Statistics applications in entrepreneurship

¶ … hear the word "statistics," the daily infographic on the cover of the U.S.A. Today comes to mind for many people. This is because they have an untrained concept of a tool with usefulness and predictive power that is difficult to overstate. In school, in public life at large and as an entrepreneur, descriptive and inferential statistics, and the ability to express and interpret the results, will become more rather than less important in innumerable ways. Essentially, statistics allows us to make accurate predictions, and thus identify and prevent wasted time and materials, and prevent potential harm to very real individuals every day.

Descriptive statistics literacy is invaluable for every day life, when the media is filled with claims about population or environmental change, or advertising trying to convince us products are safe, provide certain nutrition or what have you. For example, many people go through life thinking the more times an experiment is performed, the greater chance there becomes of a particular outcome -- I actually have a friend who thinks if he buys more lottery tickets with the same number on them, that will increase the likelihood of the number coming up! Mandating learning one simple but fundamental law of probability, that a tossed coin can keep coming up heads regardless what the prior outcomes were, could prevent very real waste. Understanding this as an entrepreneur will prevent needless experimentation trying to find production processes or material flaws where such replacement confounded identification.

Likewise for the display power of descriptive statistics, if production processes and experimental results can be expressed in complex but intuitive and easily understood scatter, box-and-whisker and best-fit plots, or histograms and bell curves of varying normality. Of course understanding this information depends on the basic concepts of dispersion and central tendency, and the general literature is full of claims based on mistaken use of these indicators of spread and concentration especially means or averages. Being able to express statistical results in ways non-statisticians can understand, and explaining those results correctly in language that does not mislead or confuse is becoming a lost art, if the popular media are any indication. Entrepreneurs will use these visual display techniques to increase productivity, notice patterns that may go unrecognized in tabular or numerical reporting, and communicate results quickly without requiring extensive and subjective verbal explanation.

Inferential statistics will become increasingly useful even before graduating college, if peer-reviewed studies in consumer psychology, economics and marketing become more rather than less proportional in coursework on the way through graduate school. Some of the coursework I read for other classes contains statistical procedures I am unfamiliar with even after this course, and thus learning more statistics should explain a significant improvement in grades in my other classes, hopefully with a strong (? = .001) effect size! Knowing how likely flaws are to occur in design and manufacture will prevent wasted resources during development and product cycle, potential market response, testing that response after product or advertising deployment, and refining targets to maximize profit and resource performance, without which the entrepreneur might as well throw darts at the map.