Moneyball (the movie) was all about understanding portfolio strategies...
For me, one of the always best scenes of Moneyball scene is when Oakland A's General Manager Billy Beane (played by Brad Pitt) gets lectured by an unknown assistant Peter Brand (played by Jonah Hill). Peter doesn't care about conventional baseball wisdom where picking athletes as high-skill individuals rules; he'd rather cut through the crap and consider value through statistical analysis.
This is extremely close to a portfolio strategy approach, where success is derived from the aggregate value of the whole system rather than optimizing individual components.
In this analogy five key points are made:
- Understand where value is hidden: Just as on-base percentage was a hidden metric for winning games, innovation teams should identify the overlooked ROIs in their portfolio. These might be innovative but "unsexy" projects that quietly deliver consistent returns.
- Think system over Stars: Instead of investing heavily in "star projects" (expensive players), focus on identifying undervalued assets that collectively create outsized returns. The A's success didn't hinge on one key player ("project") but on the collective output of their team ("portfolio").
- Get rid of old bias: Conventional wisdom in the movie prioritized intuition and traditional scouting. Similarly, organizations often cling to familiar criteria when evaluating projects (your typical ideas selection process, or our executive jury in a stage-gate process). A portfolio strategy challenges this by relying on data and patterns, avoiding emotional fights over individual winners.
- Big picture thinking: Following this, just as Beane and Brand didn’t care about individual player quirks as long as they delivered value to the system, a strong portfolio strategy focuses on the overall output rather than getting bogged down in politics over individual projects.
- Collective Synergy: All this leads to letting of linear "home runs" but to orchestrate a group of projects that work together to maximize the probability of consistent wins. Small, incremental contributions can accumulate into transformative outcomes.
This is all about the importance of redefining innovation success metrics and resisting the allure of high-stakes bets on individual star projects... And most companies are years away from realizing this.
