Money Ball Essay
In today’s business world, any decision made by a manager can have serious implications on the progress of the organization. In addition to the intense pressure, the manager is also under constant scrutiny from his peers and supervisors. Keeping all this in mind, any soon-to-be business manager needs to be fully prepared to defend his decision making abilities. The book Moneyball gives a fair idea of this process, as the manager of the featured baseball team is faced with similar kinds of challenges.
Q) With the limited resources in hand, how can a manger make the most effective decision?
Every manager in modern world is faced with the limitation of resources. ...view middle of the document...
Before making any decision, a manger should always research the decision thoroughly. There is always a tendency to be affected by the latest information. However, the manager needs to understand that it’s not always the latest information which is the most relevant. He needs to study past performances as well. What a particular individual or company historically does is not necessarily what they will do next. So before making any decision, a manager needs to evaluate the big picture. By doing this, he can base his judgment on both current and past performances. As mentioned in the book, “there was the bias toward what people saw with their own eyes, or thought they had seen. The human mind played tricks on itself when it relied exclusively on what it saw, and every trick it played was a financial opportunity for someone who saw through the illusion to the reality” (Chapter 2). This advice is very important for a manager. They have to understand that whatever they think they are seeing is not always correct. The mind will often interpret a situation in the way that best suits it. The manager needs to be very particular about the biases these situations can create and he needs to evaluate these types of situations fairly as any decision which is biased by his imagination is bound to be ineffective. Therefore, he needs to direct his thoughts rationally and make unbiased decisions.
Q) How can a manager ensure that his decisions are effective?
A manager needs to understand that not all the decisions he makes will be correct. There will be some decisions that are bound to be erroneous, so he has to be prepared to face the consequences of these bad decisions. By challenging the conventional wisdom, there will be some element of risk to the manager’s decisions. As described in the book, there was a significant amount of risk-taking in Billy’s decision. He was going after lesser known players while all of his competitors were going for the big and famous players. But he minimized this risk by doing intense research about the players. The lesson is that any manager needs to engage in thorough research before making important decisions, in order to minimize the risks involved.
The manager also needs to evaluate the probability of a successful decision. This can be achieved by calculating the probability of success of earlier decisions. The final output should always be based on the previous probability and any new information that might affect the decision. In the book, Billy mentions "We're blending what we see but we aren't allowing ourselves to be victimized by what we see", (Chapter 2). This goes on to show that all the new information which a manager receives needs to blend with the probability based on his previous experiences. As a result, the final output or decision is automatically sensitive to both the new information and the past experience. Any decision based on this type of probabilistic estimate thus reduces the risk involved.