Since the dawn of the Internet, we have been bombarded with information. Even though we’ve been inundated with more information now than ever before in our history, information is one of those things that we sometimes take for granted. What is considered viable or reliable information? How do we determine what information is useful for a particular purpose? These questions may seem straightforward, but answering them may take some explanation. So let’s get to it.
In a modern context, information is the lifeblood of any successful organization. Managers and executives that helm these organizations must be able to effectively use the information available to them to make decisions and project strategies. The issue is not necessarily the availability of information, but rather the effective utilization of that information. Managers and executives must be able to sift through the expanse of information to determine what information is useful and what is not.
In this article, I’ll define the distinctions between data, information, and knowledge, discuss the special characteristics of information, and how to get the information required to perform executive decision-making. I will also include what role information systems play in the gathering of information.
We hear the words data, information, and knowledge all the time, and may think they are the same thing, however, there are fundamental differences. The difference between data, information, and knowledge, is important to understand. Although an information system can be produced to help facilitate a particular business process, the system itself may not achieve the desired outcome if it’s not being fed the right data or information.
Data
Data can be considered raw and unfiltered and can be represented by facts, text, images, audio, or video that are captured by the vast array of technologies. Although data can be easily understood, for example, we can recognize and understand sales figures entered into a spreadsheet. In other instances, data is not so easily understood, for example, a binary stream on a Wi-Fi signal that transmits messages to our smartphones.
Thus, data may or may not always be pertinent or useful for a particular task. In this modern world, we are bombarded with data every minute, 24 hours a day. So much that our brains can’t grasp and comprehend it all. For data to be useful, it has to be interpreted and filtered to transform its rawness into useful information.
Information
Information can be defined as data that are in a format and have content that is suitable for a specific purpose. Interpreting and converting data into information involves filtering, formatting, analyzing, organizing, and summarizing, and usually is a fundamental role of information systems.
Information systems convert data into information that is required for a particular purpose, such as decision-making or problem-solving. Unlike raw data, which is frequently unfiltered and unorganized, information is structured and meaningful. However, to use information effectively, knowledge is required.
It’s important to note that converting data into information for decision-making may encompass removing irrelevant data and keeping only the desired or required data. It can be done by combining data and summarizing it to where it is now useful. Furthermore, it is possible to construct models that transform data and assumptions into predictions of forthcoming outcomes and explanations of previous results.
Knowledge
Knowledge combines understanding, ideas, rules, instincts, and expertise gained through learning, experience, and reasoning, and it guides actions and decisions. Knowledge is the ability to successfully apply information in various situations, establish relationships between ideas, and come up with solutions or gain new insights. Information systems play an important role in helping to apply the best available knowledge to facilitate decision-making.
The diagram above shows how data is converted to information, it then shows information that’s applied to get knowledge. The knowledge that is accumulated is then used to accumulate more knowledge.
Special Characteristics of Information
Relevance
The old saying, information is power, is true to a point. It’s only true if the information is relevant to the particular task. Information that is not relevant can be confusing and creates difficulties in decision-making. Information has to be relevant to accomplish a particular task, but it also has to be relevant to those tasked with achieving the desired goal.
Information can be relevant to one person but can be useless to another. Lines of code may look like just a bunch of characters on a screen to someone who is not familiar with coding. For information to be relevant or useful, knowledge is required.
Applicability
Several factors, including the quality of the information, the ease with which it may be accessed, and how it is presented, determine the extent to which it is relevant or helpful. Accuracy, timeliness, and completeness are three measures of information quality that contribute to its usefulness. It should also be noted that even if the information available is of a very high quality, it can provide little or no usefulness if it’s difficult to access.
Reliability
Information is of little value if it’s not reliable. The reliability of information is the likelihood that the use of such information will deliver what is expected of it. It is therefore very important that the filtering and interpreting of data to information is done properly.
Accuracy
The strength of information depends heavily on its accuracy. Information should reflect a position or condition with little or no errors, because errors can lead to poor solutions and decisions, and can be catastrophic for the running of an organization.
Excessive (Too much Information)
This is not exactly a characteristic of information, but we tend to think that more information is better, and in most cases it may be, however, too much information can be problematic. With so much information floating around, ordinary citizens and business professionals feel overwhelmed with the amount of information that’s available to them, a phenomenon known as Information Overload. Here again, we see how filtering, analyzing, and summarizing information is such an important task to help strip away irrelevancies and keep only what is necessary.
Current
Some information may become less relevant or useful as time progresses, this is certainly true for the tech industry. The usefulness or relevance of information is often dependent on how current it is.
Ownership
Information is unlike other forms of property because it can be duplicated and distributed rather easily. On a side note, an interesting question arises; Do we own information? Well, we don’t have ownership of information in the sense of a possessor title. Information is intangible, it’s not something we can feel, and is often referred to as “Intellectual Property”. If someone gets a hold of a flash drive and copies everything on it to another flash drive, has anything been stolen? Something to ponder about.
Soft Data and Hard Data
To increase the likelihood of managers and executives making decisions that are in the best interest of the organization, they must use a combination of Soft Data and Hard Data. Soft data can be considered qualitative and includes intuitive or subjective information and can be obtained from sources like customer feedback and market trends.
Hard data is more precise and systematic and consists of qualitative metrics like sales figures, financial forecasts, performance indicators, etc. Managers can sometimes determine fluctuations in productivity by analyzing hard data such as productivity per hour, and combining soft data, such as employee feedback.
By leveraging both soft and hard data effectively, those tasked with making decisions that are vital to the objectives of an organization, are better able to make well-informed judgments that balance both intuition and evidence, which can ultimately lead to more successful outcomes.
Maximizing the Benefits of Information
Let’s now examine the ways managers and executives can leverage information
1. Establish Objectives
Before anyone starts sifting through a maze of information, managers, and executives must establish precise objectives that are in line with the organization’s business processes. Based on a survey conducted by McKinsey, a majority of executives (61%) believe that establishing clear objectives is crucial for effective data-driven decision-making.
Having a clear understanding of the necessary insights allows for a more targeted approach to gathering data and deriving relevant information. We must then ask the following questions; What specific insights you as a manager are looking for? How will these insights align with the objectives of the company? To answer these questions, as mentioned before, managers and executives must align information gathering with the strategic objectives of the company.
2. Invest in Analytics
Even though managers and executives may do their best to analyze and filter the vast array of information, it may still not be sufficient in today’s fast-paced data-driven environments. Managers and leaders are increasingly using advanced analytical tools for data management, and to get more out of complicated datasets. Learning algorithms, machine learning, and AI data interpretation tools help to gather, interpret, and present data and information to be used in applications or to solve problems.
IDC research shows that, at the time of this writing, almost $300 billion has been spent on business analytical tools, and especially with the proliferation of AI, this amount is expected to increase in the coming years. It’s clear from these findings that increasingly, leaders understand the importance of using these advanced tools to facilitate data-driven decisions and the success of their businesses.
3. Encourage Information Sharing
Let’s assume you’ve gone through all the steps necessary to get the right information to accomplish your desired task, what’s next? Well, for information to be effective, it first has to be understood. It makes no sense to have all this great information but people are still unclear as to its purpose. Information has to be properly understood by all those who intend to use it, once this is done, the information can then be applied effectively to achieve the desired goal.
With that in mind, managers and executives should encourage information sharing across departments in the organization, as this will help to empower employees, promote a culture of data literacy, and support decision-making. To achieve this, management must ensure employees are properly trained and given the appropriate resources to effectively analyze and utilize the data that is presented to them.
A study conducted by PwC revealed that organizations that have a robust culture of data-driven decision-making are three times more likely to report substantial improvements in the quality of their decision-making processes.
Conclusion
Getting the most out of information is essential to fully maximize its benefits. By embracing data-driven decision-making, managers, and executives can effectively lead their organizations towards enhanced efficiency, innovation, and gaining a competitive advantage (for more information see my article entitled
Finally, with a strategic mindset, investment in analytical tools, and a focus on fostering data literacy, managers, and executives can unleash the power of information to drive growth and shape organizations for the future.
