New Metrics for Small Business… Recommendation from Bob Diefendorf

New Metrics for Small Business…

MONEYBALL – The economics of Identifying Undervalued Events and Players

Recommendation from Bob Diefendorf:

I recommend reading the book MONEYBALL (Michael Lewis), it is about American baseball but really it’s about the economics of identifying undervalued events and players.

Small business I believe is a lot like baseball because its main enemy is randomness in measurement and analysis. Even ISO systems are more about prevention.

This book shows a way of thinking about a subject that is: minute and innovative and ultimately game-changing. I think the next step in business analysis and thinking may be along the metrics discussed here.

Don’t worry if you don’t know American baseball.

Moneyball (also on Kindle)
http://www.amazon.com/Moneyball-Art-Winning-Unfair-Game/dp/0393057658

Best regards
Robert M. Diefendorf
Director
Tel # 6622 5507
E244262
Diefendorf Property Co. Ltd.

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One Response to New Metrics for Small Business… Recommendation from Bob Diefendorf

  1. bdiefendorf says:

    I taught piano for 25 years and there’s a clear effort v. reward ratio. What’s confounded me in business for the past few years is: How to Overcome Randomness. Esp in sales where one day the deal sails through then the next 5 fizzle away. What happened? Was it my lucky tie? Did I blast the KINKS just before the good deal? Or do some people really NOT like you to look them in the eye??

    Most business coaches focus on YOU- stay positive!! But let’s face it: 1) we’re only human and 2) it’s much more than that.

    The main character of MONEYBALL was a high school baseball superstar, BILLY BEANE. Touted as the next Babe Ruth, he never made it in major leagues. Why? It was the mental side- he never learned to lose and therefore never learned to play the angles. Talent can only get you so far in the highest levels.

    As GM of the Oakland A’s he experienced the equivalent of a lightning bolt of career and personal catharsis that few can ever hope to have. Forced to improvise on a low budget (15% the size of NY Yankees) Beane found undervalued players- some overweight, some too old, some without obvious skills.

    But they all had one thing in common: a skill set that was unconventional but was actually MORE important than the glamorous skills (a glam ex being homeruns). For ex, did you know that the batting percentage is useless to determine winning teams? If you think about it, that’s obvious: It’s a percentage after all, and not a guarantee of actual number of hits. But did you know THIS: the on base percentage is the SINGLE MOST IMPORTANT stat in baseball?? What IS the on base percentage, you ask? It’s the number of times a batter gets on base v. at bat. So a slightly overweight and slow batter who waits for four pitches, never swings, but is allowed on base is more valuable than the hitters! And meanwhile these patient old hitters are tiring out the pitchers, which the young, idolized homerun hitters don’t do.

    Bingo! Billy went to the playoffs on a budget AND he figured out why he had fizzled in the majors.

    These strange but significant stats are just two of many that were invented by BILL JAMES, a baseball fanatic whom Billy studied.

    As a small business guy, this is doubly exciting: 1) to assign values to a host of incremental actions and thus decrease randomness and 2) to look for undervalued assets and services.

    Thoughts? Continued success…

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