“If you aren’t a Moneyball Executive, you will soon by replaced by someone who is“, wrote Jordy Leiser, Co-Founder and CEO at StellaService and Linked In Influencer, in a recent blog post. “Data-driven insight is rapidly finding its way into the hands of hungry executives looking to make smarter, more informed decisions,” writes Leiser. “These are the Moneyball Executives.”
What is a Moneyball Executive?
The name “Moneyball Executives” is based on Moneyball, the popular book by Michael Lewis and the adapted film starring Brad Pitt. In case you didn’t read the book or see the movie, Moneyball is the story of how Billy Beane and his Harvard-educated quant whiz kid protégé Paul DePodesta turned the Oakland Athletics into a team that consistently made the playoffs over a number of years. The Athletics were near the very bottom of the league in terms of their financial capacity to spend on acquiring talent. Through detailed analysis of every imaginable baseball statistic, the duo uncovered the true underlying drivers of success for a baseball team. They uncovered the massive inefficiency in how baseball talent is priced and were able to exploit this inefficiency to their advantage. Billy and Paul figured out how to gauge and price the true worth of every ballplayer. The morale of the Moneyball story is that data-driven decisions result in significantly better outcomes than gut feel, intuition, or conventional wisdom.
Data-driven Decision Making Improves Company Performance
There is ample evidence that a data-driven approach to decision making results in significantly better outcomes not just in baseball but in the business world, too. For example, when researchers at the Wharton School of the University of Pennsylvania conducted a survey of 179 large publicly-traded companies, they found that the companies that adopted data-driven decision making saw measurable improvement in productivity and other performance measures.
Corporate Executive Board’s managing director Patrick Spenner and senior researcher Anna Bird agree. “The big-data explosion is driving a shift away from gut-based decision making. Marketing in particular is feeling the pressure to embrace new data-driven customer intelligence capabilities. No wonder a strong appetite for data is one of the most sought-after qualities in new marketers.”
Most Marketers Base Decisions on Intuition
And yet, the vast majority of marketers still rely too much on intuition. The 2012 Corporate Executive Board study of nearly 800 marketers at Fortune 1000 companies study revealed that, on average, marketers depended on data for just 11% of all customer-related decisions. Respondents said that more than half of the information they used to make a recent decision came from their previous experience or their intuition about customers.
Moneyball Executives Base Decisions on Data
On the other hand, Moneyball Executives gather as much data as time and budget allow when they are making new product and marketing decisions. They make product development and marketing decisions based on the analysis of consumer, marketplace, and competitive data. They utilize such tools as retail store sales tracking data, social media tracking and measurement, market and competitive assessments, and consumer market research.
Here are just a few examples of how Moneyball Executives use data to make informed new product marketing decisions and reduce the risk of making the wrong decision.
- When he has to decide which new product ideas to develop and which to drop, the Moneyball Executive commissions a concept screening test and then has his team of management, marketing, sales, and product development people evaluate the new product concepts that passed the initial screen on product advantage, market competitiveness, marketing synergy, and technical synergy.
- When she has to figure out how to differentiate a new product from what’s already on the market, determine what benefits will be the most compelling to consumers, and decide what product features the new product needs to have, the Moneyball Executive will conduct a thorough competitive analysis, scour retail store sales tracking data, and commission a consumer needs assessment.
- When making the go/no go decision on a new product, the Moneyball Executive will commission a product concept test to make sure that the likelihood of marketplace success is high enough to justify the development and tooling costs.
At the end of his blog post, Leiser issues a challenge to “Step up to the plate and become the Moneyball Executive for your organization in 2014. Just like Billy Beane, the General Manager of the Oakland A’s, you will quickly find it’s a winning strategy.” I urge you to take the challenge.