VORP, EqA, FIP and Pure "Data" as the Answer

I’ve written about baseball before, and I’ll do it again. My local paper, The Columbus Dispatch, had a Sunday Sports cover page two weekends ago titled Going Deeper – Baseball traditionalists make way for a new kind of statistician, one who looks beyond batting averages and homers and praises players’ EqA and VORP. The article caught my eye for several reasons:

• Lance Berkman was pictured embedded in the article — hey, I’ll always be a Texan no matter where I live, and “The Big Puma” has been one of the real feel-good stories for the Astros for the past few years (I’ll overlook that he played his college ball at Rice, the non-conference arch nemesis of my beloved Longhorns)
• The graphic above the article featured five stats…of which I only recognized one (OPS)
• The article is written around the Cleveland Indians, who have one of the worst records in major league baseball this year

With my wife and kids out of town, I got to head to the local bagel shop and actually read beyond the front page of the paper, and the article was interesting. The kicker remains that the article leads off by talking about two members of the Indians front office: Eric Wedge is a traditional, up-through-the-ranks-as-a-player baseball guy; Keith Woolner has two degrees from MIT, a master’s degree from Stanford, and a ton of experience working for software companies. The article treats these two men as the ying and yang of modern baseball, pointing out that both men have experience and knowledge that’s useful to their boss, Indians GM Mark Shapiro.

The problem? The Indians stink this year.

Nonetheless, there’s a great quote in the article from Wedge:

“What I think people get in trouble with is when they go all feel or all numbers. You have to put it all together and look at everything, then make your best decision. You can’t have an ego about it.”

The same holds true in business — if your strategy is simply “analyze the data,” you don’t really have a strategy. You’ve got to use your experience, your assessment of where your market is heading as the world changes, some real clarity about what you are and are not good at, an understanding of your competitors (who they are and where they’re stronger than you are), and then lay out your strategy. And stick to it. The data? It’s important! Use it while exploring different strategies to test a hypotheis here and there, and even to model different scenarios and how things will play out depending on different assumptions about the future. But, don’t sit back and wait for the data to set your strategy for you.

Once you’ve set your strategy, you need to break that down into the tactics that you are going to employ. And the success/failure of those tactics need to be measured so that you are continuosly improving your operations. But don’t get caught up in thinking that the data is the start, the middle, and the end. If it was, we’d all just go out and buy SAS and let the numbers set our course.

So, what about the goofy acronyms in the title of this post? Well:

• VORP (Value Over Replacement Player) — a statistic that looks to compare how much more a player is worth than a base-level, attainable big leaguer playing the same position (Berkman had the highest VORP at the time of the article)
• EqA (Equivalent Average) — think of this as Batting Average 2.0, but it takes into account different leagues and ballparks to try to make the measure as equitable as possible
• FIP (Fielding Independent Pitching) — this is sort of ERA 2.0, but it tries to assess everything that a pitcher is solely responsible for, rather than simply earned runs

The fact is, these are good metrics, even if they start to bend the “it has to be easy to understand” rule. In baseball, there have been a lot of people looking at a lot of data over a long period. My guess is that there were many fans and professionals who realized the shortcomings of batting average and ERA, and it was only a matter of time before someone started tuning these metrics and looking for new ones to fill in the gaps.

At the end of the day, the Indians stink. And it’s a game. And there are countless variables at play that will never be fully captured and analyzable (the same holds true in business). Mark Shapiro will continue to have to make countless decisions based on his instincts, with data as merely one important input. Maybe they won’t stink next season.