What if everything you thought was right – was wrong?

I moved to Dallas in 1987.  If you had decided, based on the naked eye, where to invest all of your money, it would have been in the frozen yogurt shops  (yes, “shops,” plural — TCBY seemed to be the champion).  Always busy, lines out the door, all day – they owned the landscape.  And there seemed to be one on every other corner.

Today, I know of only one yogurt shop in Dallas.  Our neighborhood TCBY held on for quite a while, but it disappeared a couple of years ago.  They are practically all gone.

Your eyes saw the crowd, but would have missed so much more.

And in the game/the job of business, we have to learn to see the right stuff.  And to see the right stuff, we have to see with new eyes, and we have to look in different ways, in different places, and we have to be able to reject what looks reliable for what actually is reliable

This is the message that is all around us – the naked eye will not tell you what you really need to know.  And that is the message that I revisited this month from Michael Lewis’ Moneyball:  How to Win at an Unfair Game.

I posted once on this earlier this month — here’s a little more.   One of the heroes of the story is Bill James, who, since the book was published, was hired by the Boston Red Sox and helped break the Bambino curse.  That required a true genius!

Here are some quotes about what Bill James saw, and understood, from Moneyball:

“Baseball statistics, unlike the statistics in any other area, have acquired the powers of language.”  (Bill James, 1985 Baseball Abstract).

James’ most general point, buried beneath his outrage about fielding statistics:  the naked eye was an inadequate tool (emphasis added) for learning what you needed to know to evaluate baseball players and baseball games.

“So if we can’t tell who the good fielders are accurately from the record books, and we can’t tell accurately from watching, how can we tell?  By counting things.”

Baseball teams didn’t have the sense to know what to collect, and so an awful lot of critical data simply went unrecorded:  how batters fared in different counts and different game situations, who was pitching when a base was stolen, how different outfielders affected the audacity of runners on the base paths, where hits landed and how hard they were hit, how many pitches a pitcher threw in a game.  The lack of critical data meant that “we as analysts of the game are blocked off from the basic source of information which we need to undertake an incalculable variety of investigative studies.

Well into the late 1990’s you didn’t have to look at big league baseball very closely to see its fierce unwillingness to rethink anything.  It was as if it had been inoculated against outside ideas.

What James’ wider audience had failed to understand was that the statistics were beside the point.  The point was understanding; the point was to make life on earth just a little more intelligible; and that point, somehow, had been lost.

In Moneyball, the new experts learned that one skill that could really help a less “gifted” player go a lot farther toward helping his team win is this skill:  don’t swing at a pitch that is a ball — only swing at strikes.  Why?  Because getting on base is the precursor to scoring runs.  And it really does not matter how a player reaches base, if a player can get there more often, he will score more runs.  But then they discovered this:  if a player had not developed the discipline to “not swing,” it simply was too late to teach it by the time that player reached the adult playing age.

What most scouts thought of as a learned skill of secondary importance (the ability to take a lot of pitches) the A’s management had come, through hard experience, to view virtually as a genetic trait, and the one most likely to lead to baseball success.

Moneyball tells a true story, but it also is a parable about some deeper discoveries.  Like this one:  the entire Wall Street crisis was, very simply, a crisis caused by the naked eye – the naked eye triumphed, and “counting the right things” was not done (except by a very select, very ignored. and very highly rewarded, few).

But, you say, Wall Street counts everything.  Yes, they do — but maybe not the right things.  Baseball counted all the time too — but Bill James said, and proved, “you are not counting the right things.”  That was has genius, just as it was the genius of the Michael Burrys and his very few companions who counted differently in the Wall Street crisis.

It’s been a while since I’ve read the “irrational exuberance” reference from a few years ago, but the naked eye can cause an epidemic of irrational exuberance.  And then the lack of wisdom of the crowds (the dark side of Suroweicki’s insight) can lead to bad decisions, costly errors, and a last place finish in the business of business.

2 thoughts on “What if everything you thought was right – was wrong?

  1. Meg

    I get your point, but FYI I live in Uptown Dallas within walking distance of 3 different yogurt shops – which doesn’t include ice cream stores and gelato shops. And one just opened up by my office too. Red Mango, Pinkberry, Yogurtlicious…all the big brands are moving in! Yogurt is back baby. 🙂

  2. Randy Mayeux Post author

    This is a welcome new/returning development — although I can’t afford the calories at the same pace I did in the earlier days. Thanks for sharing the good news.


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