Creative Destruction and Scouting in Baseball

Innovation in any unmanaged market typically leads to the overturning of established practices and economic beneficiaries--simply put, innovation makes certain activities and skills obsolete that previous were highly valued. This process is usually described as "creative desctruction", an old term that is now generally attributed to Joseph Schumpeter.

Advances in player evaluation in baseball can certainly be viewed through this lens, as the integration of statistical analysis combined with advances in computing power (both software and hardware) make the evaluation of players more efficient and more accurate.

What's less known, I believe, is the actual destructive aspect of this creativity--namely, the impact on the scouting profession. I never really thought about the impact until reading this recent L.A. Times story about the Professional Baseball Scouts Foundation. The PBSF offers various kinds of assistance to scouts or their families based upon need (e.g. unemployment, lack of health insurance, etc.).

To be honest, I didn't think that the impact would be all that great, but as Ben Lindbergh recently pointed out, the weighting of advanced analysis relative to observational scouting as shifted in just about every organization in baseball. Some obviously weigh it differently than others, but the shift is pretty universal at this point.

What that has led to is a general decrease in scout staffing across the league.

The Times article notes that one year after the publication of Michaefl Lewis' Moneyball, and after the Atheltics once again won despite an anemic payroll, 103 scouts lost their jobs across major league baseball.

Now, I do think that the downsizing of the scouting profession is owed in some part to greater reliance on statistical analysis versus observational evaluation. However, I don't think this is the only culprit. The Times article presents a convenient tie-in with the recent release of the Moneyball, movie, but multiple factors have conspired against the traditional scouting profession.

For sure, the ability to better predict and evaluate talent based on statistical records and to locate players based on those statistics will have a negative effect on the need for manpower in the form of scouts. But the visual analysis of young players hasn't disappeared. Rather, the convenience of watching players has increased with changes in technology.

Every pitch of every major league game is now instantly digitized. Additionally, Many international, college, and even high school games are now available in digitized form, meaning they can be viewed much more rapidly after the actual game is played. In some cases, these games are streamed or broadcast. Additionally, with the increase in the ability to view games comes the ability to code and analyze pitch-by-pitch data from those games in a way that was hardly imaginable, say, 20 years ago. Certainly, we are far from a comprehensive Pitch F/X-like bevy of data on amateur players, but teams can still put together proprietary data (visual and statistical) based on these new data sources. In the past, teams would need to rely solely on in-person scouting for such inputs.

A handful of analysts at a team's complex can cover quite a bit of ground that used to be the purview of local, road-based scouts. Now, you can't completely replace the observational piece through video, but you can certainly make a dent and create some efficiencies where they didn't exist before. Combining advanced statistical techniques with the ability to quickly and cheaply view players in action is precisely the kind of creativity and innovation that leads to the destruction (partial or complete) of an existing labor pool.

I don't think technology and advanced statistics will ever completely end the need for human scouts (especially when you think about amatuer scouting). As with most things, an integrated approach yields more than a single methodology. But undoubtedly these innovations have changed the nature of that profession in terms of how the job is done, what is valued, and how much clubs are willing to invest in that method of research and evaluation.

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