Tips Business Owners Can Take Away From The Movie Moneyball
The movie Moneyball is about the Oakland Athletics (A's) baseball team
, its general manager Billy Beane, and how he picked players and worked them into the team during 2002. Brad Pitt plays Billy Beane. His character essentially realized and recognized the fact that management couldn't run the business like the richer competitors in Major League Baseball. They just didn't have the amount of revenue needed to support other more famous and expensive players.
You are the leader--or general manager--of your business. As a result, you are responsible for making your business valuable at any and all times. To do so in these ever-changing economic conditions, you must realize, recognize and be prepared to change! In the Aggregation Age that we're in today, businesses have evolved and leveraged intellectual capital. They control the process while not necessarily owning it. The businesses that can reposition ahead of the curve can greatly benefit from wealth creation. That being said, to do so cost effectively, you must prepare now to reposition your business above any benchmark market value!
In a privately held, business, usually your CFO or CPA benchmarks your net profit within your industry, region, etc. However, to compete in a global environment, you face several challenges to profitability--or in other words--to keep your business valuable and attractive at all times.
This requires you to rethink your business model. A business model on a scalable platform will reposition your business for substantial value or wealth creation, for you the owner!
In Moneyball, as general manager, Beane realizes and recognizes that something must change. He leverages their intellectual capital and analyzes and selects undervalued players. Their process involved looking at the historic performance of players. They then used that intelligence to build a cost-effective team set to outperform the return on investment of the season. So where was the intellectual capital in the movie? Well, remember that 24-year-old economic major, Yale graduate character in the movie? That's the one. He built a program to capture the entire selection process and to statistically look at a player's historic performance to put together their offer and cost structure.
When Beane turned to this "performance based" plan to scout his team, he began looking for undervalued players who had not been given a chance to prove themselves. As a result of this "performance based" analysis and selection process, the Oakland A's won 20 consecutive games--their best winning streak in the history of the franchise.
Beane was soon offered the position of general manager by the Boston Red Sox, a package which included the largest salary offered in the history of that club--$12.5MM. Although Beane made a personal choice to stay with the Oakland A's, the Boston Red Sox deployed the same method Beane had used and won the World Series two years later.
A scalable platform in a small to mid-sized business is defined as orderly and efficiently delivering a large number of products (include services) to a large number of customers. It leverages both economy of scale (decrease average unit cost with single product) and economy of scope (decrease average unit cost with diverse products). The entire platform is bound by the proprietary intellectual properties, which are mostly several sets of streamlined processes in both real-time and cloud technology (or software). It ultimately standardizes any customization into repeatable product offerings. It is teachable, repeatable and easy to update or upgrade based on customer demand or forecast in customer needs.
Let's just imagine for a moment--what could it have meant if Beane had been able to sell that process to the Boston Red Sox or any other baseball team? Beane would have created a scalable platform. The Oakland A's would have new found a revenue source that further diversified their revenue.
In Moneyball, only a few components of a scalable platform are used--
Centralized on-going monitoring of the cost structure to replace under-performing players Centralized process of undervalued players' historic performance analysis and review
As portrayed in the movie, Beane realized and recognized the need for a game changer. He did not start off understanding what he had to do, but he found that linchpin and became the most valuable general manager ever in the history of Major League Baseball.
Admittedly, I've never really understood baseball. And sometimes I don't know everything about my client's products (including services). But the expertise I offer a business serves as a linchpin for our clients, repositioning them for value growth, so that ultimately they will be compensated for the amount of risk, time and hard work put into the business!
Do you have a linchpin in your business helping you reposition your business for value growth? As a business owner, you know your business and industry better than anyone else. You know the trends and you know you have to be on top of your game at all times! And not just for survival, but for creating substantial value and wealth for you, your family, your team and ultimately your customers.
Remember, the goal is not only to grow your business in revenue--but also in VALUE. This objective will ultimately help you achieve your financial independence when you're ready to cash out! You deserve to be compensated for the amount of risk, time and hard work you put into your business!
If you are not already, begin using key performance indicators (KPIs) to track your business performance on a regular basis. I also encourage you to as a separate step, revisit your business model. Perhaps you can take few baby steps to slowly change your business direction into a scalable platform. This will help reposition your business for value and wealth creation--leading to your NEXT JOURNEY--whatever and wherever that might be.
by: Chia-Li Chien
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