At the opening of the 2002 baseball season, the Oakland Athletics had approximately a $40 million payroll, compared to the richest team, the New York Yankees, at $126 million. (Lewis, 2003) This difference in payroll gave the rich teams the opportunity to pick the players they truly wanted, which meant the best players of the league. This meant that the rich teams had the biggest chances to win more season games than any other teams. The poor teams were forced to look at young players and older guys that were undervalued by the market. (Lewis, 2003, Ch. 6)
Billy Beane, the Oakland’ A’s General Manager, had read all twelve of the author Bill James’s Abstracts, where Bill James captured and analyzed statistical information regarding baseball and its players. Billy Beane also hired Paul DePodesta, a graduate from Harvard, who had correlated baseball statistics with winning percentages. (Lewis, 2003, Ch. 6). Paul created a model for predicting run production based on on-base percentages and found that on-base percentage was dramatically underpriced in comparison to all other skills such as the ability to hit with power, fielding skills or foot speed. This underpriced attribute gave the Oakland A’s a much different outlook than what other teams were looking for in their players.
Before the 2002 amateur draft meetings, the change problem of the organization was diagnosed for years. Traditionally, baseball scouts made the decisions on who to play on the team during the amateur draft and the GM’s would follow their lead. However, in the 2002 amateur draft, Billy was going to change the way that the scouts would look at the players. This change didn’t just happen overnight. As stated before, Billy was already in his 5th year with the Oakland Athletics, who were doing better each year he was there. Prior to Billy, Sandy Alderson, was the GM of the Oakland A’s from 1983 – 1997. (Billy Beane and the Oakland Athetics: Disruptive Innovation in Major League Baseball, 2014) Sandy followed the work of Bill James as well and had started using the concepts in 1995 when there was a significant drop in payroll because of a change in the A’s ownership. Sandy needed to find a different way of picking the players on a limited budget. The difference between Billy and Sandy was that Sandy had no baseball experience. He wanted to understand exactly how baseball worked and found that a lot of the skills that managers would find important had no correlation to who would actually be successful. In 1998, Billy hired Paul DePodesta, a Harvard graduate, who studied the statistics of every baseball team in order to correlate the teams’ skills to winning percentages. (Lewis, 2003, Ch. 6)
The change from 1995 – 2002 didn’t just happen instantly and is based on the concept of the Flywheel (Good to Great), continued improvement to deliver results. “By 1995, [Sandy] Alderson had created a new baseball corporate culture around a single baseball statistic: on-base percentage.” (Lewis, 2003, Ch. 3) In July 2000, the Commissioner’s Blue Ribbon Panel, a document that would study baseball’s economic system, concluded that poor teams didn’t have a chance to win games as opposed to rich teams. This would eventually be bad for the future of baseball. If fans were drawn to watch baseball in the hopes that their teams win, then people would start to abandon the sport knowing that their teams didn’t have a chance. The difference between the New York Yankees and the A’s opening day payrolls went from $62 million to $90 million in 2002, ending with the A’s losing three of their biggest stars to richer teams. (Lewis, 2003, Ch. 6) However, in 2002, Billy Beane was in his 5th year with the Oakland Athletics and each year since 1998, the team had dramatically improved, but the payroll was decreasing. The Oakland A’s success was slowly emerging, yet no one had noticed yet.
Billy did not establish a great enough sense of urgency or formed a powerful guiding coalition for the change he implemented. The people he needed as part of this coalition were the manager, Art Howe, and the head of scouting, Grady Fuson. During the 2002 amateur draft meetings, both Billy and Paul don’t interfere much as the scouts discuss who they think is a good player and why, all based on what they saw, their own intuitions, or their “expectations.” (Lewis, 2003, Ch. 2) However, neither Bill or Paul explained what they were analyzing as the scouts went through discussing each player they had picked. Grady Fuson would question Paul on why he had his laptop present in the meetings. Grady did not understand the need for the statistics and calculations that Billy and Paul intended to make their decisions on. (Lewis, 2003, Ch. 2). Grady didn’t have any idea that Billy felt that the way they were scouting players was completely outdated. In turn, Grady would sometimes ignore Billy and Paul’s recommendations of who to check out and didn’t understand why they should waste their time on some of the players. “The old scouts are like a Greek chorus; it is their job to underscore the eternal themes of baseball.” (Lewis, 2003, Ch. 2)
Howe was completely left out of all the decisions of the draft. (Lewis, 2003, Ch. 5) In fact, Howe just did whatever Billy Beane told him to do on the field. Billy was the one who decided who played, where, and what. According to one of the players, if Art Howe was fired, it wouldn’t have made a difference since Billy made all play decisions. (Lewis, 2003, Ch. 7). Billy and Paul didn’t seem to have much of a strategy in how to overcome resistance to the change they were making. They had a lot of research and statistics to back up what they were doing, but they didn’t take enough time to form the powerful guiding coalition.
In order to decrease the resistance of change, according to the “Leading the Change Process,” Billy should have involved these people in the change project in order to make them feel as if they were part of the change and that it was their own. They also should have made them understand how it could have helped them in the long run. For example, for Grady, this would have been a more useful tour for the scouts to use when determining which players were the best. The scouts already used some statistics to determine how each player was scored, this new tool only added to that, and gave a reason of why a skill was actually more useful than others in determining winning percentages.
Nevertheless, the change effort was successful. In 2002, the Oakland A’s ranked 4th in the regular sesason wins and in 2013, ranked 3rd in regular season wins. (Billy Beane and the Oakland Athetics: Disruptive Innovation in Major League Baseball, 2014) After that year, baseball teams started to use the same statistical analysis that Billy Beane used to pick their players. J.P. Ricciardi, Blue Jays, hired Keith Law, a Harvard graduate as part of his front office team. John Henry, Boston Red Sox, hired Bill James, as their Senior Consultant. (Lewis, 2003, Ch. 12)
The change effort was successful in part because of the Leadership Team between Billy and Paul. Their strengths played a complementary role with one another and according to the article, “The Leadership Team: Complementary Strengths or Conflicting Agendas,” it allows the strengths of both members to emerge and fill in the limitations that the other might have. In this case, Billy had the baseball experience and knowledge, while Paul had the statistical analytics and education. Together, these two were able to combine what they knew to make the decisions. Both leaders believed in what they were doing, and remained resilient throughout their change efforts.
Billy Beane was the first General Manager who had baseball experience. This difference made him see the game and the players in a different way than other General Managers did. This was one of the reasons why he was also very successful in implementing the change. In addition to that, he exhibited Level 5 (Good to Great) leadership skills. He knew when to get someone off the bus, and who he needed to hire. For example, his decision to get Paul on board early on his time as General Manager, was knowing his own limitation and exactly who he needed on the bus to get his vision going. He had a vision for the Oakland A’s and even after the 2002 season, after other teams had offered him, he remained loyal to the team and believed in what they were trying to do. He believed in the team and not just the players in order to be successful.
In the future, if this organization or a team within this organization was to challenge or change the way they made decisions, they should first establish a sense of urgency of how it is impacting the organization. In this change effort, they had the statistics to back it up, but they never created the sense of urgency that the baseball organization needed as a whole. The changes were geared towards the Oakland A’s team, but in reality, the change was needed by the entire baseball league. It wasn’t affecting only the A’s, but others who also had the same disadvantage as the A’s. The organization would also need to form a powerful guiding coalition behind the change they make. This change effort may have changed the way that teams looked at players, but now that statistics is being used by all the teams, the disadvantage of the poor teams is still an issue. They are back to the same playing field, and the financial restrictions still exist. The major league baseball will still have to figure out what to do about the statistics behind rich teams winning and how to keep from losing fans to the game.