Information Alchemy
The key to unlocking the value of data lies in understanding
the steps through which data is transformed from raw material
to useful product, and then examining how that product is used.
A powerful way to do this is through the concept of the information
value chain*, starting with data and leading steadily through
to value in a progressive series of steps.
Data -> Data in context -> Information -> Knowledge
-> Action -> Value
A key element of the value chain idea is that you can't skip
any steps. Any break in the chain means no value is delivered.
Bearing that in mind let's examine the individual links
The chain starts with Data:
£100
February 2nd
41719502
This is raw data. Any single item of data has negligible value
in itself. This effective absence of value at the lowest level
is one of the roots of data quality problems, as most data capture
is taking place at the level of individual items.
The next step is Data in Context:
Deposit amount: £100
Deposit date: February 2nd
Account number: 41719502
Data in Context is data arranged and labeled in such a way as
to provide meaning. Data stored in a database is at this level.
To many people the building of a database seems like an end
in itself - simply by having a database think they have achieved
something that will have an impact. In truth this is only one
step up the value chain, and the organisation is still a long
way from achieving value at this point.
Information as a concept is a little more difficult to pin down
so let's bring in a few definitions to make it clear.
"Information is a set of data in context that is relevant
to one or more people at a point in time or for a period of
time."
Michael H. Brackett
"Information = data + definition
+ presentation"
Larry English
"Information is data endowed with
relevance and purpose."
Peter Drucker
The way in which information differs from data and data in context
is in the two key dimensions of timeliness and relevance. Unlike
Data and Data in Context, Information is perishable. It needs
to be assembled and presented anew to meet a specific need,
and tailored to fit both the problems it is intended to illuminate
and the audience it will serve.
All these first three levels of the value chain; Data, Data
in Context and Information have in common the fact that they
can be stored using technology, whether that technology be pen
and paper or digital media. In our 21st century CRM world Data
is captured by transactional systems and web touchpoints. Data
in Context is stored in databases and spreadsheets. Information
is presented through various reporting and data visualisation
tools.
The next level in the value chain, Knowledge is something different.
Knowledge is the product of the interaction of a persons skills
and experience with information. If we refer to Brackett again,
knowledge is "the understanding of something, the fact or condition
of being aware of something, of apprehending truth or fact".
Only people can "understand", only people can "be aware". Knowledge
exists only in peoples heads.
Knowledge only exists in the mind which created it. It is internal
and cannot be passed directly to someone else. In order to communicate
knowledge we have to externalise it, turn it back into information.
The person who receives that information has to use their skills
and experience to apprehend and understand the information,
creating in their own mind a new instance of knowledge.
The point in the value chain where information is transformed
into knowledge is the point of interface between systems and
people. Information provision is not about faster, more detailed
reports, it is about generating knowledge that will lead to
action. New knowledge invariably drives change. "Now that I
know that, I can change this to make it work better"
Armed with knowledge people take Action. "An individual without
information cannot take responsibility; An individual who is
given information cannot help but take responsibility" Wilbert
Leo Gore (founder of GoreTex)
Only Action delivers Value. Through people taking action the
virtual realm of data, information and ideas finally connects
with the real world, which is the only place where we can generate
value.
If your Information Management is done right, the value chain
becomes a closed loop system. When Action is taken the consequences
of that action are captured as Data, rising through the value
chain to inform greater Knowledge and lead to further Action,
in a virtuous circle of iterative value creation.
Here is the foundation of Information Alchemy: base data turned
into gold, and perpetual motion thrown in for good measure.
* The concept of the Information Value Chain is not mine and
is outlined here with acknowledgement in particular to Michael
H. Brackett. The definitions of the links in the chain here
owe much to his article "The Business Intelligence Value Chain"
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