Our World Statistics Day conversations have been a great reminder of how much statistics can inform our lives. Do you have an example of how statistics has made a difference in your life? Share your story with the Community!
A growing number of heroes are rising up from their cubicles at many companies. They provide a sorely needed competitive edge in these trying economic times, yet only the most enlightened companies fully embrace them. In fact, most people find them intimidating.
So, who are these heroes of commerce, praised by some and feared by others? Statisticians. Some have described statisticians as numbers people who “don’t have the personality to be accountants,” but they are becoming more valued for their work in a discipline that causes many an executive’s eyes to glaze over.
According to Ian Ayres, author of the book “Super Crunchers,” there’s a war going on between traditional experts, who make decisions based on limited historical data and “intuition,” and a new breed of statistician, whom he calls Super Crunchers.
Super Crunchers “crunch” large (and I mean LARGE) databases to find trends and patterns in their organizations’ data and produce golden nuggets of insight from everything ranging from their customers’ buying habits and profitability to waste in their value chain.
Businesses are starting to understand the power of statistics to support their critical decisions. Never before has it been possible to analyze such large databases, so quickly to discover information that can have a vast impact on an organization and its customers.
One of my favorite examples from Ayres’ book is that of an online travel site. Farecast.com was started by a professor who was upset to find that plane passengers sitting right next to him had paid far less for their tickets than he paid. He decided to set up a Web site and use statistics to predict whether fares were trending up or down.
So when you go to Farecast.com to search for airfares to your desired destination, it will tell you whether the fares are expected to rise or fall over the next seven days. The amount of data it crunches is massive. Not only does it factor in historical prices, but also the time of year you are traveling and whether it’s during a holiday or a big event at your destination, like the Super Bowl or Mardi Gras. It even displays how confident it is in that prediction. Wow! That puts real power into customers’ hands. I never go to any other travel site. Because it can predict where fares are headed, Farecast.com has obtained a superior competitive advantage.
Another great example of using predictive statistics on huge amounts of data is Google. If Bill Gates searches using the word “Blackberry,” he’ll get a list of technology sites about RIM’s BlackBerry. But if Martha Stewart enters the same search word, Google will show her food or cooking sites.
So what will it mean for more companies to incorporate statistics in their business decision making? With the ability to crunch more data than ever before and predict more confidently, they’ll be able to make better decisions that can increase market share and steamline operations, making them more profitable. And maybe statisticians will start to be valued for their brains rather than be stereotyped about their personalities.