Becoming a Data-Hungry Brand
Crunching numbers is no longer just for math geeks, Moneyball fans, and pro-sports owners. These days, it’s the type of strategy that every business owner—whether you’re a venture capitalist on Wall Street or a restaurant operator on Main Street—needs to be employing. At least, Daryl Morey thinks so.
Morey, a self-proclaimed “numbers guy” and general manager of the NBA’s Houston Rockets, isn’t just a supporter of the Moneyball theory; he actually lived it.
After devouring baseball writer and statistician Bill James’ abstracts from a young age—and programming his own baseball statistics as a first grader—Morey graduated from M.I.T’s Sloan School of Management with hopes of one day owning a pro-sports team. He began his career at James’ STATS, Inc., where he and a colleague developed the basketball stats side of the business.
In 2003, Morey was hired by a group that purchased the Boston Celtics, where he worked his way up to senior vice president of operations and information. Thanks to his unique strategy of employing raw data and statistical analysis to determine team rosters, among other operational moves, Morey caught the attention of Rockets owner Leslie Alexander. In 2007, the stats guy took over as general manager of the Texas–based team.
But despite the fact that Morey makes his living in the often glamorous and always-high-stakes world of pro-basketball, he insists that every organization and business owner can adopt his stats-heavy strategy.
“The bottom line for creating profit is improving your decision making,” Morey says. And to enhance your decision-making skills, he says it’s imperative to rely on raw numbers. Morey advises that businesses should always “marry the best data possible with analytics. That’s proven to improve your decision making by 30 percent.”
This means finding data that your competitors don’t have access to or haven’t yet discovered, whether it’s information about an untapped consumer market or the probability of a certain product succeeding in the marketplace.
In an article in the Harvard Business Review, Morey writes that this secret data weapon could even be “a new product or service you could start that would give you access to data that no one has.”
Aside from exclusive data, every business should posses a team of all-star analysts. This doesn’t mean a brand or business has to score a roster of Lebrons, Bryants, and Jordans. Instead, seek out “unsung players and then reward them,” Morey says, adding that companies should “find those Shane Battiers.”
For Morey, Battier was his diamond in the rough—a player who, though he seemed largely unimpressive from the outside, was a statistical goldmine and helped lead Morey’s Rockets to a 22-game win streak (the second longest in the NBA).
Morey says putting together a team of people “who do all of the dirty work, even though they’re not putting something on the resume every day,” can help a company excel.
But even companies that recruit top-notch analysts still experience a learning curve when they begin integrating statistical analysis into their decision-making process for the first time.
Morey says the key is getting into the habit of thinking in probabilities. “Everything is a measure of risk,” he says. For example, when Morey and his team are executing a trade, he says the trade might upgrade their situation relative to another team 72 percent of the time; on the other hand, 28 percent of the time, the trade won’t have an impact.
When a brand is considering launching a new project, Morey says it should look at the history of new products as they come out and manage risk accordingly, determining what the hit or miss rate could be. “For every decision, figure out what assumptions are behind it and use data and analysis to weigh that decision,” he says.
This topic will be covered in depth at this year’s Dine America, the executive conference hosted by QSR September 12–14, in Atlanta. Visit www.DineAmerica.us for the schedule and more information about the conference. To register, visit www.DineAmerica.us/register.
By Mary Avant