5 Principles Businesses Can Learn From Moneyball
Moneyball is a film about baseball, but on a deeper level, it’s about how to succeed in life through a series of broader principles, which can be applied to many areas, including business. Here are five such principles that business owners can utilize.
1. Use cold hard facts, not arbitrary belief – In Moneyball, Atheltics General Manager Billy Beane repudiates a roomful of scouts and tells them the As are going to start using statistics and objective analysis. Human beings have a tendency to make decisions on something they believe without always having facts to base these decisions on. Call it what you will, a gut feeling, a hunch, some kind of inherent belief you feel is right. There’s nothing wrong with having these feelings, but it’s important to back them up with facts before acting on them. Facts and numbers are objective, unlike subjective feelings and beliefs.
2. Learn to accept luck for what it is – Even though the Athletics put together a great team, they still lost in the playoffs. Although it’s disappointing, Billy Beane realizes that luck is a factor, and that the solution is not to overreact but to stick with the processes that got the As that far in the first place. It's important to put yourself in the best position to succeed but the game isn’t played on paper. Just having the best product doesn’t always mean everything will break the way you want right away.
3. Know when to have benefits of group, and benefits of individual in control – Even though Billy Beane starts to question his scouts judgment, he doesn’t dismiss them altogether. He also relies heavily on the input of his assistant, who is steeped in statistical analysis. Still, he knows that when he has to make a decision on a trade or a signing, it’s ultimately his call. Sometimes there's a benefit to having a number of minds working on a problem, and sometimes there's a decision that requires bold action by one person. Knowing when to use each can be essential for successful decision making.
4. Take advantages of inequalities in the marketplace – One of the ways the Athletics are able to gain value even though they can’t afford to pay players the same amount as the Yankees or the Red Sox is by looking for areas that other teams aren’t taking advantage, such as on-base percentage. Do what’s not being done, find under served markets with room for growth.
5. Know when to wait, and when to be dynamic – As mentioned above, Beane is generally patient, but he’s not conservative and afraid to make a big move when he feels the times call for it. There's a difference between waiting long enough to let your plan fully going into action and waiting too long when there's some way you can affect it. Rather than overhauling an entire plan, there are always ways to tweak and improve subtlely to help the bottom line.
Quantifying Yelp's Impact on the Restaurant Industry
Luca studied the effects of Yelp ratings on the revenue of restaurants and discovered several interesting findings. Studying the relationships of restaurants' revenues to their Yelp reviews in Seattle over a period from 2003 to 2009, he found a significant relationship between a restaurant’s average rating and revenue. One star’s worth of improvement on Yelp leads, he found, on average to an increase of between 5 and 9 percent in revenue. The average rating is more important than the review, as many Yelp users are overwhelmed by the sheer number of reviews on manyrestaurantpages and find it easier to consult the star rating. Luca also found two features which exacerbate the effect on revenue Yelp has. First, the more reviews a restaurant has, the more impact an increase in its Yelp rating will have on its revenue. Second, the more reviews by Yelp “elite” members, the more impact; “elite” reviews have almost twice as much impact as other reviews.
The KFC Ad You Can See from Space
Yes, according to a report on space-visible ads by NPR's Mito Habe-Evans, the Kentucky Fried Chicken gang has paid the ultimate tribute to their late leader, with a tile portrait of Colonel Sanders, out in the middle of a dry expanse of dirt in Nevada, that's visible from beyond our atmosphere.
Three Keys to Franchise Success
The first is to understand the key drivers of success in your business -- that is to say, the three or four major strategies or operational processes that make up the engine of profitability and success for your organization. As an example, for a restaurant these factors may include things such as speed, consistency, freshness, cleanliness and friendliness. For an auto parts store the key drivers will probably include inventory availability, customer service, expertise and pricing/margins. Once you understand the key drivers, it is critical that you focus on them incessantly and help everyone in your organization understand that it is their responsibility to make sure those drivers are the top priority for them every day at work.