When Billy Beane took over as General Manager of the Oakland A’s in 1997, they were the worst team in baseball. They finished 25 games back in the American League (AL) West and won 36 less games than the league best Atlanta Braves. To paraphrase Beane, they couldn’t be any more lastest.
But, if you have read the book or seen the movie Moneyball, you are well aware that Billy Beane turned things around in Oakland. He produced the longest win streak in the modern era, 5 AL West Division titles and 1 Wildcard berth. And, he did it through rigorous application of statistical analysis.
At first glance, a baseball team’s success story doesn’t appear to have much to do with our industry. But, as Beane demonstrated when he took the stage at Drillininfo’s 3rd Annual World Members Meeting, baseball is a business. Therefore, his methodology and philosophy has broad-reaching implications for any business, particularly those of us charged with providing the world with its most essential energy source.
So, here are 4 key lessons the Oil & Gas industry can learn from Billy Beane and the Oakland A’s.
- Failure is a Fantastic Option: “What would you do if you couldn’t fail?” is a popular pie in the sky motivational question. But, baseball teams live that reality. With the amount of revenue passionate fans create, bankruptcy is the last thing on a baseball executive’s mind. In an environment where failure is off the table, backwards practices that would crush any other business can persist for decades. In baseball’s case, many did for the better part of 150 years. In the same way, an Oil & Gas company that was lucky enough drill a few gushers could have their blinders on about what’s not working. The revenue doesn’t necessarily tell the whole story, just look at Enron. Take a step back, examine the data and finally admit the numbers may be smarter than your gut.
- Get in the Hole: As stated above, the business of baseball undervalued key statistics for 150 years. Scouts looked for the romantic story of the small town kid who ran a 4.4 40 and hit the highest number of home runs. But, through regression analysis, Beane and the A’s were able to identify that prospects from large metropolitan areas almost always outperformed players from small towns. They also discovered on-base percentage is the single most important factor in winning baseball games. In short, they found value where nobody else found it. As you look over the crowded lease maps in Drillinginfo and pour over your own in-house knowledge base, you may be tempted to think there’s nothing left in a given play. After all, if the majority of the potentially producible acreage in the Eagle Ford is leased, how can you find anything new? But, with a projected 25,000 more economical wells on the table, there are no doubt countless things we still don’t know about the play. So, find the hole in the market and fill it!
- Consistency is King: It’s easy to sit around a board room and get excited about a new business strategy. But, whether it’s Oil & Gas or baseball, you can’t expect to see success when you change course with the shifting winds. True leaders are those who enthusiastically execute every single day, even when things get tough and opposition mounts. To quote Beane, “Having the information is one thing; having the discipline to implement it is another thing.”
- Ignore the Noise: Believe it or not, Billy Beane doesn’t read the newspaper and he doesn’t listen to the radio. In fact, he doesn’t even watch his own team’s games. And, there is good reason for it. Since 2002, his club has made decisions based solely on statistical analysis. He has the cookbook and, as you can guess, the recipes aren’t always popular with fans. After he traded Mark Mulder to the St. Louis Cardinals in 2004, one sports writer opined, “Beane needs psychological testing.” If he filled his mind with the wall-to-wall criticism that 24-hours sports news offers, he could very easily begin to question his own philosophy. Then, he would begin to make decisions with his gut, which 150 years of baseball history has proven is most-likely wrong. Beane’s strategy guarantees he can weather any storm, because he doesn’t even know it’s passing over his head. If you decide to strike out on your own and prospect where nobody is today, or employ techniques that seem alien to the industry, you can expect a fair amount of opposition. But, if the statistics are sound, ignore the noise and persevere. Because, as David Brinkley said, “A successful man is one who can lay a firm foundation with the bricks others have thrown at him.”
It won’t always be easy to implement the suggestions above. Changing behavior and beliefs is an ongoing process that isn’t always perfect. However, the Oil & Gas industry needs innovative leaders to step-up and carry us into the future. Billy Beane proved it was possible to transform an entire industry with forward-thinking and sound statistical analysis. Drillinginfo aims to do just that for Oil & Gas. We invite you to join us.
Now it’s your turn. What were your favorite takeaways from this afternoon’s keynote? Please, leave your comments below.
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