Why Small Data is the new Big Data
Presented here for discussion is a summary of a current article published with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
In his new book, “Small Data: The Tiny Clues That Uncover Huge Trends,” Martin Lindstrom argues that Small Data explains the why behind what Big Data reveals.
“The issue right now is that the corporate world has become completely blinded by Big Data,” Mr. Lindstrom recently said on Wharton Business Radio, SiriusXM channel 111. “But it’s very, very hard to describe emotions using data.”
In his estimation, Big Data is all about finding correlations, while Small Data is about finding the causation — the reason why.
Using Snapchat and Post-It notes as examples, Mr. Lindstrom estimates that of the top 100 biggest innovations of recent times, around 60 to 65 percent are based on Small Data. In his book, he interviewed 2,000 families in more than 77 countries to get Small Data clues to how they live.
“You have to remember that Big Data is all about analyzing the past, but it has nothing to do with the future,” said Mr. Lindstrom. “Small Data, which I define as seemingly insignificant observations you identify in consumers’ homes, is everything from how you place your shoes to how you hang your paintings. I call those the emotional DNA we leave behind ourselves. … You need the hypothesis first before you start to mine it and find correlations.”
To acquire Small Data, companies have to “embed themselves into the community.” The simplest way is spending time in consumers’ homes, but most CEOs and senior managers are too “reliant on sitting in meetings.”
At retail, it’s easier because consumers are in stores. He noted that he once visited the founder of IKEA, Ingvar Kamprad, at the chain’s Stockholm offices. He was told the owner was at his “usual spot,” which turned out to be behind a cash register at a nearby store.
“I said to him, ‘Why are you doing that?,'” recalled Mr. Lindstrom. “He said, ‘Because this is the cheapest and the most efficient research ever. I can ask everyone why they choose it and why they didn’t choose it.’ This is the essence of how good business leaders are.”
Are retailers “completely blinded by Big Data” and consequently missing out on insights from smaller one-on-one conversations and observations? What lessons should retailers glean from Mr. Lindstrom’s take on Small Data versus Big Data?