November 19, 2017

Why The World Needs Analytics

In my analytical studies and experience there is always an educational aspect to analytics. There are people, to this day, that do not believe in the power of data driven strategy. Executives must go through a culture change to allow analytics to override their gut based decision making. It is indeed a major shift in thinking, but there is good reason to make the adjustment.

Statistical Reasoning for Shift Towards Analytics
Assuming you are a brilliant decision maker with a great business sense. You can make the right decision 75% of the time. If you take that decision making probability through the course of time, your probability diminishes. The graph below illustrates that your probability of getting decisions correct without data, each month for 12 consecutive months, is about 3%. Much like playing BlackJack, the longer you play the higher the likelihood you will lose.

Decision-Probability

Winning Combination of Analytics and Business Acumen
It’s about analytics and the knowledge of your business domain.  For example, Tony La Russa used data to find the best lineups when he was coaching, but he also used his intuition to see how his players felt that day, and what was going on in their personal lives. The analytical insights provide you with a higher probability of getting the decision right. It is up to the people with common sense to say if the analytical insights make sense and apply testing methods to make sure the insights end up making money for your business.

Conclusion
Analytcis is not just about modeling data and predicting outcomes. Analysts also have to have a business sense to be successful. Without these two components, your probability of success over time is lower as your competition increases.

Related posts: Statistics provides clarity in web marketing analyticsBig vs. Small DataSmall Business Need Analytics

 

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