Central Tendency

In nature we have variation. Things tend to spread out across a range. Some measures we have of variation are the standard deviation, variance, range, so on.

But nature also shows us another side. Things vary but they also clump. There tends to be more of one kind of species and less of another. We have thousands of different species of monkeys, but a few tend to be more common than others. We have We have millions of different kinds of birds, but some are more common than others. People vary in age between 0 and 130 years, yet those aged between 35 and 75 tend to predominate. And so on. I don't know whether my figures are right but you get the idea. There's only one platypus for example.

We have several measures to help us measure and describe central tendency: mean, median, mode, kurtosis, skewness, etc. These tell us how clumpy some aspect of nature is and how it clumps.

It's key for entrepreneurs to understand simple statistical concepts and how to apply them. They need to know them to understand their own business' and to be able to understand how other are using them or misusing them. For example, when some business proclaims, "We are Number One in customer satisfaction," you might like to know what that means. What measures are they using? Where did they get their data? how did they analyze it? And so on and so forth.

Chances are the proclaimer doesn't care about all of this. He or she just wants to shoot it's mouth off. Don't you just hate that? We get a lot of people shooting their mouths off to.

When I lived in Bloomington, Indiana, two radio stations proclaimed they were Bloomington's most listened to radio station. I said, "How can this be?" Turned out one was the most listened to in the city, the other county-wide.

A business in Madison, Wisconsin, proclaimed it had a "99.9% customer satisfaction rating. That meant that they had to have surveyed at least 1,000 customers and 999 of them had to have indicated some sort of satisfaction. But what does that mean? They were extremely satisfied? They weren't extremely dissatisfied? How were the data collected? What scales did they use? Hard to know. Pretty much they were blowing smoke.

Entrepreneurship is the lifeblood of my professional activities. For my books, go to amazon.com and plug in my name and you'll come up with both mysteries, The Case of the Kearney Music School Murders and No Stop on Red. Neither is ready yet for the Kindle.