Data Driven vs. Data Informed Product Design

I was speaking with the CEO of an SMB software company last week who has built a great business on very little capital by focusing on building a great product that has generated strong organic customer growth. He had spoken to many investors over the past two years and made the observation that some seemed almost dogmatically focused on taking a data driven in product design decisions. While this CEO had used data to inform his design decisions, he had mainly relied on his former industry experience in building the product. This prompted a good discussion about some of the problems that being too data driven can introduce – mainly that the customers who are the early adopters of your product may not be the same as the customers you aim to target longer term. Sometimes relying too heavily on this early data can lead a company to design for a local maxima – optimizing for the wrong customer set and limiting the ultimate potential of the company. Andrew Chen has a good post on this where he talks about the difference between being data driven and data informed. It’s a good read and does a nice job of summarizing this issue.

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