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The lowerachy of business intelligence

In an article on Knowledge Management in CIO magazine (Dec. 15, 1998), P. Glasser lays out the "hierarchy of business intelligence". Here is an abridged version (but all the wording is Glasser's own):

  • Data. Simple, indisputable facts. Example: Twenty percent of all widgets are sold in Minneapolis.

  • Information. Mix two or more facts and cook up a new fact. Example: The widgets sold in Minneapolis are bought by new parents 9 times out of 10.
  • Knowledge. Aggregated information does not morph into knowledge. Knowledge bubbles up from hands-on or brains-on work performed by people in the field. Example: If we target new parents in Minneapolis, we will double our sales of widgets; if we try this in Osaka, we will take a bath.
  • Wisdom. Practices that work in many times and places constitute wisdom. Example: Since in all times and all places, people will always need widgets, we will strive to manufacture and sell the finest widgets we can.

Whoa, you're going way to fast!

It used to be that a datum was the contents of a record in a database, and what Glasser calls data is information. So, he's moved the scale one notch to the left, raising the stakes and making it even more unlikely that companies will ever achieve knowledge. Hey, most companies would do well just to not be so damn stupid most of the time.

But notice the big gap between information and knowledge. Data and information are defined by the complexity of their contents while knowledge is explicitly defined by its source: hands-on or brains-on work done by people in the field. (Note: Try to get some of that brains-off work!) And he's right. Knowledge isn't information made complex.

But why say that knowledge is defined by its origins? If it isn't field-grown, it can't be knowledge? Sounds implausible, doesn't it?

Why not try to keep the word close to what it means in Real Life: Knowledge is what you know, and what you know is distinguished from what you think, believe, feel and hope. Knowledge is the stuff you can rely on, that you have reason to believe is true.

Now, in the business world, we don't much care about epistemology (the study of knowledge) and questions about how belief is justified. We just want to make money, preferably by stealing it from the orphans of our competitors.

To do that, we don't really have to worry too much about whether some information is 99.9% reliable and other information is only 89.9% reliable because we're willing to take the risk if it means we might be able to rip out a couple of competitive hearts and eat them with maple syrup.

But there's still a sense of knowledge worth rescuing. Suppose we were to say that information consists of the facts and figures that anyone can spout but knowledge is the insight that's won. Knowledge is what wise people have and it's what they say. And it's indistinguishable from the wise people who say it. It comes out in their own voices, with their own mannerisms and turns of phrase. When someone else says it, they can only get the words out by acknowledging that they're quoting the person who really said it.

Knowledge is the stuff we listen to. It's what turns a meeting away from a dead end by pointing out the open road. It's what makes the rest of us realize how completely hopeless we are even though our spreadsheets are full of important-looking numbers.

In short, knowledge is what shuts up the jabber of information.

With that in mind, let's look at Glasser's "hierarchy of business intelligence" one more time:

  • Data: The welter of facts. Example: Store #12 sold 45 widgets on Dec. 12.

  • Information: Data unweltered. Example: Stores that sold more than 40 widgets in December also had a disproportionate increase in profits.
  • Knowledge: Ideas with enough force that we actually shut up and listen to them. Example: Does anyone here have any idea what a widget actually is? Do you think maybe we should stop selling them until we find out what they are?
  • Wisdom: What wise people have that enables them to have knowledge. Example: It's December. Send someone else to Minneapolis to investigate.

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