Data versus Intelligence

June 13, 2013

Too often, people confuse the presentation of data with the delivery of intelligence. There are major differences, since you should be converting raw data into actionable intelligence. Let me give you a hypothetical example.

You just found out that a competitor of yours, World Wide Widgets, has announced plans to build a new plant, Plant Cee. The announcement contained some general details such as where it will be located, how happy the local development authority is to see a new plant (and jobs), and a general indication of the total capacity of the plant. Now you have some data. But this is not intelligence.

To start your analysis, first put it in context. WWW also has two other plants which it bought from two other companies over a period of years. WWW they both produced three similar products: rock, paper, and scissors. Over the past three or four years, WWW has gradually rationalized production in the two plants, moving rock production in bits and pieces from Plant Bee to Plant Aye, and consolidating production of its most popular product, scissors, in Plant Bee. It has also made continuous small improvements at each to increase production.

The announcement of the new plant indicates it will be dedicated to making more scissors to meet rapidly increasing US demand. That US demand is currently being met by importing more expensive scissors made in its home country, Germany. Now you have more context – and maybe information, not just data.

Now add a little more context. It’s highly likely that, consistent with its past management, that Plant Cee, the new facility, will eventually house all of the production of scissors, and that its production eliminating the need to import more expensive scissors from Germany. This is not certain, but it seems likely. Now you have something approaching intelligence.

However, dig back into your research notes, and read what the local development authority you spoke to said about the new project. You did call, didn’t you? For example, she said that Plant Cee will only be half completed, that is, only 50% of the interior will be occupied with production facilities when it is completed. Why? Because WWW is giving itself the option to expand, cheaply, and produce even more scissors in the future, without having to build another new plant. Now we have something:  indications of a major push to dominate the scissors market.

However, should also have found out that, before announcing the construction of the new plant, Cee, WWW considered expanding Plant Bee to meet this increasing demand for scissors. The local newspapers serving Plant Bee said so a couple of years ago.

Where does that leave us? If you think about it, and you should, you can see a pattern here: rationalize and expand. So this announcement of a new plant to produce more scissors foreshadows two different things:

  1. A coming, long-range, massive increase in WWW’s capacity to produce more and more scissors, and to sell therm either more cheaply or with a greater profit margin.
  2. A high likelihood that after the completion of stage 1 at plant Cee, that the remaining production for scissors will be moved to Plant Cee from Plant Bee. That in turn, consistent with WWW’s “rationalize and specialize” pattern over the years, would allow WWW to increase the production of paper at Plant Bee.

That is the difference between just recording facts and applying analysis, simply by putting the facts in a deeper and broader context.

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