In 2003, the book Moneyball: The Art of Winning an Unfair Game was picked up by many leaders around the world in many professions and fields. The movie came out in 2011 and interest in the lessons and advice from the story expanded across private and public organizations looking for ways to attract, select, upgrade and retain talent.
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From Challenge to Triumph
There were several challenges that the team’s general manager in Moneyball, Billy Beane, faced in this true story that apply to leaders of many organizations.
Challenge No. 1: The reality of needing to rebuild the team after losing several high profile star talent to better contracts with more powerful teams.
Challenge No. 2: Rebuilding that team with the constraints of a team owner in a small market with a tight budget.
Challenge No. 3: Thinking differently and creatively about how to be competitive against teams with more resources and more talent.
Challenge No. 4: Changing the fixed mindset, conventional wisdom and long-held beliefs and biases of many in the game.
The new strategy and game plan Billy came up with to rebuild faced immediate pushback and strong resistance requiring his persistent selling to convince the manager, coaches, scouting staff, public and most importantly, players.
Billy’s four keys to victory were based on a game plan and model his competitors were not using at the time.
Billy’s First Key to Victory: The use of statistics and analytics to evaluate player’s performance and averages to identify undervalued attributes that fit his model.
Billy’s Second Key to Victory: Making sure his model is implemented.
Billy’s Third Key to Victory: Changing the team’s priorities to change and align behaviors.
Billy’s Fourth Key to Victory: Not allowing the old methods and biases to interfere with or sabotage the model.
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Billy was introduced to the use of statistics and analytics by Peter Brand. During one of the many conversations between the two of them, Peter told Billy: “Okay, people who run ball clubs, they think in terms of buying players. Your goal shouldn’t be to buy players. Your goal should be to buy wins and in order to buy wins, you need to buy your run.”
Conventional wisdom focused on individual stats like batting average, homeruns, RBI’s, slugging percentages and many other non-quantitative measures and beliefs. All good but not consistent across the line-up and the full roster. The focus here was consistency across the team’s roster.
Billy’s new model was focused on filling the roster with players he could afford with the statistics that show they can consistently get on base, play fundamentals and help score more runs to beat the “better clubs.” An example stat the data analytics focused on: On base percentage formula includes hits + walks + hit by pitch, the three major activities that a batter can be measured on, and can work to improve, to get on base.
From Baseball to Business
So if business and sales are games and were to focus on metrics and statistics to grow sales, what would that look like?
It is proven that better data and better metrics help business leaders and managers make better decisions. Metrics and data help align people and provide clarity to the actions and desired results leader and owners expect from marketing and sales investments. Cold hard facts on performance helps managers target a specific need for coaching and training in order to improve individual performance (like patiently taking more walks, etc.) and overall results.
As in the Moneyball example, a barrier or obstacle many businesses face to unlocking the full potential of KPI’s and Performance Based Metrics is conventional wisdom, organizational bias and an overall resistance to change the status quo.
What are the equivalent business stats or metrics you could use like “buying wins,” or “buying runs” and “on-base percentage?” Here are five areas you may want to invest time tracking and improving.
Conversion Rate. As in the Moneyball model, it is not about depending on the “home run” hitter (Super Star Rain Maker) that makes the plan, it is the consistent and sustainable on base percentage of each sales person. The focus on metrics helps each member convert more and better deals to meet current and future revenue needs. Where could you increase conversion rates?
Pipeline Velocity. How many, how fast and what are the sizes of the opportunities progressing through the stages of your sales pipeline to achieve your revenues cash needs? Each deal has a unique value and level of complexity based on the buying process of each customer. Your team needs to be managing the progress as opportunities are qualified, prioritized, converted and invoiced through the stages of your sales cycle. What could you do to increase velocity?
Sales Cycle. How long does it take for an average sized sale to “run all the bases” to be counted as a “run?” Are all the steps, all the activities, in your sales process clear, understood and necessary? Your sales cycle can start from initial contact to realizing revenues and could include tracking to the cash being deposited in your bank account. Your sales cycle lines up with your weekly and monthly operations schedule and your financial cycle. It is true that you will win some deals and some deals will be lost, impacting your monthly forecast. Where could you shorten your sales cycle?
Profitability. As in the Moneyball example, there is the reality of budgets and costs with every deal. Not all customer revenues are of equal value as measured by profit. There are costs to acquire a customer, costs to make the product/service, overhead to recover, and costs to serve a customer in order to realize the profits from revenues. How could you improve profitability of your major opportunities?
New Customer Acquisition. Based on desired growth rate, retention rate of existing customers and loss/churn rate, how many new customers have to be attracted and converted to achieve goals? What do you need to do to attract and convert more new customers?
So can any of this help your business grow sales?
Many leaders follow professional, Olympic and college sports because of the competition, the loyalty to the team or the social and entertainment aspects from investing time and energy with other fans. For business owners, leaders and managers, there continue to be valuable lessons from the strategies, training and player development, and roster management presented in examples like Moneyball.
The principles of data analytics and statistics, accountability for executing models and processes, challenging and overcoming the “status quo” of conventional wisdom and changing mindsets are all consistent with what sustainable and healthy businesses need from their owners and sales leaders.
Wayne Bergman is a business and executive coach and founder of Consistent Business Growth. Questions or comments about this piece? Email him directly at email@example.com.