{"id":5132,"date":"2017-04-05T18:32:32","date_gmt":"2017-04-05T22:32:32","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/the-houston-rockets-leading-the-data-charge-in-the-nba-will-it-make-a-difference\/"},"modified":"2017-04-05T18:32:32","modified_gmt":"2017-04-05T22:32:32","slug":"the-houston-rockets-leading-the-data-charge-in-the-nba-will-it-make-a-difference","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/the-houston-rockets-leading-the-data-charge-in-the-nba-will-it-make-a-difference\/","title":{"rendered":"The Houston Rockets: Leading the Data Charge in the NBA \u2013 Will it Make a Difference?"},"content":{"rendered":"

In 2006, the Houston Rockets\u2019 owner Leslie Alexander surprised the sport\u2019s world with the announcement to hire Daryl Morey (image below) as the team\u2019s general manager. Morey – an MIT Sloan graduate and statistics wizard – but did not have previous playing or scouting experience. Alexander wanted analytics to play a crucial role in running his organization.<\/p>\n

\"\"<\/a><\/p>\n

Value Creation<\/strong><\/p>\n

\u201cYou don\u2019t always have to use data to help drive a decision, but you do always have to see if you can do that.\u201d Morey is a strong supporter of using data whenever possible to aid the decision-making process when analyzing in-game performance, draft picks, trades, and even making coaching decisions. The idea is that the team can leverage data to assemble players who, when brought together, will provide the most value, which is evidenced by the number of wins a team can manage as well as its performance in the playoffs.<\/p>\n

The stated goal of the Houston Rockets \u2013 the same goal of every NBA team \u2013 is to win a championship, which is not an easy goal considering only 1 team out of 30 wins. From a sport\u2019s competition perspective, this makes sense \u2013 teams want to be the best. But it also makes sense from a financial perspective \u2013 when teams win, their revenue (ticket sales, merchandise, advertising) and equity value (almost always) increase. This is why an NBA owner is incentivized to win.<\/p>\n

Value Capture<\/strong><\/p>\n

From a player perspective, the Rockets attempt to capture value by utilizing data to find undervalued players that they can sign for a better deal.<\/p>\n

From a business\/revenue perspective, the Rockets capture more value from ticket sales as they win and demand to attend and\/or watch their games increases. Additionally, their bargaining power will increase when negotiating merchandise, advertising, and marketing contracts if they win more.<\/p>\n

Data Mindset in Operations<\/strong><\/p>\n

Given that the owner hired Morey specifically for his strength in analytics, the Rocket\u2019s organization does not have the issue of dealing with defensive traditionalists who oppose the use of data. Additionally, Morey seeks to hire analytically minded people who will be open to this approach.<\/p>\n

How has the Data Strategy Turned Out for the Rockets? <\/strong><\/p>\n

It depends who you ask.<\/p>\n

The Positive View<\/strong><\/p>\n

While the Rockets have not won a championship under Morey and his approach \u2013 the constant end goal \u2013 they have made the playoffs in 6 of 9 seasons (only the best 8 of 30 teams make the playoffs every year) that he has been general manager and are ranked #3 of 30 teams in the current season\u2019s standings. Additionally, the Rockets have been one of the pioneers in changing the style of the game to go from a 2-point dominated style to a 3-point style \u2013 a strategy that they developed based on the highest probability of winning statistics. In the current season, the Rockets set the NBA record for most 3-point field goals made by one team in a season.<\/p>\n

Aside from this team success, it\u2019s also easy to isolate individual decisions that Morey has made using data that turned out to be very successful. The most obvious and glaring one is his successful signing of James Harden, an undervalued \u201cSixth Man\u201d from the Oklahoma City Thunder who has proven to be a league superstar and 2nd<\/sup> overall on the scoring list this season.<\/p>\n

\"\"<\/p>\n

The Negative View<\/strong><\/p>\n

While the Rockets have made the playoffs a number of years in the last decade, they have often lost in the first round and performance from year-to-year has been volatile. They have been clearly unable to compete with the league\u2019s best.<\/p>\n

It\u2019s also easy to see the limitations of a data-driven approach in isolated decisions. For example, the decision to acquire Dwight Howard (picture below) was based on Morey\u2019s strategy to play a strong \u201cinside-out\u201d game, focused on taking shots that are high-percentage or high-scoring \u2013 close-to-the-hoop 2-point shots or far-from-the-hoop 3-point attempts. Dwight Howard, according to statistics and individual talent, was at the time arguably the best \u201cbig man\u201d in basketball, capable of providing the rockets with a strong inside game. However, he had a track record of team-chemistry issues and it proved to be no different at the Rockets \u2013 the team ultimately imploded and Howard chose to leave. One argument is that an over-focusing on the data led Morey to overlook the chemistry issue.<\/p>\n

\"\"<\/a><\/p>\n

Conclusion<\/strong><\/p>\n

The Rockets have utilized data to make a number of decisions leading to an overall strong performance over the last decade. Will they be able to use it to win a championship? How should they continue to use it in the future given that other teams are learning from them?<\/p>\n

Sources<\/strong><\/p>\n

    \n
  1. http:\/\/www.northwestern.edu\/magazine\/winter2013\/feature\/moreyball.html<\/li>\n
  2. http:\/\/www.nba.com\/article\/2017\/01\/09\/morning-tip-houston-rockets-james-harden-thriving-barrage-3-pointers<\/li>\n
  3. https:\/\/insight.kellogg.northwestern.edu\/article\/using-data-to-call-the-shots<\/li>\n
  4. https:\/\/www.theatlantic.com\/entertainment\/archive\/2015\/06\/nba-data-analytics\/396776\/<\/li>\n
  5. http:\/\/www.cnbc.com\/2015\/02\/27\/rockets-gm-daryl-morey-is-done-with-charles-barkley.html<\/li>\n
  6. http:\/\/www.cbssports.com\/nba\/news\/rockets-gm-daryl-morey-on-their-plan-against-warriors-a-barrage-of-3-pointers\/<\/li>\n
  7. https:\/\/www.washingtonpost.com\/news\/book-party\/wp\/2016\/03\/18\/how-data-geeks-are-taking-over-basketball\/?utm_term=.8e2e3add7041<\/li>\n
  8. http:\/\/www.nba.com\/rockets\/news\/Rockets_Hire_Morey_as_Assistan-174585-822.html<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

    Data has undoubtedly changed the game of basketball already, but can it be the deciding factor in winning a championship? <\/p>\n","protected":false},"author":630,"featured_media":5133,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-5132","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/data-and-analytics-as-digital-assets\/","yoast_head":"\nThe Houston Rockets: Leading the Data Charge in the NBA \u2013 Will it Make a Difference? - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/the-houston-rockets-leading-the-data-charge-in-the-nba-will-it-make-a-difference\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Houston Rockets: Leading the Data Charge in the NBA \u2013 Will it Make a Difference? 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