understanding that even with an objective based decision making, you are not going to be right 100 percent of the time.