Can ‘Moneyball’ Work in Manufacturing and Industry?

Spring training is in full swing. It used to be that finding baseball talent required a seasoned eye and an instinct honed by time. For decades, professional scouts traveled the country -– and in some cases the world -– watching up-and-coming players for signs of the skills that would propel them to major-league superstardom. Scouts learned to sort through average prospects using traditional measures of talent and conventional wisdom, and pair phenoms with the teams that could best use their skills.

Then, in the 1960s, everything began to change. The rise of sabermetrics, or computer-aided analysis of baseball performance on the field, not only started displacing scouts in the recruiting process, it demonstrated that the measures of talent historically relied upon by baseball insiders were not as indicative of future success as they had previously been thought. As a result of this insight, traditional metrics such as batting average and runs batted in (RBI) today are less important than measures that lead to runs or team wins in the scouting process.

Increased use of analytics in baseball has led to tougher competition and a smaller margin for error -– even among the best athletes in the sport. But for all the advantages sabermetrics offer, they have had the opposite effect on the prospects of professional scouts. Their unique, and often subjective, perspective holds a diminished place in the recruiting process today. In a January article run by USA Today Sports, Bob Nightengale wrote, “Teams are relying more heavily on analytics and sabermetrics than at any time in baseball history, with teams treating veteran pro scouts as if they’re old eight-track car stereos, needless in today’s game.”

Baseball is not the only “sport” being materially altered by a greater reliance on data. Corporate competition is changing rapidly in the face of modern analytical capabilities. Just take a look at the growing phenomenon of Industry 4.0, the next phase in manufacturing, considered by many to be the fourth industrial revolution. Plentiful cross-functional data will influence how connected, integrated enterprises gauge performance and their decision-making on what’s best for them.

Despite the impact baseball analytics has had on pro scouts, that is not a reason to ignore data’s potential -– once a capability becomes available and is applied to great effect, there is no turning back the clock. The same holds true for business and manufacturing analytics. As more data becomes available, companies need to be receptive to the revelations of analytics -– even when they contradict traditional wisdom.

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The question that must be answered, however, is what the balance of talent and technology needs to be moving forward in any organization or function leveraging the power of analytics. It is impossible to deny that data and analysis play a strategic role in any business. But some responsibilities will always need to be addressed by a human with the right background and skills to apply data effectively.

Information is Not Intelligence

Computers may be tailor-made for the task of structuring and analyzing large pools of data, but it is only through application that information becomes intelligence. What constraints need to be factored into each scenario? How should timing be allowed to affect the outcome? Are there outliers in the data skewing the resulting recommendations in a dangerous direction?

Only the context of human experience makes it possible to answer these questions. After all, data has been part of baseball since the first batter stepped up to the plate. What has changed is the interpretation of that data. Even though companies have access to a mind-boggling amount of data today, they must still cull value from all that volume. There will always need to be a logic-test for recommendations produced through an analytics engine, and while professionals with the relevant background and qualifications to vet the information may not be able to compete with computers, they can ensure the success of the information coming from them.

The Team Dynamic

Even in baseball, a game long beloved by statisticians, analytics falls short in the face of subjective decision-making. One example is team culture. Sabermetrics aside, each club is made up of humans who must work together with enough cohesion to defeat their opponents. Analytics can address the physical strengths and capabilities of each player in comparison to the objectives of the game, but they are no match for aligning a player with an existing team culture or determining whether there is enough space in the locker room for one more ego. Although these factors are not reflected in the analytics process, they are often obvious to human perception. A player’s performance as measured by sabermetrics likely reflects their performance under ideal conditions, a level of ability that may never be realized if interpersonal dynamics get in the way.

While technology will never eliminate the need for human intervention altogether –- in baseball or otherwise –- the number of pro scouts has been significantly and permanently reduced by sabermetrics. Part of this is due to the capabilities of such systems and the realization that the traditional measures of performance were not the best indicators of future success. But another, and equally important, part of the change comes from the game itself. As baseball became more competitive, the metrics and analytics needed to evolve to keep their predictions in line with actual events.

This is an important reminder to anyone who applies analytics for any fixed purpose over time: keep your eye on the ball, because it’s coming at you fast.

[image via Google images]

Kelly Barner is the owner and editor of Buyers Meeting Point, an online resource for procurement and purchasing professionals. She has been an industry award-winning supply management practitioner and consultant, and is now an independent thought leader and author on procurement, sourcing, and purchasing. She is co-author of Supply Market Intelligence for Procurement Professionals: Research, Process, and Resources and Procurement at a Crossroads: Career-Impacting Insights into a Rapidly Changing Industry. Kelly earned her MBA from Babson College and her Masters of Information Science from Simmons College.

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