The Data Pyramid: Foster Wisdom By Understanding How Data Flows Through Your Business

By Eric Newell | February 12, 2024

the data pyramid

Understanding the data pyramid is a great way for you to analyze the flow of information in your business to determine the best ways to make more informed decisions and increase success.

What is The Data Pyramid?

The data pyramid has been a concept since about the 1980’s. It’s essentially a really good way to think about the progression of data through your organization and how you can use it to see the future and where your business is going.

Let's break down each layer and provide some insight into how you can turn data into wisdom.

Data

The first layer is data. It is at the bottom because it is the raw foundational building block you need for the pyramid to work. Your systems collect large bunches of data every day and store them for you to access when you need it. For example, a company selling a physical product will collect data on customers including their names, contact information, orders, returns, customer service requests, product suggestions,  and much more. While it's important to have data, what you do with it and what it can provide to you take things further.

Information

Raw data doesn't provide you much unless you can parse out the important information from it. Being able to pull out vital information from your data can help you to start making informed decisions. In the example above, let's say your company sifts through your data pool and finds that a large bulk of your customers have submitted feedback comments about particular issues with a product or you notice a common suggestion on how to improve it. Another example is when you notice that a large portion of your buyers come from one region.

Knowledge

Once you pull the information from your data, that's when it becomes knowledge. When you know of a specific trend within your data you can then use that knowledge to make adjustments. To continue the examples above, noticing multiple customers providing the same feedback gives you knowledge on how to change your product or service to ensure better customer satisfaction. Likewise, noticing the bulk of your customers come from the same region can give you the knowledge to help you either focus on that region or figure out how to expand to others.

All three of these are referred to as "lagging indicators." That means they are acquired from data that already entered your system in the past. The fourth and final stage of the pyramid is a "leading indicator."

Wisdom

From here, the journey from data to wisdom comes to fruition. As you and your team gain more knowledge from your data, it becomes wisdom you can use to forecast your decisions and get ahead of trends. Analyzing customer comments on your product empowers you and your team to constantly think of ways to improve it in the future that are related to the feedback you've already received. If you successfully expand your product to another market, you can then turn that information into wisdom to expand into even more markets.

How You Can Make the Data Pyramid Work For You

Consolidating your data into a centralized hub and deploying tools that can help you create engaging and informative visualizations of it will help you establish all of the building blocks of the data pyramid. Utilizing tools like Dynamics 365 and the Microsoft Power Platform can help you accomplish this through automation and consolidation.

With Dynamics 365, you gain access to ERP and CRM systems that can work together to gather and store your data in a central location. Your team members can then access the data they need to do their jobs effectively from everyday tools like Microsoft Teams, Outlook, SharePoint, and more. These systems streamline the process of turning data into wisdom.

Similarly, the Microsoft Power Platform's core components can help you on this journey by allowing you to:

Want to Learn More About How to Optimize Your Data?

Reach out to the Stoneridge team! We can help you implement systems and best practices to help you optimize your data flow and turn that data into wisdom. You can also watch the video below to gain a bit more insight.

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