Data-Driven vs. Data-Informed

By: Joshua Tan


I am sure all of you have heard of data and how many companies nowadays, either startups or incumbents, have claimed that they are a data-driven or a data-informed company. Nevertheless, with today’s technologies, such as the IoT (Internet of Things) and Big Data, I believe that there is no reason why any company shouldn’t use the data available to them to improve their decision-making process.

So, which one is better, being a data-driven or a data-informed company? Personally, I do not think that there is an absolute answer to this question. It all depends on the company’s needs and goals, and I think understanding when to use these approaches is the more important facet.


What is Data-Driven?

Data-driven decision making is a process of putting data at the heart of your decision-making process. This means that you make your decisions solely on what the data tells you and set aside your assumptions or even experience. Why is this important? The answer is simply because you do not want to create any biases when you make a decision.

However, it can sometimes be dangerous if you blindly follow data. Let’s imagine that you are using Google Maps to navigate to a certain place. Unfortunately, you encounter some errors in the system and it sends you in the wrong direction. As a result, you miss your destination and have completely lost your way.

Well, to avoid this problem, there is the data-informed approach.

What is Data-Informed?

Just like data-driven, data-informed uses data to help companies make their decisions. The only difference is that data-informed uses the human experience to verify the results of the data analysis – it puts the data in context. Companies that use the data-informed approach use the data to create a hypothesis, not the absolute decision.

Let’s get back to the Google Maps illustration I mentioned before. Let’s say that you are now familiar with the area, but still don’t know the exact location that you want to look for. With the experience that you have right now, you will be able to notice an error when the system gives you what you might think is the wrong direction. Therefore, when this happens, instead of just following the direction on the app, you stop and ask the people around you to verify it. In other words, this approach prevents you from following the wrong information.
However, this approach also has a problem. It opens up the possibility of your decision having some biases in it.

To conclude, both approaches are good for helping companies make decisions. Just keep in mind that the data-driven approach allows you to set aside any biases while the data-informed approach uses both the data analysis and human experience to verify a hypothesis.

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