Do Statistics Matter?

The Case for Statistics

I read a book not too long ago that I really enjoyed called Supercrunchers. Essentially, the thesis of the book is that quantitative data is more useful in decision-making than is intuition. Ian Ayres, the author of the book, uses example after example to make a compelling argument for the effectiveness of statistics in making accurate decisions. Ayres argues that we are inherently biased toward intuition, thinking that our "gut" is more reliable than it really is. If we really want a better chance of being right in decisions we make, Ayres argues, we'll crunch numbers.

One of my favorite examples Ayres uses is that of batting averages in baseball. Many professional "scouts" in baseball will go to games and watch players in an effort to get an accurate gauge on how well they perform overall. Ayres suggests that a better way to gauge the performance of players is to look at their batting averages. If a scout goes to see one game, he is getting a very small sample of the player's historical performance. The player may hit three home runs in the game the scout is watching, while never getting a single hit in games prior to or after that game. On the other hand, the player may strike out three times while the scout is present and yet consistently hit home runs in the games the scout does not see. In any situation, the naked eye simply cannot capture the breadth of information that statistics can.

In sales and marketing, we use a lot of metrics for decision-making. We understand that we are more likely to be correct when our decisions are data-driven than when they are based on our hunches. Forecasting isn't perfect but it's better than, "I've got a good feeling that..." When real dollars are at stake, it's much better for us to have hard data and solid, measurable reasons to do the things we do. We aren't interested in a single "at bat" so much as we are the "batting average."


When Statistics Don't Matter

Statistics are great when you're the scout but what about when you are the batter? How do you approach each "at bat?" Does your batting average matter to you? For each "at bat," you're not going to get one-third of a hit if your batting average is .333. No, you're either going to hit the ball or you aren't. Should you be thinking, "The odds are against me. I only get a hit one out of every three times I step up to the plate?" That is the statistically validated truth, but is it really useful to you in that situation? No! I'll tell you what I would be thinking. I would go with my intution. My gut would be telling me that I'm going to knock it out of the park and, every time I swing, I would believe it.

Sales people who are in "slumps" often make the mistake of paying too much attention to their "batting averages" when making sales calls. The "slump," in actuality, is an illusion. Each sales call is a unique opportunity to a hit home run and is only correlated with previous sales calls in as much as the sales rep's attitude enables it to be. Negative self-talk can only decrease the chances of success. It doesn't matter what the historical numbers are; what matters is how you behave in the moment.

In the Stands or at the Plate?

So, which is it? Is data more important or is intuition? Well, I think the key difference here is whether or  not you are involved in the creation of the statistics. The scout has no hand in creating the batting average. She is merely an observer seeking to make a prediction. The batter, on the other hand, creates the statistics. He is in a unique position to affect the way the statistics turn out. The same is true of the sales person as opposed to the business analyst. Someone watching the sales churn does not have the same level of influence as someone actually churning them.

What does all this mean for you and your decision-making? Why have I spent the above paragraphs discussing pros and cons of statistics? Because it's important to realize that, if you are a part of the statistics, you have a tremendous amount of power to change them. "Statistics show that 8 out of 10 businesses fail within the first three years." If you are an angel investor for a startup, perhaps this is a statistic you'll want to pay attention to. Yet, if you are the entrepreneur, I would advise you to disregard it with all that is in you! Starting off believing that you have an 80% chance of failing will lead you to a 100% chance of failing. You don't have to be one of the eight. You don't have to lose the sale. You don't have to strike out. When you are part of the statistics, you can change them.

My point? Don't be the statistic; create the statistic. Don't let the numbers define you. Create the numbers for a future that will be defined by them. Statistics come from somewhere. You'll either be the one who makes them or the one who falls vicitm to them. If you aren't in the stands watching the game unfold, don't act like you are. You have power to change the outcome, regardless of what the numbers say.

featured image courtesy of Ben Brown licensed via Creative Commons