Moneyball and the Work of the Chief Strategy Officer

Paul DePodesta was recently named the Chief Strategy Officer by the Cleveland Browns of the National Football League. This is significant because, as any fan of Moneyball knows, Mr. DePodesta has spent his career in the sport of baseball, not football. This matters to the community of strategic thinkers because it means that increasingly, the realm of Strategy is seen as a unique and crucial discipline independent of the industry in which the strategist works.

You may recognize DePodesta’s name because he was played by Jonah Hill in the movie Moneyball based on the Michael Lewis book of the same name. The real DePodesta is nothing like the Jonah Hill persona. He played both baseball and football at Harvard, and comes across in person as bright, energetic and assertive. But it is DePodesta’s intellect that made the story… both the true story in the book and the quasi-true movie. Evidently the movie producers wanted the character played as passive and dumpy to accentuate the theme of brain over brawn.

“From the standpoint of raw intelligence, Paul is the smartest person I’ve ever been around,” says Josh Byrnes, VP of Baseball Operations for the Los Angeles Dodgers. “From a strategizing viewpoint, he’s brilliant. If the owner gives him enough runway, I have no doubt in a short time Paul will make an impact.”

To put the role in a nutshell, the Chief Strategy Officer owns the decision-making processes of the organization. The strategist does not necessarily make strategic decisions, but designs and manages the process by which they are made. The strategist must then align the compendium of all decisions made throughout the organization such that all members understand strategy, and can make operational and tactical decisions in a manner consistent with the organization’s strategy.

Moreover, the strategist ensures that all decisions are made in an information-rich environment. Appropriate competitive intelligence must be gathered and understood by the right people. That’s why DePodesta’s experience as an Analyst is so important for his upcoming job.

DePodesta as a chief strategy officer

As Chief Strategy Officer, DePodesta will own the strategy-making process from end to end. He will evaluate intelligence and make sure the right information is in the right hands. He will guide the process of formulating strategy. He will assist in articulating strategy to the Browns organization so that others can make good decisions. He will ensure that executives know how and when to execute strategic action (that’s why they are called executives!). And he will make sure that the Browns’ leadership learns from experience, reviewing the results of past decisions and tweaking the process so that future decisions are better made. The graphic below shows the work of the strategist as a continuous learning loop.

In a presentation to a group in the OD world several years ago, DePodesta explained how he got started in the world of strategy and analytics:

“In my first year I was charged with charting every pitch of every single one of our major league games in terms of pitch type, pitch location, and ultimately the outcome of that pitch. It really made me focus on everything that was going on, and ultimately what was successful and what wasn’t.”

DePodesta described how he would sit in the stands at baseball games among the “scouts” who were evaluating the players. As he hung around the periphery and listened to the opinions and evaluations of the scouts, and then waited a few years to see what would happen, he came to realize with time that the scouts’ predictions of future performance were not proven true by the players on the field. He realized that their subjectivity was actually hurting the decision-making of the Cleveland Indians.

“In my mind, I started thinking that maybe this whole subjectivity thing isn’t so good. I started realizing that we had a lot of psychological biases when we were making subjective decisions on things. A lot of them”, he says. “First and foremost was that we made a lot of emotional decisions. The team was playing well, the team was playing poorly, it didn’t matter. Whatever sort of wave of emotion we were riding at that point caused us to make certain decisions that in otherwise rational times we probably wouldn’t have made.”

As mentioned above, the job of the strategist is to “own” the decision -making processes of the organization. DePodesta has spent a lot of time thinking about how decisions should and should not be made. He says “I don’t think it was the scouts. I think it was us. I don’t think we were doing a very good job at all in preparing the scouts for what they needed to do. What we needed to do was come up with a better process – a better process than the subjective 1.0 operating system that we had at the time.”

This is music to the ears of Browns fans, who have seen their team bungle decisions high and low since their return to the NFL in 1999.

DePodesta cites Thomas Payne’s Common Sense as wisdom to be mined in correcting a decision process gone wrong: “A long habit of not thinking a thing wrong gives it a superficial appearance of being right, and raises at first a formidable outcry in defense of custom.” Depodesta learned that this was the case in baseball, and as we have all observed is still the case for the Browns of the football realm. Talking about baseball, he says “This was an industry that was run by old-timers. It was old school. Everything was really based on opinion, but for all this time we felt this was the way to do it, but we weren’t thinking critically about it.”

As an analyst, he began to ask “What are we going to measure, and how are we going to measure it? The first one was critical, because for so long we just assumed that batting average and on-base and home runs and runs batted in were important. We decided to throw it all out. We started trying to figure out what the real correlation was between a statistic and winning, and ultimately we created our own statistics.

DePodesta concluded his talk about organizational strategy and decision-making with a quote from Thomas Kuhn in his book The Structure of Scientific Revolutions. “The proliferation of competing articulations, the willingness to try anything, the expression of explicit discontent, the recourse to philosophy and to debate over fundamentals, all of these are examples of a transition from normal to extraordinary research.”

Some important things to take note of

What can the rest of us learn from the challenge that faces Paul DePodesta? Keep in mind the job of the Chief Strategy Officer:

1. Understand the strategic environment. Understand the critical capabilities necessary to win. Monitor the organization’s performance on critical success factors. Monitor the performance of competitors along the same dimensions. Gather options.
2. Formulate a strategy based on facts, informed assumptions, and the best possible “what-if” thinking. Frame strategy so that members of the organization can internalize the strategy and implement strategic action at the right time.
3. Know when to pull the trigger on strategic options and how to do so. Recognize critical events in the strategic environment as they unfold that will trigger strategic action. Communicate strategic intent throughout the organization to clarify and align the role of every strategically critical player and process.
4. Monitor progress and update strategy as the organization learns from experience.

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