Using Data to Drive Consumer Financial Wellness
May 17, 2023 | 2 min read
Theo Epstein, named one of the world's greatest leaders by Fortune Magazine and 100 most influential people by Time Magazine, sat down with Shane Evans, President of MX, to share how he helped revolutionize baseball and the entire sporting world with his unique approach to data, leadership, and culture.
Get exclusive access to the full session here.
Data is critical for making sound decisions. Epstein starts the conversation by explaining his experience early on in the world of baseball and how he leaned on data when it mattered most.
Epstein says, “The draft is the single most important day of the year in baseball. It's your primary talent acquisition mechanism. When I was working in the draft rooms we’d go on and on talking about these different players and it was a huge decision who we were going to take in the first round. [In the decision-making process] there wasn't a single statistic mentioned. It was all scouting reports going through scouts observations.”
He goes on to say, “One year, it sounded like we were going to take this pitcher from Texas Pan American who the scouts loved. But it sounded like he wasn't getting guys out. I remember in a panic the night before the draft I called down to the sports information director at Texas Pan American asking him if he could fax this player’s baseball team stat sheet, sure enough, he had a six and a half era at Texas Pan American and I got up on the soapbox like we can't take this guy if he can't get out.”
When you start analyzing and understanding the data, you’ll start to see trends that you can build on to create a sound strategy. Epstein shares that when he joined the Red Sox one of the first things he did was to “send a team of interns to MCA headquarters in Indianapolis to go through old file cabinets and photocopy 30-years worth of college baseball stats so we could build a database and start running some simple regression analyses.”
He goes on to say that the aim was to “answer simple questions like what good big leaguers look like when they're in college. The first year that we applied some of those insights we drafted Dustin Pedroia.” He says that through the analysis they realized that “if you can hit some extra base hits and not strike out that was a great leading indicator of future performance, so we took him. That was the first basic model that we built and we saw that it worked, so from there it became a constant race to get more streams of data, better analysts, and better ways of presenting the data and impact.”
Regardless of how well you use data, if your team feels polarized or disconnected you’ll have little success. Epstein reflects on his own experience with this, saying “there was anxiety and it manifested in terms of labeling someone as either a stats guy or a scouting guy.”
He goes on to say, “In some respects, you don't want your scouts to be completely bogged down by data and you don't want your analysts to be completely overwhelmed with understanding all the human factors that go into performance and making up a team. But you need understanding, perspective, and to be open. That’s the only way you can get to the right answer is understanding why you might be wrong. I say this all the time in the rooms — I want to know why I'm wrong here and let's talk about it.”
When it comes to bringing the team together, the best thing they did Epstein says was “spending time together. We took our analysts and sent them out in the middle of nowhere like four corners territory with the area scout and we brought the scouts into the draft room so they could see all the different inputs that go into the model and all the thoughtfulness and care that goes into decisions. Through shared time there was a lot of enlightenment, understanding, and connection which helped depolarize those camps.”
Data should be at the center of every big decision, but it’s true power is when you marry it with your experience. Epstein believes, “You understand the limits of certain data streams or the limits of certain models, so you're still making intuitive, gut decisions informed by the data. I think that's always the case, to a certain degree, nothing's ever going to be completely automated. Take a step back and ask if things make sense, ask if the risks outweigh the rewards. You need the best data with the most integrity. You need to capture data streams that no one else is capturing, you need to have the best analysts analyzing it, you have to present it in a way that is most user friendly and most applicable, but in the end, you're the one who's making the decision on a transaction or any decision and you have to feel good about it.”
Setting people up for success is critical to building a winning team. When it comes to culture in baseball, Epstein says, “For me, I just found that it starts by making people feel connected. As a leader, you really have to be thoughtful, intentional, and bold in bringing people in collaboration. When establishing a vision we added organization-wide meetings to define the Cubs way of playing baseball. We spent a day on hitting, pitching, defense base run, and what values we wanted in our players. Everyone talked — from the youngest analyst to the oldest, long-time coach. That created buy-in. We then codified it, we wrote it down in a 300-page manual so everyone had a little bit of a skin in the game, a little bit of connection to this big vision of what we're trying to become. The standard should be that every single person in the organization should not only understand the big vision and feel connected to it, but they should know how.
He adds, “We haven't talked about transparency, but you have nothing if you have no trust. We try to institutionalize transparency by having individualized player development plans for each player, we meet with them several times a year. We tell them where we think they're falling short, listen to them, and set out developmental goals. Institutionalizing those important values creates the right kind of culture.”
As data capabilities advance so should your strategies. Epstein explains how the industry changed over the years and became data focused by the time he got to the Cubs. He says, “Most organizations had advanced software programs. When I got to the Cubs, our initial focus from the data side was just hiring analysts, programmers, and building a proprietary software system that could quickly get us up to speed, so we can start making good decisions.”
As data gets more advanced, Epstein says, “we had to dig into areas where we never would have thought to predict how a baseball player would play. At that point we had developed a neuroscience model where our programmers came up with a 10-minute test that would give an accurate assessment of young hitters’ neural pathways to see whether the most important neural pathways are to determine if a young hitter’s brain is more like David Ortiz's brain or mine. If it was like David Ortiz, we moved him up the draft board.”
Data can set you up for success, but sometimes it’s the real-time decisions that break records. Epstein recalls one day on the field where he was trying to predict the outcome of a game by “analyzing every single pitch and trying to think ahead... meanwhile, the players blew that three run lead and gave up a big home run in the eighth inning and it looked like hope was lost. When they came off the field… had they been focused on the insurmountable odds or focused on what had just happened and what had gone wrong, we would have been dead. Or if they'd been focused on themselves, we would have been in trouble.”
He goes on to say, “Because they had put in the time over the years to be connected, not only to the vision, but to each other, they had the opposite instinct. Even at their lowest and most vulnerable moment, they crammed into the really small weight room and were there for each other. They rallied around the fact that ‘no one's gonna take this away from us. We're going to go out when it stops raining and we’re going to win this game.’ And sure enough that's exactly what they did. So it just shows how even if baseball is best understood from 10,000 feet, it’s best enjoyed up close, on the field, in the moment.”
Epstein adds, “It shows with anything in life, whether you're a banker working with financial data or you're in baseball working with predicting the outcomes of games using data, it's important to strike the right balance, not only to get to the right answer, but also to make sure that you enjoy these difficult decisions and predictions that we are asked to make in real time.”
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