Information is free. Knowledge is not.

In business, everyone keeps confusing information with knowledge. They’re different. Even the dictionary says so:

Information: Facts provided or learned about something or someone.

Knowledge: Information and skills acquired through experience or education; the theoretical or practical understanding of a subject.

Information is ones and zeros. It’s raw data, or a list of facts. It’s instructions on filling out a business license, or the instructions Google provides when you sign up for Adwords. The obvious stuff. You can often acquire information for free: Go to the Associated Press for raw, un-analyzed news. Or read a ‘how to’ on building your own car.

Knowledge is something else entirely. It’s what you get when you combine information with analysis and experience. Knowledge is information distilled down to actions. It can and should cost you money, or time, or something else. If you want real analysis of the news you just grabbed from the Associated Press, for example, you might go to the New York Times and pay (at least after 10 views). To learn AdWords tricks that can actually help you profit, you’ll buy a book, pay for a seminar or hire a consultant.

You must pay for knowledge in money or effort. If you don’t understand this, you’re going to fail.

Why don’t we understand?

It seems simple. So why don’t we get it? Did we all fall on our heads as children? Eat too much sugar? Listen to too many political advertisements? What?

I tried to do my own bookkeeping for 3 years. I tried to do my own taxes for 3 years before that. All because I bought TurboTax and Quicken. But those programs are just information in pretty wrappers. I got very, very lucky when I married an accountant. She was smart enough to say “IAN GO HIRE AN ACCOUNTANT YOU IDIOT.” So I did. And narrowly missed bankrupting my company after just a year.

Then there’s the story of The Couple Who Tried Sailing. I won’t name names. 15 or so years ago a nice married couple rented a sailboat. They’d read some good stuff on sailing and figured hey, seems doable. They did OK. But while sailing back into their slip, they made a classic beginner mistake and left their sails up. A little gust of wind accelerated the boat, which rammed the dock and crushed a big tool locker. No injuries, no serious damage. And some hard-won knowledge that could’ve been more easily acquired through a few lessons.

And, of course, there are all the people who refuse to hire a decent copywriter or marketer. That’s stupid, they say, I’m not paying $250 for three product descriptions! Outrageous! I’ll juzt rite it myselph. And they do. Then they wonder why they don’t sell anything.

I know why: Information doesn’t sell. Knowledge does.

What the hell is going on here?

Everyone’s got it backwards!!!

Companies invest millions in information. They use huge databases, intranets and ‘knowledge’ sharing systems to put lots of facts at everyone’s fingertips.

But these companies still step on their respective naughty bits: They publish incorrect prices, make marketing blunders worthy of the Marx Brothers, or complete a new aircraft (cough Boeing cough) years late. And their information management tools faithfully record each nail in the company coffin.

Why? Because information systems maintain data. They don’t do anything with it. Putting information in front of programmers, marketers or machinists isn’t the same as giving them the knowledge to *use it*.

Companies succeed because of knowledge.

Microsoft has access to the exact same information as Apple: Market research, development skills, you name it. Yet with Steve Jobs at the helm Apple left Microsoft behind. Jobs knew how to use the information and then get beyond it. Once beyond it, his team could create truly inspired stuff based on their knowledge of design. Microsoft? They do a really good job of ensuring everyone fills out their TPS reports.

Knowledge wins. Information maintains. But companies blow millions on the latter while ignoring the former. What the hell is going on here?

Knowledge makes you unique

If you build a business using information (which is, after all, free), you’re just part of the herd. Everyone around you is doing the same thing: They all visited the same web sites. They all invited consultants to dinner to ‘pick their brains’. They all assume that having a list of undigested facts entitles them to success. So they all join an army of zombiepreneurs. And they all walk into the same wood-chipper.

Instead, make yourself unique. Acquire real knowledge:

• Learn (God forbid) more than memorized facts. Whatever the business task, make sure you truly understand it and the implications of your actions. If you don’t have the time, maybe it’s not that important. Or
• Hire people who already have the knowledge you need. You can’t know everything. Build a great team. Then you won’t have to.

The greatest companies are great because of their knowledge: Apple’s design. Zappos’ customer service. FedEx’s efficiency.

What’s going to make you great?

Knowledge, people. Acquire it. Protect it. Invest in it.