Learn to Distinguish between Data, Information, Knowledge, Wisdom during MBA

Knowledge Pyramid

These are times of data explosion. The data available on any subject is thousands of times more than what a person can comprehend and meaningfully use. For example, if we simply type the word ‘leadership’ and do Google search, we get approximately 48,20,00,000 links using this word. In order to go through the entire data on a subject even one time, full human life may not be adequate. Even a thousand lives may be insufficient to grasp entire available data on any subject. Fortunately, it is neither necessary nor useful to go after such raw data. However, some data is useful and required for business.

What we actually require is an extracted relevant portion of data, meaningfully organised, which we can put to use. This we call information. It needs to be specific, precise, relevant, and presented in organised form for easy comprehension. For example, if you go to the finance department of any organization, you would encounter astronomical number of recordings in the account books. These constitute data. When we look at the financial statements of the firm, we find these are extracted from the bulk data and provide utility to management and others.

Knowledge about a business or a firm is what we require for decision making on various issues which are important to us. Knowledge is what is contained in the human brain. Even the financial statements do not provide such knowledge, and we can obtain it only by looking at comparisons. For example, ratio analysis involving financial ratios gives us a better understanding of soundness of the business and its future prospects.

Wisdom is what we get by assimilating and mulling over of knowledge. Most successful investor and businessman, Mr. Warren Buffet once said, “While I am in my office, eighty per cent of my time is spent on reading and reflecting”. This reflecting provides insight into the way things are evolving and foresight into the future likely trends. Wisdom does not come quickly. It comes by deep thinking, repeated and prolonged integration of knowledge with the values, beliefs and dominant thoughts of the person.

Many persons have defined data, information, knowledge and wisdom in different ways. Some commonly used definitions are given below;


  • Data are recorded (captured and stored) symbols and signal readings. Symbols include words, numbers, diagrams and images. Signals include sensory readings of light, sound, smell, taste or touch.
  • Data says nothing about its own importance or relevance. But data is important to organizations mainly as raw material for creation of information.


  • Information is a message that contains relevant meaning, implication, or input for decision and/or action.
  • Information comes from both current and historical sources. In essence the purpose of information is to aid in making decisions and/or solving problems or realizing an opportunity.


  • Knowledge is the human expertise stored in a person’s mind, gained through experience, and interaction with the person’s environment.
  • It is the content that resides in our mind and process of acquiring knowledge is through our interpretation of information.


  • Wisdom is gained through self-reflection of experience and formulation of deeper goals.
  • Wisdom is a process by which we discern, or judge between right and wrong, good and bad.

Wisdom determines how one would conduct business and life in difficult times. It is based on assessment of real life current situations, feel and perception how future might evolve, and deep rooted virtues on which to base one’s conduct at all times. Key virtues have been spelled out by most religions and defined by various thinkers and philosophers. Some of these virtues are benevolence, etiquette, perspicacity, credibility, trust, humanity, justice, propriety, knowledge, penance, forbearance, rectitude, faith, valour, fortitude, charity, temperance, prudence, integrity, leadership, diligence, understanding, respect, contemplation, intellect, moderation, courage and generosity.


Two interesting quotes about wisdom are given below;

“Wisdom is not a product of schooling but of the lifelong attempt to acquire it”. . . . . . Albert Einstein

“Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in the information?” . . . . T. S. Eliot

For the student pursuing MBA, it is opportune time to think over this issue of data, information, knowledge and wisdom. For example, on every topic of study one can find enormous data and information in books, journals and on the internet. How to collect relevant information, extract subject knowledge and internalize such knowledge for future use when needed is herculean task. While pursuing MBA study, one must experiment on such issues and develop own personalized styles. Wisdom is something totally personal as it involves knowledge, experiences, reflection, and introspection to develop and grow into a person of high stature.

Data, information, knowledge and wisdom form a hierarchy commonly referred to as DIKW. Data is seen from the perspective of the user and application. It is now possible to analyze large amount of data in meaningful way to generate information, primarily due to enormous computing power of computers. Knowledge is neither data nor information, though it is related to both. Knowledge is in the mind of the person.

The common idea is that data is something less than information, and information is less than knowledge. We first need to have data before information can be created, and only when we have information knowledge can emerge. Wisdom comes much later when the person undertakes inward journey to obtain insight into life processes and prepares oneself to take effective business and life decisions.

In today’s fast paced world we are required to deal with data, information, knowledge and wisdom all the time. In order not to get embroiled in vast complexities of these aspects, one needs to be very vigilant, alert and specific regarding differentiation amongst those and effectively use each as the situation demands.

Knowledge creating activities take place within and between humans, whereas data is found in records or transactions, and information in reports and messages. Knowledge can provide sustainable advantage. In the current day environment, competition can always match current products, quality, service and prices of a firm. However, by the time this happens the knowledge-rich organization would move to newer levels of products, services and quality.

We can say that wisdom can be cultivated in individuals systematically by experiencing the emerging situations and reflecting internally. Sound character based wisdom would be vital for executing responsibility laden high end managerial assignments.

Understanding the implications of words data, information and knowledge and cultivating one’s own wisdom about business situations would groom the MBA student to be ready to own major responsibility in the job situation or embarking on own private business, as the case may be.

Contributed by Sumit Gulati (Class of 2009, IBS HYDERABAD)

Leave a Reply

Your email address will not be published. Required fields are marked *