Wednesday, October 26, 2011

IBM Information on Demand 2011: Day Four (#IODGC)

The highlights of my fourth day at the IOD conference in Las Vegas was the general session with Michael Lewis and Billy Beane.

Billy Beane is the the general manager (as well as a minority owner) of the Oakland Athletics. Michael Lewis is the author of the book, Moneyball, that outlines how Beane revolutionized baseball analytics by focusing on different statistics than the traditional RBI and batting average. Indeed, the A's analysis showed that on-base percentage and slugging percentage were better predictors of offesnive success, and therefore translated into more wins. Additionally, because other teams were not focusing on those stats it would be easier for a small market team like the A's to acquire talent based on them and compete with the "big boys" like the New York Yankees and Boston Red Sox.

Lewis and Beane were informative and entertaining. Lewis started with a funny tale about waiting to talk to the A's players and seeing them as they walked naked from the showers. He said if you just lined these guys naked, up against a wall, you'd never think they were professional athletes.When Lewis mentioned this to Beane, Beane replied that that was basically the point. He told him "We're in the market for players whose value the market doesn't grasp..."

After this conversation Lewis continued to observe the team operations for awhile. And the light bulb came on. Lewis told Beane "Aha... I see what you are doing here. You are arbitraging the mispricing of baseball players." He recognized it because he had covered Wall Street in the past.

When asked if it took courage to rely on the statistics like he did, Beane countered that it really didn't. With a small market team he had no money to compete against the major market teams using traditional measurement analytics. So, it made sense to use the new statistics that were backed up by rigorous analytics and compete in a non-traditional way.

Beane also discussed how baseball tends to get the 8 best teams in the playoffs each year because they play 162 games and the better teams tend to win over longer periods of time. But in the post season, with best of 5 or best of 7 series, anybody can win. The nugget of wisdom passed on by Beane in this story: "Never make decisions based on short term results." To make his point, Beane said that this year most people would agree that the Philadelphia Phillies were the best team in baseball... but they lost to the St. Louis Cardinals in a best of 5 series in the National League Division Series.

The interview with Lewis and Beane tied in well to the overall theme of the IOD conference, which focused on gaining insight from information through analytics. And that is what Beane achieved and Lewis documented in Moneyball (which is now a major motion picture showing at a theatre near you).

Speaking of motion pictures, not major ones by Hollywood standards but perhaps by DB2 users standards, be sure to keep checking in on the daily IOD video blog that I am hosting at Today's video blog offers up an interview with Suresh Sane, Database Architect at DST Systems in Kansas City and three-time best user speaker at IDUG.

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