Introduction
In today’s digital times, businesses with structural data are ruling the world. Business decisions are not only taken based on the experiences of successful entrepreneurs but, to achieve that in the right way one needs a proper study of market analysis and target audiences. And to execute this in both, strategical and operational ways, that align with the goals and mission of the company, businesses have their own data processing systems. These processing systems filter raw data into insights which are further used to make the right business decisions.
Also, decision-making is a crucial skill. To take the right decision at right time, proper knowledge about the respective business and its target audience is necessary, which can be obtained by filtering the available raw data of the respective field. Data-driven decisions are very important for any business as they will help to increase revenue and also will have a competitive advantage.
DIKW Pyramid is one of the data processing models used to process the raw data into knowledge and then wisdom, which can be further optimized to make the right business decisions at right time. This model is also known as the DIKW hierarchy, wisdom hierarchy, knowledge hierarchy, data pyramid, and DIKW model.
In this article, you will get to know about :
What Is The DIKW Pyramid And Its History?
DIKW(data, information, knowledge, wisdom) Pyramid is a model that involves a cognitive process. It defines the relationship between data, information, knowledge, and wisdom, by extracting useful and valuable data from raw, unstructured, or big data.
Basically in this model, four steps answer different questions about the available raw data, thereby adding meaning or value to it. The more valuable and insightful data, the better decisions could be drawn out from it. It is an ecosystem that supports every other level.
Assumptions are made that, this concept has its origin from lines of a poem by T.S. Eliot from his play ‘The Rock’ in1934
"Where is the life we have lost in living?
Where is the wisdom we have lost in knowledge?
Where is the knowledge we have lost in information?"
Also, later in 1979, Frank Zappa mentioned this model through the following lines
"Information is not knowledge
Knowledge is not wisdom
Wisdom is not truth
Truth is not beauty
Beauty is not love
Love is not the music
And music is the best."
What Does DIKW Pyramid Represent?
DIKW pyramid represents the structural procedure of converting raw data to insightful output using four different levels. These outputs are further used to project the future of the business by taking the right decisions.
The four levels of the pyramid are data, information, knowledge, and wisdom arranged in ascending order of value. These levels are also called the elements of the pyramid.
Data is at the broad base of the pyramid followed by information, knowledge, and wisdom respectively. A set of particular questions are asked at each level. Right answers to these questions, will result in climbing the pyramid to the next level.
Elements of DIKW Pyramid
1. Data
Data can be defined as a collection of facts, symbols, signals, or characters with no context or meaning. It is the product of observations made in the past in an unstructured or unorganized or unprocessed manner. It is at the base of the pyramid. Data in its raw form is irrelevant and doesn't have any value until you add any context to it using certain data analyzing tools. It is collected from different sources using various software.
This raw data is contextualized and aggregated to build the second level of the DIKW pyramid called information.
2. Information
Information can be defined as data that has a certain meaning or context. It has relevance or specific purpose and hence is meaningful, valuable, and useful. Questions like who, what, where, and when are asked, to separate information from the raw data. To do this, various operations are performed on raw data which makes it easier to measure, visualize or analyze. The information helps to understand the relationship or patterns between the raw data. It is data in a more concise and refined form.
When this information is applied it becomes knowledge.
3. Knowledge
Knowledge can be defined as information processed, organized, or structured in such a way that it is put to action to achieve certain goals. It is a combination of framed experience, value, and insights, which come from expertise, skills, experiences, and study, that provide a framework for establishing new future experiences. To get knowledge from information, ‘how’ is the question asked. It is an applied form of information, combined with understanding and capability. When a man knows entities, knowledge is established. And as one knows more and more about entities, knowledge grew.
When the knowledge is further filtered to plan future decisions with more accuracy and precision wisdom is achieved.
4. Wisdom
Wisdom can be defined as an ability to make sound decisions without thought. It comes into the picture when knowledge is used to take proactive decisions to predict the future almost correctly. This is achieved not only by detecting and understanding certain patterns from knowledge but also by knowing the ‘why’ behind those patterns. Wisdom is when questions like ‘why do something?’ and ‘What is the best?’ are answered correctly. It is integrated knowledge made super useful. It requires a sense of good or bad, right or wrong, ethical or unethical.
Apart from the above four levels, two more levels can be assumed to get more clarity about the DIKW pyramid. Those are
1. Insights (can be added before wisdom), are drawn out from the knowledge to make the right decisions.
2. Decision-making (can be added after wisdom), can give the right purpose to wisdom.
Is DIKW Pyramid A Circular Model?
The answer to this question depends on where DIKW Pyramid is used or applied. It is a linear model which represents various levels of data in a much more contextualized form than the previous level, thereby filtering or refining data so that it can be used in the best way possible to make the right decisions.
But, when the DIKW pyramid is used in integration with organizations or businesses, it resembles a circular model. This is because the market and technologies are changing very rapidly and using past data to make decisions would not always be correct. To match up with the ongoing market situations, fresh data is always needed. Also, the more data available, the more insightful will be the decisions.
The circular model works as a cycle. Firstly raw data is collected and it is contextualized to convert into information. Further, this information is put to action to gain knowledge. Insights from this knowledge are further used to reach wisdom, and to take the right future decisions. Further, outcomes of these decisions are collected as new raw data which is according to the present or ongoing market situations. This data is again filtered or refined to make much better decisions according to ongoing market conditions. And this cycle goes on.
If this model is rightly integrated with the goals and the strategies, the businesses will never get out of the ongoing trends and grow.
Applications of DIKW Pyramid
As, in this digital transforming world, almost every industry is shifting online, DIKW Pyramid has its applications in almost every sector. And to sustain in this digital world for the long run, all the businesses in every sector need to integrate data-driven decision-making systems into their growth strategies. When data processing or data analytics comes into the picture, the DIKW model should be applied to get maximum positive results. This model should be the core of every data-driven industry.
DIKW Pyramid With An Example In Real-Life Scenario.
Let's take an example of a social media account on Instagram and try to relate it to the DIKW pyramid
In the image above, there are two different images, which represent insights of two Instagram reels. How to apply the DIKW Pyramid here and use these insights to make the right decisions is explained below;
Two images show different characters, symbols, numbers, etc. which are defined as DATA. It is just content, which has no sense until it is structured properly. For eg. 8581, 87, accounts reached, likes, etc.
When the data is structured in a particular form, by asking questions like what, who, where, and when information is obtained. For eg, in this case, from figure 1 it is seen that the respective reel got 8581 views, 87 likes, 76 saves, and 44 shares. While, from fig 2 it is seen that another reel got 2766 views, 9 likes, 31 saves, and 11 shares. This is information i.e. data with context.
And when we compare the insights of the above two reels, we can conclude that reel1 has performed better than reel 2, as it is getting more engagement. This conclusion drawn out is knowledge, which is obtained by asking the question ‘how’ or by comparing two different pieces of information. To separate knowledge you need to study a particular subject, in this case, it is the study of Instagram characteristics and algorithm
When you make decisions using a piece of knowledge, it is called wisdom. Here, in this case, we can get to the conclusion that, in the future to get more engagement, you need to create a reel with content and strategies similar to the one which gives insights like figure 1 in the above image.
This is how the DIKW pyramid is used in almost every data-driven field to make relevant right decisions for businesses.
More Facts About DIKW Pyramid
1. First, three levels of the pyramid i.e. data, information, and knowledge are the outcomes from the past, which were recorded to make decisions for the future, i.e. at the fourth level named wisdom.
2. As we move from the bottom to the top of the DIKW pyramid the level of value and context increases and can be considered the highest at the top level i.e. wisdom.
3. As we move from the top to the bottom of the DIKW pyramid the meaning and understanding decreases and can be considered the lowest at the bottom level i.e. data.
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