"Statistical Thinking will Be as Important as Learning to Read and Write"
Data analysis is becoming a ubiquitous (widespread) phenomenon in the business world and, as future business graduates, it is pertinent that you pick up this subject and pick it up well. It is also one of the vital components in your Graduation Assignment, as it will help you to analyse and interpret the data in your findings. So, if you think you don’t have to master it, or if you think you can ignore this subject, you are, unfortunately, wrong. So, what is Business Statistics?
As most of us know, statistics is concerned with collecting, analysing, presenting and interpreting data. With advances in technology and the digitalisation of many aspects of our lives today, anybody can have access to vast amounts of statistical information. More and more business leaders and owners realise the significance of the ability to use data to their organisations' advantage. Companies which collect data, like Google or Amazon, translate online data into useful information that can earn them huge amounts of money. It is no wonder, then, that the top four largest brands and richest companies in 2019 are tech companies, with Apple leading the way, Google comes next, followed by Amazon and Microsoft.
Statistical data provides useful information. Businesses should envision entrenching statistics in their strategies in order to succeed. Decisions should be made based on factual information supported by appropriate data and its variations. Statistical data is important in every department, not just in accounting. It helps in marketing, finance, logistics, production and even human resource management.
Take, for example, finance. To make reliable forecasts, companies watch for trends, patterns and correlative relationships in order to determine the probability of any of these factors influencing a specific outcome. Based on analytics, a company can project sales, growth and projected cash flow, which can determine its viability in the market or its "death".
A marketing department uses statistical data to strategise marketing efforts, such as what, how, where and when to promote and market which products. These are vital to ensuring successful market penetration or sales growth. Amazon, on the other hand, utilises big data analytics to manage its supply chain logistics optimally.
Although big data and analytics are beneficial, having too much data can also be bad, as it results in information overload, and overloads result in inefficiency and uselessness. The reason is that too much information breeds complexity and requires time and effort to analyse. And we know, time and effort cost money, because sometimes, some decisions have to be made fast, and delaying decisions to wait for analysis can lead to lost opportunities. Knowing too much information is also not good because it makes leaders use less of their natural instincts. Instincts are scientifically proven to help people in making better decisions.
The downside of statistics is that people can use statistics to lie. A prudent person never believes a statistic without hard evidence. According to a study, more than 80% of statistics are completely made up (can we even trust this statistic?). You should always be wary of percentages and ratios that are not supported by concrete evidence. And if you, as future managers, use such statistics to make business decisions, you are really treading on dangerous ground.
Many people claim that if they are given any set of data, they can make it say whatever they want it to. This is called fudging the data. Fudging refers to the act of ignoring or excluding data that does not support the conclusion that the respective person wanted. Fudged data leads to bad decisions. The results of data analysis are always open to interpretation and depend on the perspectives of the person looking at them. Some statisticians carry out surveys many times until they get the desired results. This is also ethically wrong. An ethical leader will not pick and choose the data that he wants to make decisions. He will accept data as it is, no matter how disappointing the result is.
Statistics transform the way businesses run and how we lead our lives. We cannot escape it. Its intrusion into our lives is inevitable, yet can lead to profitable results. Knowledge of statistics can garner us a competitive advantage, whether in the business sense or career perspective. Thus, learning this topic and knowing it well is very important if you want to progress successfully in your studies and career. As H.G. Wells said, “Statistical thinking will one day be as necessary for efficient citizenship as the ability to read and write.”
by Hanna Abdelwahab