Are Analytics Flattening Sports, August 28, 2019

In our current Age of Analytics, there is a danger of focusing on what can be measured, even if it is not central to the matter at hand. I once had a brilliant engineer tell me how many shares he deserved in a new start-up, using the Black Scholes model. When I pointed out that the Black Scholes model was constructed to measure stock volatility in public companies, and was irrelevant to the matter at hand, he was unconvinced. It was the closest related algorithm, he maintained.

Sports and Wall Street have been leaders in leveraging Analytics. The last twenty years have seen numerous events in the world of High Finance where complex algorithms were used to manage and profit from risk, to the point where they no longer matched the reality on the ground.

Consider the impact of Analytics on Major League Baseball and the NBA. First, the positives:

In baseball, analytics has allowed the fine tuning of talent selection and management, and supported players in continuously improving their games rather than the guesswork and superstitions of prior eras. The NBA is arguably in a golden age, able to distinguish team and player efficiency as never before.

But something has been lost in each sport as well. In baseball, the game is dominated by the “Three True Outcomes” - home runs, walks and strikeouts, so called because they are not influenced by defenders in the field, but are solely the outcome of the pitcher-batter duel, and hence analytically “cleaner”. As a result, there are noticeably fewer infield plays than there were 20 years ago, and considerably more strikeouts and homeruns. But baseball, historically, was a subtle game, where infield play was used to manufacture and defend runs. Nothing is more exciting than a home run; but a game dominated by home runs and strikeouts is a cruder game.

As for the NBA, nearly all teams today preach for a minimum of shots that are not 3 pointers or lay-ups – this is mathematically efficient. I don’t miss the NBA of my youth, where players would run up and down the court taking and missing off-balance 17-foot jump shots. And yet, the midrange game, at its best, was a beautiful game. Michael Jordan and Larry Bird thrived there. The best indication of breaking down a team’s defense was producing open 12-foot jump shots.

Fortunately, there are ways to balance some of the extremes created by taking analytics to their absurd conclusions. In the case of baseball, there is talk of outlawing shifts, so that two infielders would be forced to stay on either side of second base, thus promoting more infield hits. In basketball, there is consideration of extending the three-point line to make it a more difficult shot, and encourage more midrange shooting.

What are the lessons of these sports for business and society? It is the responsibility of individual businesses and society at large to set metrics to be optimized that are logical and productive, not to blindly optimize for the sake of theoretical efficiencies.