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January 22, 2004

Paul DePodesta

Paul DePodesta (remember MoneyBall?) of the Oakland A's gave a talk at the CSFB Thought Leader Forum on 'The Genesis, Implementation, and Management of New Systems'. Really good talk - definitely worth a read (link via Joho the Blog). Here he points out the importance of asking the naive question:

The A's like everybody else in baseball had ceased to do one very critical thing—to ask the naïve question: “If we weren't already doing it this way, is this the way we would start?” Management guru Peter Drucker introduced this simple test decades ago and yet our public and private institutions are replete with things as they are because that's pretty much the way things have always been. Why is the workday 9—5? Why do we have the Electoral College? In baseball, why do people still believe that trying to bunt and steal bases helps in scoring runs?

Jim Pinkerton wrote a book called What Comes Next, and in it he wrote, “It's human nature to stick with traditional beliefs, even after they outlast any conceivable utility.” It was as if he were writing this specifically for baseball... Pinkerton also wrote, “systems of any kind tend to degrade over time. Bugs accumulate, people figure out how to cut corners, and eventually they go through the motions and a lowest-common-denominator mentality prevails. And as the original purpose is forgotten, reflexive self-perpetuation becomes the only goal.” This is the world of player evaluation in three sentences.


He also has some interesting thoughts on the myopia that results from outcome-based thinking and how he was able to put this cognitive bias to use - in selling his system:
Many of us share a common psychological deficiency. We judge decisions based on the outcome instead of the time and the circumstances under which they were made. This happens all the time in baseball. They make trades and say things like, “we'll see in three or four years if it was a good decision.” That doesn't work for me because you can't go back and learn from the decisions because of all the variables that occurred in the intervening time. It makes replication of an outcome impossible.

I was in Las Vegas for a weekend playing blackjack. A person at the table to my right had 17 and said they wanted a hit. The whole table stopped and even the dealer asked if he was sure he wanted a hit. Finally he said he wanted a hit. The dealer deals the card and of course it was a four. What did the dealer say? “Nice hit.” But I'm thinking, you're kidding me. It was a terrible hit. Even though it ended up working out, it wasn't a good decision.

Outcome-based myopia actually gave us an opportunity in selling our concept that we could take advantage of. I realized that all we really needed to do was win some games and find a way to get into the playoffs. Then we could leverage this success by introducing all of these changes in our systems. We wouldn't need to go into in-depth analysis of how we came to all of our conclusions. If we won, people would buy into it. This is how the game had operated for 100 years.


He concludes with:
Being innovative doesn't mean searching for upgrades over inefficient systems. It means searching for entirely new ways of doing things. We don't spend a lot of energy tweaking current systems that are inefficient. Thomas Kuhn wrote, “the proliferation of competing articulations, the willingness to try anything, the expression of explicit discontent, the recourse to philosophy and to debate over fundamentals, all these are symptoms of a transition from normal to extraordinary research.”

Update: CSFB pulled the piece from their website, but it's archived and available at kottke.org here.

Posted by Narasimha Chari at 09:30 PM in management | Permalink

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