What Moneyball Can Teach Us About Innovation

Photo by John Morgan

Photo by John Morgan

"The inability to envision a certain kind of person doing a certain kind of thing because you've never seen someone who looks like him do it before is not just a vice. It's a luxury. What begins as a failure of the imagination ends as a market inefficiency: when you rule out an entire class of people from doing a job simply by their appearance, you are less likely to find the best person for the job."

– Michael Lewis, Moneyball: The Art of Winning an Unfair Game

I just returned from a service innovation workshop with a client. We have been tasked with developing a new service from scratch; one that doesn’t necessarily fit within the client’s current business model. Service design, especially when it involves a new business model, is a challenging process – sometimes inspiring, other times frustrating, but nonetheless one that must move forward, often without a clear image of the finish line. Lucky for us, our client is fully committed to this expedition. They have shown trust and belief in the sometimes-confounding innovation process.

True innovation sets its sights on wicked problems, ones that require disruptive solutions, not incremental ones. In order to boldly go where no one has gone before, we have to study and understand the efforts and results of the past. While invention is often viewed as a completely new idea, innovation seemingly transforms what currently exists, often by combining disparate products, services, and business models. These distinct pieces have usually been around for some time, but when united together in a new form, they create something that unsettles the status quo and creates a new reality.

In the story of Moneyball (a 2003 book and a 2011 movie - starring Brad Pitt - of the same name) author Michael Lewis describes how Billy Beane, the Oakland A’s General Manager, put together a winning team of players in 2002 that, as individual pieces, had little, if no, potential. Examining the common statistics of Batting Average and Runs Batted In (RBI) would have caused a baseball executive to laugh off the possibility of signing one of them to a contract. However, Beane saw them differently. He reframed the conversation around more subtle statistics like On-Base Percentage and Slugging Percentage and realized that when pieced together strategically, you could take a group of unimpressive baseball players (by common opinion) and create a winning team. Beane’s strategy succeeded. The A’s ended the season in first place in the American League West division, winning 103 games and losing 59, tying the almighty New York Yankees for the most wins of any team. They set a record of 20 wins in a row during one stretch of the season. All of that while losing “big name” players to free agency and replacing them with “no-name” journeymen.

In the business world, how often have you heard of an existing product being used in a way that wasn’t originally intended and consequently creating an entirely new market (see Garmin)? Or how about an existing business model successfully being applied to a completely unrelated industry (see better place)? In the above quote from Moneyball, Lewis is referring to people (baseball players). However, you could just as easily substitute “products and services” and have it reflect corporate innovation. The ability to envision new realities by uncovering subtleties and similarities, separating them into discrete parts, and piecing them together to form a new “team” is not only a key strategy in baseball, but also what produces disruptive innovation in business.

In Moneyball, common assumptions were thrown out the window and the rules of the game were ultimately changed forever. The story should ring true for business leaders and innovators across industries. They should ask themselves what players they are currently ignoring because they can’t envision or understand how the pieces might fit together into a winning team. This was exactly the goal of the workshop we just completed. We helped the client to identify seemingly unrelated and unimpressive ideas to build an innovative solution. The goal is to be the one changing the game, not the one who failed to see how the pieces fit together.