Big data and baseball efficiency: the traveling salesman had nothing on a baseball scout

All opinions are my own and do not necessarily reflect those of Novo Nordisk

The MLB draft is coming up and with any luck I’ll get this posted by Thursday and take advantage of web traffic. I can hope! Anyway, Tuesday in Fangraphs I read a fascinating portrayal of the draft process, laying out the nuts and bolts of how organizations scout for the draft. The piece, written by Tony Blengino (whose essays are rapidly becoming one of my favorite parts of this overall terrific baseball site), describes all the behind the scenes work that happens to prepare a major league organization for the Rule 4 draft. Blengino described the dedication scouts show in following up on all kinds of prospects at the college and high school levels, what they do, how much they need to travel, and especially how much ground they often need to cover to try and lay eyes on every kid in their area.

One neat insight for me was Blengino’s one-word description of most scouts as entrepreneurs. You could think of them almost as founders of a startup, with the kids they scout as the product the scouts are trying to sell to upper layers of management in the organization. As such, everything they can do to get a better handle on a kid’s potential can feed into the pitch to the scouting director.

I respect and envy scouts’ drive to keep looking for the next big thing, the next Jason Heyward or Mike Trout. As Blengino puts it, scouts play “one of the most vital, underrated, and underpaid roles in the game.” While one might make the argument that in MLB, unlike the NFL or NBA, draft picks typically are years away from making a contribution and therefore how important can draft picks be?, numerous studies have shown that the draft presents an incredible opportunity for teams in building and sustaining success. In fact, given that so much of an organization’s success hinges on figuring out which raw kids will be able to translate tools and potential into talent, one could (and others have)  made the argument that scouting is a huge potential market inefficiency for teams to exploit. Although I’ll have a caveat later. But in any case, for a minor league system every team wants to optimize their incoming quality because, like we say in genomic data analysis, “garbage in, garbage out.”

As I was reading this piece, I started thinking about ways to try and create more efficiencies. And I started thinking about Big Data.  Continue reading

Can studies of bosses help us figure out how good sports managers are?

All opinions are my own and do not necessarily reflect those of Novo Nordisk.

The world would be a simpler place, although maybe a much more boring and predictable one, if every aspect of performance could be measured directly. My completely unoriginal thought here is that one of the reasons sports appeal to so many people is because they provide clarity. In a confusing, complex world where the NSA is sucking up our information like a Dyson vacuum sucks feathers in a henhouse, and we’re told this is for our own good, clarity can be refreshing.

The simple view of an athlete’s performance is that all the accolades (or jeers), all the milestones (or flops), all the accumulated statistical totals (or lack thereof) are because of that athlete’s ability: his or her drive, passion, training, and natural ability. And that performance is measured via the statistics each sport collects and chooses to honor and promote. Performance is right there, what more do you need? What more could you want? Continue reading

Biopharma should choose targets using a baseball-style draft

All opinions my own and do not necessarily reflect those of Novo Nordisk

I was sitting around last evening checking out how the end of my fantasy baseball season is working out (for the record, first out of ten in one league and fourth in the league I wrote about here) and I starting thinking again about the parallels between baseball and drug development (which I previously wrote about here and here for example, and also Stewart Lyman has a nice piece on a similar theme here). And it hit me that there’s another way in which biopharma could take a  page from baseball: fantasy and Major League Baseball both.

Biopharma could institute a draft for drug targets.  And to explore this I’m going to employ the time-honored, not to mention trite and artificial, format of a series of questions and answers.

Continue reading

Transparency and the invisible hand in hospital and healthcare costs

All opinions are my own and do not necessarily reflect those of Novo Nordisk

One of the things that sometimes seems to get lost when people talk about the power of the market to create efficiency is that a free market requires that information be shared and freely available and understandable by everyone.  When information is withheld by one side or the other of a transaction, or when different customers for a service or product are unable to compare prices, the metaphor of the invisible hand breaks down.

You can see, this, interestingly enough, in sports as it relates to both the trading of players under contract and the signing of free agents.  Since I’m a baseball fan, let me link here to a discussion of research that’s been done looking at Major League Baseball.  The studies looked at players traded or signed by a different team as a free agent and how those players performed in subsequent years versus players whose original team re-signed them.  It turns out that players who switched teams did, indeed, perform more poorly relative to projections than players who stayed.  This suggests that the original teams have proprietary information that allows them to make better decisions about which players to retain.  Thus the market for baseball players isn’t quite free and efficient because of information asymmetry.

And unfortunately, information asymmetry is also rampant in other industries such as healthcare. Continue reading