Using Regression Analysis for Making Data Driven Decisions

Managers use regression analysis for making decisions. Amy Gallo in the Harvard Business Review interviewed Tom Redman, author of Data Driven: Profiting from Your Most Important Business Asset. He explains, "Suppose you’re a sales manager trying to predict next month’s numbers. You know that dozens, perhaps even hundreds of factors from the weather to a competitor’s promotion to the rumor of a new and improved model can impact the number. Perhaps people in your organization even have a theory about what will have the biggest effect on sales. “Trust me. The more rain we have, the more we sell.” "Six weeks after the competitor’s promotion, sales jump."

Amy Gallo explains, "Regression analysis is a way of mathematically sorting out which of those variables does indeed have an impact. It answers the questions: Which factors matter most? Which can we ignore? How do those factors interact with each other? And, perhaps most importantly, how certain are we about all of these factors?"

Redman tells us more. “As managers, we want to figure out how we can impact sales or employee retention or recruiting the best people. It [regression analysis] helps us figure out what we can do.”

Why is it important for managers to study statistics?

How important is it for managers to use data to make decisions?