Billy Beane, vice president and general manager of the Oakland A’s, the keynote speaker at the recent Winning Is Everything Conference, explained how mathematics is transforming America’s pastime. Yes, I said mathematics.
His successful model of producing a winning team without paying high salaries is being duplicated throughout baseball, as senior executives at many teams are now also using statistical and probability analysis to make their player selection decisions.
What did the analysis of Beane, a former professional baseball player, conclude? It doesn’t pay to steal or sacrifice to advance a base runner, and that on base percentage is the most important statistic to focus on in a non-pitcher.
Interestingly, the individuals who work directly with Beane at the A’s are mathematicians, utilizing the same type of efficiency analysis employed by Wall Street firms.
What motivated this dramatic change? Quite simply, a new business model had to be developed for teams like Oakland to survive economically. This is a good reason why Beane was able to be the trailblazer. It began with the owner of the Oakland A’s viewing the team as a business, and that Beane’s mentor and former boss, the then general manager of the A’s, didn’t have a baseball background and saw the benefit of having a former professional ball player who had a deep understanding of, and ability to apply, “market efficiencies” through numerical analysis to develop a new model for player selection and executive team management. To accomplish that, Beane brought in mathematicians as direct reports and key strategic decision makers.
This is a remarkable deviation from the well-established and unwritten rule that senior executive baseball team management must be entirely comprised of former professional ball players. Are CPA firms really any different? There is a need to include non-CPAs in firm management as the model and marketplace conditions are changing. It can be a chief operating officer, technologist, marketer, or firm administrator. I expect more and more really successful CPA firms will follow a similar path, and incorporate many more non-CPA professionals as members of the executive team.
