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Modern NBA

What Business Can Learn About Analytics From the Modern NBA

If you told the Cleveland Cavaliers in 1980 that one player would attempt over 750 three-point shots in a single season, they would have never believed you. That disbelief would surely have stemmed from the fact that in the early 1980s, entire teams were only averaging three three-point shots a game. This past season, individual players were routinely making double that amount in a single game, and teams often took more than 25 such shots.

This revolution to what is now known as the “modern NBA” was driven primarily by analytics. As more data became available to front offices and coaching staffs, some organizations took advantage of it and determined that taking a three-point shot was intrinsically more valuable than taking a two point shot.

To understand this at a high level, consider statistics from the 2016 -2017 Cleveland Cavaliers. During the 2016-2017 regular season, the Cavaliers shot 52.8 percent on all two-point shot attempts, and 38.4 percent on all three-point shot attempts.

If we extrapolate these numbers over 100 possessions, the Cavaliers would have 105.6 points shooting two-point shots and 115.2 points shooting three-point shots. Now, this does not take into account other factors such as corner three-point shots or opponents’ fast-break opportunities; but it does show a stark (~9%) increase in projected points. Given that the Cavaliers’ average margin of victory was only four points per game during the 2016-2017 campaign, a 9 percent swing has significant ramifications. As such, the general managers and coaches who have bought into this data-driven decision making have slowly separated themselves from the rest of the league.

As business professionals, we must carefully consider the current and potential role of analytics in each of our industries. Just as general managers and coaches have used analytics to transform the game of basketball, we must use these tools to make our businesses smarter and more efficient. We cannot live in the past and do things the way they have always been done. Business leaders who take this approach will quickly be passed by and left scratching their heads as more analytically driven businesses forge on to a brighter future.

If you are one of these decision makers, now is the time to look internally at your business structure and ask the question, “What do these analytics mean for my business?” Are you interested in increasing your inventory turnover, profitability or customer satisfaction? The key to uncovering ways to increase these metrics could be found using business intelligence and data analytics. Your business has a wealth of data that is ready to be explored. Now is the time to extract and analyze this data. This will help you make informed, data-driven decisions that will aid your future growth.

Are you tracking the right metrics at your company? Do you have lots of data at your fingertips, but you’re not sure how to use it as part of your growth strategy?  Contact Steven Roby, CPA, at 440-449-6800 or email Steven.

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