Moneyball by Michael Lewis - Book Review

The book, Moneyball by Michael Lewis is a fascinating book about how to be competitive in an unfair world. The book gives insights into how from 1998-2003 the Athletic A's Major League Baseball team was able to have as many wins as the vaunted New York Yankees despite operating at a budget of around $40 million per year versus a Yankee budget that exceeded $120 million per year! Moneyball discusses the specific strategies that the A's used to both build and maintain a winning organization. It also explores the background information that was the genesis of these strategies. It is through this exploration that it is clear to see that while this book is set in baseball, it is really a business book. There is talk about interesting baseball statistics like OPS (on base plus slugging percentage) and slugging percentage (total bases per at bat), but it's the business concepts such as understanding the business environment, setting and measuring goals, and managing change that make this a must read for all executives.

The book is centered on the A's general manager Billy Beane. A large amount of space is devoted to discussing how Billy's early successes and failures in baseball developed his thoughts about baseball. Billy was an immensely talented athlete. He was all everything in high school and projected to be either the first or second pick in the 1990 major league baseball draft. He was a five-tool player (ability to run, throw, field, hit, and hit with power) and everyone was convinced that he was a sure future major league all-star. That is everyone except Billy. Billy wanted to go to college, but ultimately, against his better judgment, he decided to go to the minor leagues where he was drafted as the number two prospect in the entire country. Billy's failed baseball career lasted nearly nine seasons mostly in the minor leagues. Very few baseball scouts or baseball executives could understand how someone with Billy's skills could not be successful. Through his relationships and experiences in the minor leagues he came to realize that the mental approach to the game was just as important as the physical approach. He routinely played with guys who didn't have his speed, power, or arm strength, yet consistently outperformed him on the field. This concept of results versus raw talent would be the core of his future success as a general manager.

At the end of his playing career, Billy got into baseball management. He began to explore how baseball organizations scouted for, drafted, and traded for baseball players. He knew from first hand experience that scouts looked for the raw talent but often overlooked "less talented" players who produced results. He started to investigate why these baseball players with seemingly less skills were more successful on the playing field. Through research and his own personal experiences, he discovered that the major league baseball scouting and talent evaluation process was not looking at the correct key aspects when evaluating talent.

It was in 1998 when Billy was promoted to the general manager of the Oakland A's that he got a chance to test his theories. It was shortly after this promotion that his boss (the team owner) issued him "The Challenge". The challenge was to beat the New York Yankees despite having a budget of only $40 million per year to spend on players, which was ranked thirty-first out of thirty-two major league teams. He realized he couldn't win by doing what the Yankees were doing because they had three times the resources. Billy decided that the best way to get the most talented people was to look for people who produced results and not just people who had strong physical talents. He began to draft and trade for players who had the results that matched his theories on how to be successful. He also instilled these beliefs in the entire organization from the minor league players to the coaches and the supporting staff. Once the talent and clear strategies were in place, the results followed. The A's made the playoffs every year from 2000-2003 and won more games in that stretch than any team in the Major Leagues.

Many of the concepts that Billy Beane used to make the Oakland A's a successful baseball team also apply to business world. A look at the healthcare industry and how these concepts can be applied will be discussed in further detail.

The first concept that will be discussed is understanding the business environment. It is critical in today's healthcare environment to understand the business environment. A hospital can decide to focus on specific specialties, such as cardiology or oncology, and then develop programs around those specialties to meet the needs of the patients. Before such decisions are made though, a business analysis is completed to determine what the community needs are, viability of the program (are there other nearby hospitals offering the same services?), the profitability surrounding the program,