Can Leaders Learn Anything from Baseball?

The Hot Stove was fired up early this year with the new policy of Major League Baseball being anyone who was eligible automatically become a free agent upon the last pitch in the World Series. As a Cardinals Fan, this was a welcome change because it meant that I had an excuse to start paying attention again.

One of my favorite websites for watching what is going on is run by the St. Louis chapter of the Society of American Baseball Research or SABR. Fungoes includes lots of interesting (if you're a stats geek) debates about the values of players and how they compare to other people at the same
position, on other teams, on the same teams and even against retirees and minor leaguers.

The winter's offseason has had me really wondering why we don't have this kind of research ourselves when we're evaluating existing talent and considering who to hire. I started to go down the path of trying to figure out if there was an effective scoring system of statistics that I could create - as that's the #1 thing that baseball has 100 years of and business doesn't.

Maybe these particular stats will get your synapses firing to think more objectively about how you might evaluate your team during the upcoming Employee Evaluation season that typically happens right around the 1st of the new year.

VORP (my personal favorite): Value Over Replacement Player. The number of runs contributed beyond what a replacement-level player at the same position would contribute if given the same percentage of team plate appearances.
RARP: Runs Above Replacement, Position-adjusted. A statistic that compares a hitter's Equivalent Run total to that of a replacement-level player who makes the same number of outs and plays the same position.
Breakout Rate: The percent chance that a hitter's EqR/27 or a pitcher's EqERA will improve by at least 20% relative to the weighted average of his EqR/27 in his three previous seasons of performance. High breakout rates are indicative of upside risk.
Stuff: A rough indicator of the pitcher's overall dominance, based on normalized strikeout rates, walk rates, home run rates, runs allowed, and innings per game.

Obviously, it's not going to be possible for you to come up with the raw data to plug into the formula for STUFF (For the record, Stuff = EqK9 * 6 - 1.333 * (EqERA + PERA) - 3 * EqBB9 - 5 * EqHR9 -3 * MAX{6-IP/G),0}). However, with some creativity, you can come up with some equivalents.

The questions for you:

Do you have some young talent that drives you nuts but has HUGE upside potential?
Do you have someone whose performance was great 3 years ago but they've been sinking since and you've still got them hanging around?
Have you ever thought about something like VORP and considered how worthless or valuable someone on your team is compared to what else is out there in the marketplace?

Comment by Brian Keith on December 3, 2010 at 11:24am: One quick point on statistics. They are historic and thus serve as trailing indicators.

I think they are most helpful in the identification of the intangible traits, qualities, and characteristics one possesses. Those, after all, are what enable or enhance the behavior/performance.

The existence of TQ&Cs are the surest indicators of future success. The numbers merely confirm the notion.

Two books that helped me further understand performance and its relationship with predictive behavior are "Fooled By Randomness" by Nassim Taleb and "Outliers" by Malcolm Gladwell.

To your questions:

1. Young folks are challenging to size up because they don't have classic business statistics (quota attainment, revenue generated, or money saved). However, it terms of predicting their behavior and value I believe if we dig into their philosophical approach, their attitude, and relative enthusiasm we can discover the TQ&Cs and more accurately predict future success.

Dee Hock, the founder and CEO emeritus of Visa, expressed his belief in the importance of hiring for intrinsics rather than for specific experience or knowledge when he said, "Hire and promote first on the basis of integrity; second, motivation; third, capacity; fourth, understanding; fifth, knowledge; and last and least, experience. Without integrity, motivation is dangerous; without motivation, capacity is impotent; without capacity, understanding is limited; without understanding, knowledge is meaningless; without knowledge, experience is blind. Experience is easy to provide and quickly put to good use by people with all the other qualities."

2. In Fooled By Randomness, Taleb performs a very interesting exercise which demonstrates how success can be, well, random. I have talked to people whose Closing Ratio (Batting Average), Revenue Generated (Runs Batted In) and W2's (Runs Scored), were without question, the result of a heavy dose of luck. If I looked at these people from a statistical standpoint I could reasonably conclude they are proficient. Unfortunately, these are some of the same players who, at some point, can't buy a base hit let alone produce another home run. So, invariably they get traded, released, or sent back down to the farm system.

3. In short, yes. Stats are one facet of the 'diamond' that is our employee/candidate. What amazes me is when an average hitter or mediocre pitcher changes leagues (American/National) or teams and suddenly, almost inexplicably, become a dominant force. What changed? If it were predictable I'm sure teams would be on it like white on rice.

Coincidentally, I have a friend who is working on an elegant yet highly complex algorithm which he hopes to use to predict sales performance and relative value of individual contributors. My hunch is that it won't be much better than a coin toss at the end of the day but, I'll reserve judgement until I see the 'statistics'. ;-)

Great questions Jonathan! Very thought provoking. This may come as a surprise but, I LOVE pouring through baseball stats!

Comment by Jonathan D. Davis on December 3, 2010 at 2:10pm: @Brian - since you're officially a stat junkie like I am, check this link out: http://h-b.me/kcx7

Baseball statisticians have been trying for years to project how a Minor Leaguer will perform at the Major League Level. This is a lot like your question about projecting young people.

I look forward to hearing your thoughts and thanks for the well though-out comment.