The best way to explain how data turn into information and knowledge is best described by an anecdote. The story went back to the time of World War II. A Japanese aircraft carrier chief commander was reported the shot down of many Zero airplanes. Only a few made it back to the ship.
The commander went down to welcome the survived pilots and inspected the return planes. He found that the some of the returned planes were fired but still managed to get back. The shot airplanes had holes of the size of the gun installed on the American P40 airplane (this is DATA). So he knew that his planes were in the dog-fight with the American's.
He also noticed that the returned planes were shot on the left side (this is INFORMATION). So he asked his mechanic to put up iron armor on the right side of the plane. This caused doubt to one of his pilot and he couldn't resist asking the commander.
Pilot: "Sir why did you ask to have armor put on the right side of the plane. All of the plane was shot on the left side"
Commander: " Do you see any returning plan who was short on the right side?" (this is KNOWLEDGE)
- When the commander inspect the returned Zero, he realized the plan was shot with data on the size of the holes. This is the pure data.
And when he can relate the shot holes to the left side of the plan, he gains the insight of relationship of the data. This becomes information.
- When he decided to install the armory shield on the right side of the plane, he gains understanding that the returning Zero were only the one that was shot on the left side, but not on the right side. This becomes knowledge.
- Lastly, when the installation of the armory shield on the right side of the Zero become common from the new manufactured planes from the factory, these knowledge gets widespread and become pattern of actions. This is wisdom.
As from the story, the level of understanding increases when the cognition turns from data-wisdom as well as the level of context independence is higher. Knowledge is still situation dependent and context sensitive, while wisdom become less dependent with situations and less sensitive on context.