Should your company be data-driven or data-informed? Here’s the difference

A few months ago, I got a chance to speak at the Tech in Asia Product Development Conference in Jakarta about what it means to be data-driven vs data-informed. After the conference, a few people asked me if I could discuss and speak more about the same topic at other events. So, I thought I might as well share my thoughts.

The term data-driven has started to become a buzzword, stacking on top of a list of other tech jargon. So, let me first get us all on the same page.

What does it mean to be data-driven?

Being data-driven means that data is at the center of a team’s and company’s decision-making process. Decision makers operate mostly (and sometimes solely) on data, and some decisions can be made without humans involved.

Here are some things you commonly hear from a data-driven company:

• “Let’s A/B test this and implement the version with the better result.”
• “Don’t talk to me unless you have data.”
• “We’ll just follow what the data tells us.”

The truly data-driven organization will implement this process across teams and functions. This means that every team (product, marketing, customer success, operations, etc.) uses data intensively for all their decisions.

What are the benefits?

Eliminating human biases in decision making

As humans, we have many cognitive biases. In fact, my mentor, Misha Chellam, created flashcards to help people memorize them all.

Data helps get team members and stakeholders on the same page with less of their own judgment.

Less time-consuming

How many of you have been in a three-hour meeting where people argue back and forth with no sign of compromise?

Sometimes, we discuss and argue about something only for the HiPPO (highest paid person’s opinion) to make the final decision. (Yep, I know how you feel.)

An MIT study has proven that being data-driven has its benefits. Professor Erik Brynjolfsson and his colleagues studied 179 large, publicly traded companies and concluded that those companies are 5 percent more productive and profitable than their competitors.

However, being data-driven also has its drawbacks.

What are the drawbacks?

It requires a huge amount of data for decisions to be accurate

There’s still a bias in the way we gather data

What is a data-informed decision?

What are the benefits?

What are the drawbacks?

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