On Wednesday afternoons, my interns and I have our weekly book club meeting. I decided that my interns and I would read Michael Lewis' book, Moneyball, to use as a tool in understanding how we should develop our nonprofit microfinance organization. I chose this book because it explains how analysis of baseball metrics can be used to field a competitive team at a low payroll. The interns and I are developing and analyzing our own financial metrics that will allow us to build a competitive nonprofit that will improve the nature of student loans.
Last week I was talking to one of my interns, a passionate Red Sox fan, and realized that even some of the highest payroll teams in the MLB are using statistics and metrics as the foundation of their approach to business. The Red Sox have consistently been in the top 5 highest payrolls since 2002, a year that they signed the youngest General Manager in MLB History, Theo Epstein. GM Epstein and the brain trust of the Red Sox front office adopted a metric focused approach -- similar to the one Michael Lewis describes in Moneyball. However, the Red Sox are not using metrics because they don't have the money, they are using metrics because it is best practice for their business. Although the Red Sox ought to have some success with their high payroll, they have arguably been the most dominant team since 2002 (winning two World Series, making it to the ALCS or 'semifinals' twice, and making the playoffs every year but one.) The Red Sox have competed at the highest level, while simultaneously developing a team that will allow them to succeed in the future.
The economic recession has forced businesses and companies to re-evaluate the way they look at their finances and practices. Although it might seem odd to look to non-profits for financial strategies, the 'metrics' used by nonprofits can help large, profit-making corporations reassess what is important to the success of their company and ultimately will lead to different business practices -- similar to the shift to a metric focus in baseball.
Other books besides Moneyball that have great lessons on doing more with less:
My Years with General Motors: Alfred P. Sloan, Jr.
Zilch: The Power of Zero in Business: Nancy Lublin
The Principles of Scientific Management: Frederick Winslow Taylor
Written with Samuel Plunkett
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