Insights|Blog

The world is full of business lessons. Taking best practices from other industries is a great way to get fresh ideas to motivate your teams. In making business learning a little more fun, we’re starting a personal series called “Business Lessons from the Movies.”

If you’ve seen the movie, read the book, or followed the story at all, you know the top line. Billy Beane, GM of the Oakland A’s was working in a capital constrained environment, with one of the lowest salary budgets in the American league.  With this reality, he was willing to look at the game differently and to use the quantitative skills of independent guys to really look at fresh opportunities. They challenged historical thinking, developed new information and ultimately applied this knowledge to change up the A’s recruiting process. As a result, Beane managed to win the same number of games as the league champs with only 40% of the budget for salaries. By making it to the playoffs his team was in the top third of performers. Here’s the bottom line: When business leaders are in the top third of performers in industry, they’re generally thought of as reasonably successful. When you make it to the top third of annual performers with 40% of the cost of your competitors, you should be in the executive and investor hall of fame.

What exactly did Billy Beane have that most executives don’t? He had go-to resources in the form of trusted, quantitatively-oriented folks who had the skills to frame the problems as opportunities, and then gather and analyze significant volumes of data to fill out the frameworks. The goal was to measure the difference between higher and lower performing investments (players), that weren’t understood by the market or realized by Beane’s own organization. His specialists tracked down the data and crunched it. They then not only delivered insights to show where prioritized investments would produce outsized returns, but also identified low payback returns to free up limited working capital. By adding a few of those outperforming expenses and reducing the low-return investments, Beane delivered substantially improved performance. Call it incremental on base, runs scored, games won, or profit improvement. If you could do that in business, you would have improved return on equity.

One of the ways in which Stax partners with clients to improve their overall returns is by being that trusted, quantitatively-oriented team that takes problems and frames them as opportunities. We can get into the numbers to identify better places to invest and ways to reclaim your working capital. Below are 5 examples of Stax partnering with clients in a similar manner:

• For a healthcare services company trying to determine the best points in sales and marketing to invest for growing share:  Stax sized the market and analyzed the sales pipeline from catalyst and consideration to close, pinpointing specific, actionable changes to improve results in marketing, messaging, identifying leads and allocating sales resources.
• For a technology company in B2B, considering three large growth options by industry vertical and geography:  Stax sized the opportunities and competitive situations, modeling potential revenue and profits for comparison and a board level decision.
• For an education company looking to boost sales without adding to total sales expense: Stax identified 5% more profit potential calling on 15% fewer customers via in-depth customer segmentation that demonstrated relative propensity to purchase.
• For a distribution company, evaluating potential of a brand they’d been running as a cash cow: Through a market sizing and deep customer segmentation, analysis of on-line behavior and overlap analysis with other brands, Stax determined significant upside in reinvesting,
• For a transaction processing company looking to reduce working capital requirements: Stax analyzed customer behavior, profitability and costs associated with collections, then provided a re-pricing and collections strategy to increase profits by $20M and wring out $10M in working capital, leading to a successful spin out into an LBO.

Most leaders are in situations like Billy Beane’s—working in a capital constrained environment. If you’re in a leverage buyout situation, capital is tight and the timeframe to show results is short with exit timelines creeping up.

The good news is that unlike in Moneyball, most of your team already gets it about the data and the power that analytically driven insights provide. They probably have a handful of great ideas they’d like to test as well. In today’s environment, your team likely agrees on the benefits that a good partner with the experience, process and skill sets could bring to bear in accelerating your growth. Stax is that partner.