The document summarizes how Billy Beane and the Oakland A's challenged traditional baseball theories and changed their business model on a tight budget through statistical analysis. They shifted draft metrics to favor college stats over physical attributes. They prioritized on-base percentage over batting average. This allowed them to reduce salaries for second-tier players. Their strategies focused on on-base percentage and avoiding outs rather than traditional tactics. As a result, Oakland had the lowest payroll but one of the best win-loss records in 2002. The document asks if readers have similar examples of challenging traditional models.

1. The Oakland A’s challenged and changed their business model Can you? Ed Curry Vistage chair

2. How many have read “Moneyball” by Michael Lewis?

3. Billy Beane, GM of the Oakland A’s, in response to a “gut” feeling, a very tight budget and supplemented by comprehensive statistical analysis challenged the long standing baseball theories as to: • draft choice metrics • major league player metrics • correlation of the metrics to salaries • game strategies

4. Draft choice metrics Shifted from high school stars evaluated on foot speed, throwing speed, big league “looks” to college players with accumulated statistics including overall winning percentage. High School Star Foot speed Throwing speed Big league College Player Foot speed Throwing speed Big league

5. Major league player metrics Shifted on base percentage ahead of batting average and other traditional metrics.

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11. Run Rate Traditional Future Run rate Revenues 1000 1000 Cost of sales 600 600 Gross margin 400 400 R&D 50 50 0 Selling 200 20 180 G&A 100 20 80 Operating expenses 350 90 260 OI before future expenditures 50 140 Future exp 90 Operating income 50

14. Questions