Friday, May 29, 2009

Information Without Meaning

We live in the “information age”, or so we are consistently reminded. And while it’s true that business people have vast amounts of information at their disposal, the fact remains that making good decisions hasn’t gotten any easier. In some cases the challenge is too much information. In others, it is having the wrong information. However, the primary limitation of information isn’t its quantity or quality, but rather its application.

Facts, figures and insights have no inherent meaning. If a company discovers that 55% of its current customers give it a favorable rating for customer service, is this good or bad? It depends. If the company is in a category with historically low customer service ratings, it is probably good. If the company had a higher rating last quarter, it’s bad. If the competition has lower ratings but gained ground since the last measurement, it’s a mixed blessing. Information derives meaning from its context.

Context also influences the relative importance of information. “Price” will rise to the top of virtually any purchase criteria survey conducted. However, if consumers perceive that every competitor in a category is similarly priced, how important a role does price play in the purchase decision? If consumers perceive one company’s product to be more expensive than its competition, is this important? It depends on who was surveyed and the business strategy of the company. This isn’t to say that price isn’t an important criteria, just that this particular criteria might not be important when diagnosing and solving every business problem.

Unfortunately, too much research is conducted without a clear understanding of the context in which it is needed. Misinterpreted data leads to ineffective execution or, more often, inaction. Smaller quantities of actionable data have the greatest value. Since people solve business problems through their actions, only the pieces and combinations of information that produce constructive behavior have utility. The rest is just taking up space on our bookshelves.

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