The Knowledge Funnel is a concept introduced by Roger Martin in Design of Business: Why Design Thinking is the Next Competitive Advantage (2009).
The book is excellent and worth a read.
There are mysteries at the top of the funnel. Mysteries are the unknown. They’re the known unknowns and the unknown unknowns. It’s knowledge that the organization doesn’t have.
In the centre of the funnel, you have heuristics. These are rules of thumb. They aren’t quite always precise, and aren’t always quite reliable. Heuristics are just predictive enough to be useful. It’s knowledge that is known to the firm.
At the bottom of the funnel you have algorithms. This is knowledge that is standardized and optimized enough to be run by machines. It is knowledge that is known enough to the firm that it can be run automatically and at scale.
I’ve drawn out the knowledge funnel for you to see below.
The Knowledge Funnel is central to product management and data science. It’s vital in business design. It’s at the core of value creation. It’s a beautiful idea. Roger Martin’s book is well worth your attention.