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What You Need to Know about 'Moneyball'

What You Need to Know about 'Moneyball'

The recently released movie "Moneyball" and the Michael Lewis book on which it was based offers insight into how the small-market Oakland Athletics were able to get the most out of their limited resources.

Although the story revolves around Athletics' general manager Billy Beane and his efforts to compete with larger-market franchises, the strategies employed by the baseball team's front office can be applied to businesses in many industries.

According to ComputerWorld, analysts say that "Moneyball" tactics are particularly applicable to corporate IT organizations, which must learn to optimize their operations to become more efficient in difficult economic times.

"Like professional sports teams, traditional companies must rethink how [such] measures can also drive changes in business processes," Rita Sallam, an analyst with Gartner, told the publication.

The news source cites Washington, D.C.-based non-profit Social Compact, which is encouraging businesses to invest in inner cities based on often overlooked economic indicators such as utility usage data and tax assessment figures. Alyssa Lee, president and CEO of Social Compact, told the news source that the information the company utilizes to paint economic pictures of inner cities is much more effective than simple census statistics and delves deeper into the true underlying factors behind the struggles.

Such metrics become useful for the non-profit much in the same ways as on-base percentage (OBP) and walks plus hits per inning pitched (WHIP) were emphasized by Beane. Beane, who was forced to replace some of his top-performing players who left via free agency, made a conscious decision to look past statistics he felt were overrated, including batting average. The general manager believed that by placing more value on "hidden" information, he could bypass the market and stay within his budget to field a successful team.

"Moneyball" can also be applicable to small businesses and startups, which often attempt to take customers away from their larger competitors. Relative to the rest of the league, Beane's Athletics could be compared to a startup company, at least in terms of capital. As such, small businesses can learn from the general manager's ability to cost-effectively get the most out of his players or employees.

According to Forbes, both CFOs and CIOs can learn from Beane's "Moneyball" strategy, as evaluating the cost/value-trade-offs of every decision becomes even more critical for companies with tight budgets during struggling economic times.  

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