Data Analytics and Baseball: the “Moneyball” Approach

Data analytics offers potential benefits to practically every company and plays a huge role in obtaining the information organizations need to succeed. Specifically, data mining and predictive analytics guide organizations in making business decisions for which there are conditions of limited certainty, for assessing and detecting fraud, and for predicting outcomes.

Predictive analytics and data mining use algorithms to discover knowledge and find solutions. Organizations need to constantly take advantage of current data, and seek out new datasets and metrics to continue evolving, all the while analyzing the information from different angles to stay competitive. Predictive analytics assist organizations in optimizing marketing productivity, gaining a competitive advantage, understanding customers/clients better, locating areas of attrition and identifying new revenue opportunities.

Let’s put this into perspective using baseball. In the movie “Moneyball,” based on Michael Lewis’ bestselling book, “Moneyball: The Art of Winning an Unfair Game,” Oakland Athletics’ General Manager Billy Beane utilized sabermetrics to evaluate his potential roster by performing data mining on hundreds of individual baseball players, identifying statistics that were highly predictive of how many runs a player would score, a number not typically among those valued by baseball scouts in the day. In doing so, Beane sought lower-cost ballplayers with high on-base percentages, as opposed to high-priced home run hitters with high batting averages. His theory was that players who have a higher on-base percentage would be more valuable, even though they may hit fewer home runs.

The efforts proved remarkably effective. Beane was able to utilize predictive analytics to develop a highly successful team despite operating under a tight budget. Over the course of subsequent years, the Athletics averaged 95 wins per season, captured four division titles and made five playoff appearances. They even managed to string together a 20-game winning streak during one of those campaigns.

Beane’s story resonates the importance of data analytics today, as well as the business advantage it can give an organization. Companies no longer have to blindly trust their gut feeling, but can now make decisions based on real data after considering insights into their customers, market conditions and more. Data analytics is increasingly being welcomed to various industries, benefiting companies by offering them different sources of information and unique perspectives to guide them in making better decisions.

Schneider Downs can help with your data analytic needs and offer data-driven solutions. For more information, contact Schneider Downs.

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