In a nutshell
So, how should data be used? There are three commonly mentioned approaches — ‘data-driven’, ‘data-informed’ and ‘data-inspired’ — terms that you may have heard being used interchangeably. But the difference is not just semantic. Data-driven decisions are made based on facts. Data-informed decisions involve the human insight. And data-inspired means coming up with ideas while exploring data. Find out in this impulse what approach works best for your context.
Data at the core of decision-making
Today, data is commonly understood as an invaluable resource of information that can enable businesses to make the right decisions. In fact, more corporations and organisations sought to have data at the core of decision-making processes. As it should be. However, how data is used in decision-making also matters. It can have an impact on the business and its trajectory.
Data-driven: decisions made based on cold facts
In a data-driven approach, data has the final say in the decision-making process. As the most rigid form of data use, there is no room for insight based on experience and gut feel. Data-driven is best for answering business questions and ensuring any changes resulting from the outcome will not negatively impact the business.
Here’s an example where a data-driven approach will work: optimising an ad campaign by determining the best time to release an ad or the best design to use. Running A/B tests will offer results pointing to the best configuration for the ad campaign. If you’re looking to validate, be data-driven.
Data-informed: decisions made based on data and the human insight
Being data-informed means that data is one of the many components in the decision-making process. Since data represents only a snapshot of reality, taking into consideration other sources of information like past experience, intuition, judgement, and insight will allow decision-makers to have a more holistic understanding of the business and make better decisions.
Data-informed is best when you’re working on a complex project that requires a number of inputs or a project that requires creativity.
For instance, when building a new product feature, apart from product data, you need feedback from your users, your personal experience, stakeholder input and more. To further illustrate, a website designer would have to consider user experience, website data and so on to create an additional feature that is not just beautiful but also optimized for its functionality.
If you’re looking to innovate, be data-informed.
Best of both worlds
Being data-informed allows you to interpret the data while understanding its limitations.
Data-inspired: explorations inspired by data
Unlike the first two approaches, a data-inspired approach is exploratory, with zero expectations on outcomes. The analysis produced by this approach draws entirely from intuition and inference based on data from different sources. The data will not have a definite direction about your design or strategy, but it does offer observed trends that can be used as springboards for ideation and innovation.
Let’s say you’re brainstorming ideas for the upcoming pitch presentation on a shampoo brand. You might find out that shampoo is sometimes used as substitutes for laundry detergent. Based on that trend, there might be ideas like targeting green consumers who look for more environmental solutions or cash-strapped students who are just cash-strapped or even proposing an outrageous laundry foam party. The possibilities are… endless.
If you’re looking for inspiration, be data-inspired.
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So, data-driven, data-informed or data-inspired?
Being data-informed allows you to interpret the data while acknowledging and understanding its limitations. Being data-driven requires you to use the data as it is. Being data-inspired allows you to imagine possibilities based on the interpretation of the data.
There is no one right answer, and ultimately, the right approach is dependent on the goals you are trying to achieve and the type of data that you have available. And naturally, as your business evolves, so will your approach to data, too.