Data-driven vs. data-informed: What’s the difference?

As any forward-thinking business knows, we’re past the point in time where we can leave business decisions to guesswork and ignore the benefits of data available to us.

Today, data is an invaluable organizational asset that can be used to drive decision making processes and qualify or disqualify ideas based on cold, hard facts. It may sound a little imposing, but data is your friend! We promise.

Here’s a look at what it means to be data driven versus data informed, and the pros and cons of each.

Data driven: When data informs the decision making process

In a data driven business, data leads the decision making process. In other words, decision makers see data as the Holy Grail from which they can extract information to steer the business. Data driven businesses use data across the whole organization – from sales and marketing to IT, warehousing, and so on.

Pros

• Decisions are entirely evidence-based
• Data-based decision making encourages information to be up-to-date and data to be examined
• Evidence-based decision making helps foster long-term success and innovation

Cons

• Data is trusted blindly without interrogation into the numbers
• Low-quality or inaccurate data can lead to misinformed decisions
• Handling complex data streams require skill and ongoing input

Generally speaking, the bigger the company size, the more difficult it is to be truly data driven due to the sheer volume of data that needs to be analyzed.

Data informed: Considering (not worshipping) data

Being data informed means using data as a factor in decision making rather than using it as the entire basis. In a data informed business, teams may take other factors like brand consistency or subjective customer experience into consideration in addition to data when making decisions.

Pros

• Takes into account the limitations of available data
• Uses multiple sources to make decisions, rather than just relying on data
• Can facilitate a more creative or “out-of-the-box” decision making process, potentially leading to better results

Cons

• May be less efficient to take into account multiple voices and factors when making a decision
• Can lead to a lax approach to tracking and monitoring data in immature organizations

New businesses are likely to start off with a weak data informed approach simply because they don’t have enough quality data available to them to be truly data driven or lack the experience in experimental design. On the other hand, some larger companies end up being data informed simply because they don’t have the systems in place to sort through huge volumes of data and be truly data driven, or because they need to take qualitative measures into consideration depending on the decisions being made.

So, should you look into adopting a data driven or data informed approach? The answer depends on the type and quality of data available, and the goals you are trying to achieve with the use of that data.

For growing SMEs, it’s worthwhile investing in data analytics tools and implementing data-based decision making processes as soon as possible, so the right foundations are laid when growth is accelerated. That way, you’ll have access to quality data whether you take a data driven or data informed approach.