Statistical Thinking normally is perceived as attached with hard core statistics and data sciences. In one way, the perception is right, but in the other way, it is not something to be scared of. Though many a time, authors and scientists present things rather in a complex way which is hard to understand for the common person in everyday life.
I will try to demystify the concept of statistical thinking in a very simple form. Let me give you a simple example. If you say, it will take me 3 hours and 50 minutes to reach New York from Washington, you have used the statistical thinking by giving a 'number' in your speech. But if you say, in a few hours I will reach New York, it may not amount to statistical thinking. It is a small example, but it reflects the type of brain you have and how you see things and how you process things.
If you say that ‘I have to reduce 6 kilos of weight in 30 days’ then you are using 'numbers' in your speech and you are using the statistical thinking way. On the other hand, if you say, ‘I am overweight now, I think I should reduce some weight in the next months’. This definitely is not a 'statistical thinking' mindset.
In the simplest manner, if you are in the habit of using numbers, you are already wearing a 'statistical thinking' hat.
We cannot improve anything without measuring anything. Depending upon the guts, intuition and guess work may happen to be an individualist style, but in the structured and disciplined world, it does not take you to new heights. Those businesses who have disciplined goals and structured KPIs to measure their performance can certainly produce better results. Yes. Luck also favors the better prepared people and organizations.
With passing times, the importance of the data and statistics in our daily lives as well as in our professional cannot be ignored. The technology advancement is based on the data. No marketing department can plan its campaigns effectively without getting the statistics about the demographics of the people they want to target. The age group, the income group, the gender and the lifestyle habits. This kind of marketing campaign based on the solid market research can certainly produce belter results than the one that was just advertised in one mass newspaper without knowing much about the target audience.
When we listen to speeches of the politicians on our TV screens, those who use numbers in their performance and and their manifestos get better attention from the audience and they are believed more than the others who just base their speech on mere rhetoric and guess work without any homework or hard work. This is another example of using the statistical thinking in your everyday life. They also conduct various opinion polls and surveys, and use such numbers to impress upon people and make them believe what they believe in. Without numbers, the persuasion is very difficult practically.
The famous scientist and writer H.G. Wells about 100 years ago said, “statistical thinking will one day be as necessary for efficient citizenship as the ability to read and write.”
The statistical thinking, now can be used in advance manner in every sphere of life, and mostly in business and science world. It is important to know that the basic 4 statistical measurement functions can help you do most of the advance statistical functions as well. Mean, median, mode and standard deviation. These 4 functions are usually now taught at the school and college level and these are now in-built in the MS Excel program for those who are using it for their job or business purposes.
One of the very advance business improvement science called Six Sigma is primarily based on the statistical thinking and using not only the basic statistical functions but the advance statistics as well. I will not delve deeper into the Six Sigma statistics here, but in just a nutshell, Six Sigma helps business to solve their business and process problems with the help statistical methods. It is an advance methodology that does not leave anything to just intuition, gut feeling and guess work. It is about the data driven decision making support for the top management and at the same time, for the middle management to solve many of the business problems through business process improvement and re-engineering. In advance stages of statistical thinking, you may also use the statistical graphs and data tables. The more data you have, there will be greater need to use tables and then its analysis through some pre-defined statistical formulae.
Just to give a business example, suppose one pizza companies, sells 300 pizza everyday with 5 types of different pizza sizes. Now if you want to find out which size is the most popular in the last 12 months. How will you get that answer?
Of course you will wear your statistical thinking hat and will start with the basic statistics. First, creating 5 columns for the 5 pizza sizes and putting the daily sold orders in each column. So it will be about 300 x 365 = 109,500 pizzas sold in 12 months. And every column will show you the number of pizza for that size. Therefore, the mean, median and mode perhaps can help to solve that answer. And you can easily tell in your office or in your speech which was the most popular size of pizza, and what more the company needs to do. It may also happen that 2 small sizes of pizza may have very little orders, so why not to stop producing those small size pizzas, because the effort exerted may not justify with the sales. And such a decision based on the solid data can also help the company to save more money in the future. And saved money is equivalent of earning more money.
Statistical thinking is what can simply differentiate you from the rest. It is easily applicable in your personal life as well in your professional and business life. And it provides you greater benefits in financial and non-financial way.
In case, you would like to understand more, you can also check out the detailed article on Statistical Thinking by clicking here.