The Houston Rockets are an American professional basketball team based in Houston, Texas, and are a member of the National Basketball Association (NBA). In 2017, the team made the number eight spot on the Forbes list of most valuable NBA teams. Daryl Morey is the Rockets’ general manager, and managing director of Basketball Operations. He’s been at the club since 2007, and has spearheaded an innovative integration of data analytics throughout the entire organisation. His background in behavioural economics has driven the Rockets’ success, with the aim of using this approach to strategically lead the team to long-term success through data-based decision-making. Morey has been regarded as revolutionary, and has been listed in the Sports Business Journal’s ‘Top 40 Under 40’and HOOPSWORLD’s ‘Top 50 Most Influential in Basketball’, and Fast Company magazine’s ‘10 Most Creative People in Sport’. By using data science to innovate the team in areas such as recruitment and managing diversity, Morey’s data staff have been able to predict how future players will gel together and work with each other’s skill sets and unique characteristics. The approach Morey has brought to the Rockets has set the standard for data analytics across the entire NBA , and has earned the Rockets organisation the unofficial designation of ‘Moreyball’, or the Moneyball story of basketball.
Learning from big data has been at the forefront of Morey’s strategic leadership. While many note this as the reason for his success, using data to drive decision-making is not a concept Morey invented. It’s been happening in businesses for years, with companies like Proctor and Gamble being one of the first to use data to drive decision-making in their operations. However, it takes a visionary leader to champion and implement an entirely new way of thinking in an environment more accustomed to making decisions on gut instinct. Morey brought what some might refer to as ‘nerdy statistics’ to the basketball court and tailored it work for the sport. In contrast to baseball, where success can be more easily quantified as the sum of individual performances, basketball has much more of a dynamic flow, with multiple players intertwined continuously in the action. Adapting data analytics to this type of team sport has taken an innovative and adaptive approach to develop statistical modelling which is highly relevant to the sport.
Morey has proven himself as an innovative leader, not only for bringing revolutionary thinking to the NBA , but also in selecting the right team in relation to new factors of evaluation. For example, collective diversity offers a new structure of recruitment based on drawing together a range of diverse characteristics. Morey can tap into the unique playing styles and characteristics of NBA players through data analytics, and consider them in combination with each other. He also has also been a thought leader in relation to player valuation, and uncovering biases embedded in his staff. For example, the endowment effect refers to when people ascribe more value to something when they own it. During Morey’s stint at the Rockets he has realised that player personnel staff will often overvalue their own players’ due biases, which can arise from knowing their own team better than players on other teams. Educating the staff about these biases, and ridding them from the decision-making process has been a central theme for Morey’s tenure with the Rockets.
Morey has also ensured that he has the right people to work with, and creates an atmosphere where evidence-based decision-making is one of the core values of the organisation. As part of this process, he has embedded people around him who can recognise patterns to drive decision-making, and help instil this value in the culture of the organisation. Beyond making player personnel choices, the Rockets now also utilise these techniques when making other hiring decisions, such as coaching hires. For example, when Nick Nurse was interviewed for the head coach position at the Rockets Development League (now the G-League) club, the Rio Grande Valley (RGV) Vipers, he was met with a completely different approach than he had experienced previously in his career. Framing the conversation was a large amount of data on his previous teams, with questions formed around how his philosophy to coaching had shaped the playing style and team performance in very specific aspects of offense and defence. In order to find the right people to interview for the job, Morey and the Rockets staff had developed large databases on each candidate to flush out the most relevant interview questions and enable better decision-making in the hiring process.
The culture of utilising data science for optimal performance extends beyond the use of data which is readily available. Morey’s philosophy for utilising information to create better decisions also includes developing new data sets that are highly relevant to the main components of the organisational strategy. While having a top-tier analytics staff capable of different types of data analysis is a necessary component for success, this alone is no longer a sufficient condition for creating breakaway opportunities in sport. Instead, Morey believes that the true source of developing a competitive advantage is compiling unique data which others don’t have. The small army of analysts and interns that Morey employs therefore have a major focus on capturing new data points that could ultimately play a role in optimising performance. A classic example is the way that Morey runs the Rockets G-League team, the RGV Vipers. Rather than handing the reigns completely over to the coach, game strategy is intertwined with experimentation to demonstrate and assess specific ways to play the game. In essence, the Vipers are a living laboratory for basketball experimentation and data capture. Examples include focusing on a specific amount of three-point shots attempted, and maximising shots taking on a certain space on the court or specific range of the shot clock. This information then feeds back into the main organisation and used to inform coaching decisions for the Rockets.
While being a champion for using data whenever possible to inform decisions, Morey also understands that data has limitations and must still be used in context. For example, there is a delicate balance to strike in relation to big data and traditional coaching practice, which has primarily been based on experience and individual interpretation. This provides an important leadership challenge to navigate, and can take time to strike the right balance. While data science can assist in many areas related to team performance, even the most advanced data needs expert human interpretation. Although Morey asserts that coaches should use their best judgement and have the right to deviate from the statistically optimal tactics, the goal is for coaches to consider and integrate data into decisions whenever possible. While there may still be coaching ‘dinosaurs’ that continue to drag their heels in this space, a trend is emerging for data-friendly leaders, where managers and coaches who embrace this perspective will be at the forefront of sporting performance.
Daryl Morey is a truly innovative leader in the world of sports, and is the epitome of step change in this environment. With little-to-no sporting experience from a playing or coaching perspective, his approach, which has instead been informed by an MBA and computer science background, has revolutionised the NBA and the game of basketball more generally. The days where top sports executives make decisions without being informed by relevant data are evaporating, and Morey’s once provocative approach with the Houston Rockets is now a prime example of successful leadership through championing data-driven decision making.