Michael Lewis’ Moneyball Novel Inspires Microsoft To Predict Technology Patent Costs

Posted Aug 6, 2009

Horacio Gutierrez, Corporate VP of Microsoft’s Intellectual Property Group came up with an idea that would help the software giant predict technology patent costs.  The idea was inspired by the book Moneyball, authored by Michael Lewis, who is also famous for the book Liar’s Poker.

The software would enable Microsoft to predict prices and the value of patents.  Microsoft would also be able to better forecast and budget IP costs.  Microsoft took a hit when a jury ruled that the software company infringed upon an MP3 patent that was owned by Alcatel-Lucent.  The jury ruled that Microsoft owed A-L $1.5 billion, but the decision was appealed and a settlement was reached.

In the book Moneyball, the Oakland A’s general manager Billy Beane used an unorthodox approach to selecting baseball players while staying within an operating budget.

“While everybody was going through the discussion of talent selection the way they traditionally do it, which was with the old scouts who’ve been around the business for 50 years or so, saying ‘This kid’s got a good arm,’ ‘He looks like a ballplayer,’ and ‘He’s got a cannon,’ and all of these qualitative things, they started to have people come in and start to crunch numbers and realized that a lot of the things they were measuring, and taking as measures of success, were the wrong things,” stated Gutierrez.

“For example, does it really matter how many home runs a player hit in one year? Or how many runs the person actually helps score? If you just focus on home runs you could have someone who’s a disruption to the productivity of a team when he’s just focused on hitting home runs. Yet, everybody evaluates talent and pays for it based on how many home runs they hit,” added Gutierrez.

Guitierrez said that when he arrived at Microsoft, other employees would insist that the patents were high quality, but when you think about it, how often were the research papers cited and whether the objectives were measurable.

[via Sumner Lemon of IDG News Service]