4 Small-Business Lessons from 'Moneyball'

by Ellen Lee on January 23, 2012
brad-pitt-in-moneyball-300x203.jpg

The award-winning 2011 film Moneyball — a potential Oscar nominee for best picture — isn’t just an entertaining flick. It can also offer insight into how to run a business.

Based on Michael Lewis’s book, Moneyball: The Art of Winning an Unfair Game, celebrates how the Oakland A’s manager built a Major League Baseball franchise on a budget (one much smaller than that of rivals such as the New York Yankees) by using number-crunching and analytics to recruit players.

Here are four lessons from the film that can help small businesses to compete with larger entities.

1. Adapt or die. This is what Oakland A’s general manager Billy Beane, played by Brad Pitt, tells baseball scouts when the team is faced with replacing star players such as Jason Giambi, who is lured to the New York Yankees by a much bigger paycheck.

Beane says they have to think differently to rebuild the team, because they don’t have the money to recruit someone as talented as Giambi. At first, his ideas are met with resistance from the coach and scouts, who believe that they should stick to the traditional way of building a team. But after adapting to a new strategy involving a deep dive into statistics, the Oakland A’s later win 20 consecutive games — and set a league record.

Like the Oakland A’s, small businesses should think differently when going toe-to-toe with larger competitors. You need to take chances and come up with innovative and different strategies, because the traditional ways won’t necessarily work against competitors. After all, small enterprises rarely have the budget or resources to deploy that big businesses do.

Running a lean, nimble operation can also work to your advantage. Startups and small businesses are often the ones to tap into trends first, such as using social media as a cheap, effective marketing tool, because they’re willing to try something new and face less bureaucratic red tape when it comes time to test a new plan. This can give you a competitive edge.

2. Find hidden value. As the Oakland A’s recruit new players on a limited budget, its scouts look for players who can contribute and add value to the team but who have been overlooked by others. They turn to a pitcher who has been scorned because he “throws funny” and hire an injured catcher to play first base.

Small businesses can find hidden gems, too. When hiring, for example, don’t just look at Ivy League graduates. Don’t overlook women returning to work after taking a break to raise children. Although it’s easy and comfortable to hire and work with people whose backgrounds resemble yours, be open to staffing your business with a diverse group of employees. They can add depth and breadth to your team.

3. Money isn’t everything. The Boston Red Sox offer Beane $12.5 million to become the team’s general manager. He declines. Beane said he learned his lesson after turning down a scholarship to Stanford University to play in the major leagues, only to fail.

One of the reasons he rejects the offer is so that he can stay close to his daughter, who is growing up in California with his ex-wife. Likewise, small businesses also need to set priorities — and money shouldn’t necessarily be the top one.

4. Being first matters. Because the Oakland A’s were the first to take advantage of Beane’s strategy, the team had an edge over the competition, and it led them on a winning streak. Since then, however, other teams have also used the same method to build their lineups, and the Oakland A’s have not fared as well in recent seasons.

That said, small businesses should take advantage of any first-to-the market leads they catch. Unlike baseball, which starts with a clean slate every season, business keeps going. So, stay focused and race as far ahead as possible, making it difficult for rivals to catch up.

Advertisement