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Analytics

What sports analytics can teach business managers

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What’s the worst sports decision ever made?

Ask MIT Sloan’sand he’ll tell you it was Michael Jordan not being the No. 1 pick during the 1984 NBA draft.

“Obviously hindsight is 20-20,” said Shields, a senior lecturer in managerial communications. “In the end, when you combine both the on-court success that he had, as well as the off-court business success that he had, I think that’s a really tough one to defend.”

The Portland Trail Blazers’ draft pick distinguishes itself among terrible choices, but there are plenty of examples of smart thinking in athletics — namely, using analytics in decision-making.

“Competition is the main reason why sports has been an early adopter of analytics,” said Shields, who created and teaches the MIT Sloan executive education course Management Analytics: Decision-Making Lessons from the Sports Industry.

“Every team, every athlete, is seeking a competitive edge,” he said. “In the pre-analytics era, athletes and teams would find competitive edges through trash talk, or aggressive base running. Now the competitive edge is through information and how you analyze that information.”

Just as athletes and teams are seeking that competitive edge, companies want to be at the top of their respective markets — hiring the best employees, maximizing productivity and efficiency, and building customer relationships. And one way to meet those business goals is by adopting a sports-analytics approach.

“There are a variety of ways to gain a competitive edge,” Shields said. “Better, more objective information is one of them, and sports organizations have proven adept at capitalizing on new sources of data and advanced analytics methods to out-think and out-perform their opponents both on and off the field.”

Here are five steps Shields teaches to help business leaders set a clear plan for using data in decision-making and developing an analytics-literate culture.

Identify your strategic goals, and explore your data’s strategic value

Deciding what players to acquire, what plays to run in order to win a game, and how to optimize a team’s performance aren’t new challenges to sports leaders, Shields said. Now it’s about using data and analytics to inform those decisions.

Ask yourself: What are your key strategic goals? What problems need to be solved, or what decisions do you need to make, to achieve those goals? In reality you might already have the tools to achieve what you’re trying to do.

“In sports — and business overall — you can inform virtually any decision you are making with data and analytics,” Shields said. “Identify the decision you have to make, capture and analyze data, and use the analysis as another source of information to reduce the uncertainty of a decision.”

Focus on technical solutions

After you’ve laid out your goals and identified what data you need to meet them, look into the methods, technology, and people you will need to align, Shields said. This is the nuts and bolts of analytics work.

“Data management alone can be a major task for organizations, given the exponential amounts of data now available,” Shields said. “Organizations need to have a data system that accounts for all elements of the analytics process.”

This data system needs to be accessible to everyone, Shields said, from senior executives to frontline employees. In sports, a general manager could use the data to help inform their evaluation of a player. A coach might use the data to develop game plans, while one of the team’s athletes might want to use that information to study opponents.

“Depending on the audience, the amount and complexity of the information may be presented differently, but the customizability and flexibility of the system should allow for all stakeholders and employees to do their job better with the help of analytics,” Shields said.

Communicate your analytics insights

Once you’ve got the analytics aligned with the needs of your business, translate and share those insights.

Keep in mind that the stakeholders you’ll be sharing these insights with will have a varying degree of understanding and bias toward analytics, Shields said. Some athletes are more data-driven than others, for example. Or a general manager will use the information differently than a coaching staff would use that same data.

“For the analytics insights to have impact, the end user needs to understand how they can act on them, and it’s up to the strategy and analytics team to be able to make the information as accessible and useful as possible,” Shields said.

Be aware of all the different inputs in a decision

Part of what makes sports so exciting is the uncertainty. Will that last-second shot make it through the basketball hoop? Can a pitcher throw a strike when it’s full count and bases are loaded?

Gut instinct can be critical on a court or field, but not all decisions are alike, Shields said. Consider scouts who rely on their expertise and experience to assess players. Teams today use those assessments in their models to improve predictive ability, and businesses should, too.

“Very complex decisions may require a mix of human intuition and machine assistance,” Shields said. “More routinized decisions could be the domain of the machine.”

Lead your team to a more data-driven culture

Using data analytics to complete a project or solve a problem is good, but the overarching goal is to transform your business into one that understands what analytics can do, and how it can help everyone do their jobs better.

Teams use key performance indicators every game, Shields said. These KPIs provide team leaders with an opportunity to discuss what did and didn’t work, to improve for the next game.

“In the business world, every day might not be a win or lose situation,” Shields acknowledged. “But it can be helpful to think about gamifying certain performance outcomes to encourage not only the consistent measurement of performance but also conversations about continuous improvement.”

Learn more about Management Analytics: Decision-Making Lessons from the Sports Industry