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Outcomes and the Value of Information

More than four years have elapsed since I first wrote about what I called the Structured-Unstructured Information Continuum, and the Data-Information-Knowledge Continuum. Both articles described the nature of information and how humans consume it.

This is a long awaited discussion about the value of information. I shall cover the key points here and you are more than welcome to contact me to discuss the topic further.

The value of information is—and always will be—determined by outcomes. Information’s value is not intrinsic as some people seem to believe. Rather, its value is extrinsic and derived from its use or misuse as the case may be.

Why the Interest In Information’s Value?

Organizations of all types estimate the value of information to establish service levels that directly affect their operational and capital expenditures (e.g., access, availability, priority, protection, preservation, etc.). Courts ballpark the value of information to calculate the scope and extent of damages. Legislators ballpark the value of information to understand the feasibility of proposed legislation. In all cases it helps if we are able to estimate the value of our information assets.

Today’s Metrics

Today, the value of information depends on one’s perspective. Businesspeople and information technologists see things a bit differently.

IT managers attempt to determine the value of information largely based on insight about access patterns/frequency, and availability. One typical assumption is that less frequently accessed data may be of less value to an organization. Another is that the value of data is determined by type (e.g., marketing PowerPoint presentations versus engineering CAD drawings). Yet another is that lack of access to data may have a direct impact on an organization (e.g., the inability to perform deposits, withdrawals and transfers when ATMs and online banking websites are temporarily unavailable).

In contrast, business leaders tend to rely upon the judgment of their employees to determine the value of information as if the full value of a piece of information can be known in advance of a specific application.

Both attempts to assign value to information fall short of meaningful. That is to be expected. The real value of information isn’t in the information itself, it’s in the people and processes using it. Value is determined by actual outcomes.

Outcome-based Value

The best way to illustrate my point is with several simplified examples:

  • Two banks offer online banking to their customers. Insufficient security measures compromise the personal data of the first bank’s customers. What was the value of the information to the bank, its customers, its competitor, and the hackers?
  • Two investment advisers use the same piece of information to make recommendations to their clients. The advice of the first results in a million dollar loss while the advice of the second nets a million dollar gain. What was the value of that information to their clients?
  • Nine Supreme Court justices interpret the constitution and legal filings in a landmark case. Personal experience, expertise, prejudice, interpretation and bias contribute to a 5-4 decision. What is the value of the information to supporters and opponents of their decision?
  • Two highly-trained medical specialists review the medical history and symptoms of a patient, and recommend different courses of action. The patient chooses one and is severely disabled for life as a result of her treatment. What was the value of the medical information to the hospital, the specialists and the patient?
  • A government launches a misinformation campaign to gather support for a previously unpopular plan. What is the value of the information to people negatively affected by the plan, and those benefiting from it?
  • An intelligence agency leaks misinformation in an effort to disrupt the activities of its target. Target operatives don’t fall for the deception. What was the value of the [mis]information to the agency?
  • Two climbers assess weather and ground conditions for the same summit. They devise different ascent strategies scheduled hours apart. A misinterpretation of conditions leaves one dead. What was the value of the information to the individual climbers?

In each of the scenarios above, the “value” of the information was determined by human interpretation and decision-making based on personal experience, competency, skill, prejudice, bias and perspective. A few observations:

  • Information in the wrong hands is less valuable because the expected outcomes are less valuable.
  • There is a fundamental difference between information and knowledge. Information is that which has yet to be interpreted and understood by the individual.
  • The value of information is highly contextual and derived from human goals, knowledge and insight. “One person’s trash is another person’s treasure.”
  • The value of information is, in many cases, indeterminable in advance. This is especially true for information consumed by people.

What Is Next?

How should we approach the challenge of information valuation within our organizations? Unfortunately, there is no single universally applicable solution. In a future post I’ll provide a few thoughts that may inspire your own novel approach to the problem.

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