Editor's Note: This post originally appeared on the HubSpot Sales Blog
In 1997, Billy Beane became the General Manager of the Oakland A’s. The A’s had the lowest payroll in Major League Baseball and in the four full seasons before Beane became GM, the A’s averaged less than 70 wins a season. Beane knew if he was going to build a contending team, he would not be able to do it the traditional way.Beane’s strategy -- as depicted in the 2011 film, “Moneyball” -- has traversed beyond the world of baseball to nearly all sectors of business and has become synonymous with making data-driven decisions.The tenet Beane and the A’s followed enabling them to average more than 93 wins per year for the following eight years had two components:
Discard highly valued “vanity” metrics that did not have a significant impact on winning baseball games.
Identify different metrics -- preferably those no one else was paying attention to but which had a significant impact on winning baseball games.
If Billy Beane were to take over a sales organization today, he would feel like he’d traveled back by about 20 years.Sales organizations today are dominated by metrics, but they’re rarely data-driven and even take actions counterproductive to the outcomes they desire. This results in higher costs, burnt out reps, high turnover, and frustrated customers.When noted economist Steven Levitt published the book “Freakonomics: A Rogue Economist Explores the Hidden Side of Everything,” he shared the disproportionate impact structural incentives have on the behavior of individuals and their output.Structural incentives are those created by the structure of what’s being done. They are often referred to as the law of unexpected consequences and are generally more powerful than explicitly stated incentives.Structural incentives are also one of the primary causes of difficulty in change management. In sales, the most common structural incentives are the metrics used to assess performance -- whether tied to compensation or not.