Ask Google how many people are searching for the term "big data" and you'll get a graph that resembles a steep mountainside. The concept has become incredibly hot over the last few years and it shows no signs of cooling anytime soon.
And why not? Every day our devices spew out an incredible amount of data on our behavior, preferences, and relationships. You can't blame companies for hoping that all that raw information hides a few valuable nuggets of business insight. What could be wrong with our newfound obsession with combing through numbers for profit-boosting insights and previously unnoticed correlations?
The trouble according to Martin Lindstrom, author or Small Data: The Tiny Clues That Uncover Huge Trends, is when we fetishize data to the point that we forget to actually talk to people. In a fascinating interview with Knowledge@Wharton, Lindstrom argues that what he terms "small data," i.e. face-to-face conversations with actual, real-life customers often in their own homes, is a more reliable source of great business ideas than massive databases and sophisticated number crunching.
"I think it's fair to say if you take the top 100 biggest innovations of our time, perhaps around 60 percent to 65 percent are really based on Small Data," Lindstrom claims, citing breakthroughs ranging from the idea for Snapchat to the resurgence of Lego as examples of the fruits of small data.
What big data can't do for you
Big data, Lindstrom insists, isn't useless. Once you know what you're looking for, it can be a powerful tool. But it's just not creative.
"We become so obsessed with Big Data we forget about the creativity. You have to remember that Big Data is all about analyzing the past, but it has nothing to do with the future," he argues. "You need the hypothesis first before you start to mine it and find correlations." The best way to get those testable ideas is to get out and have an actual conversation with a customer.
Lindstrom cites the example of one bank that combed through its data and discovered a high level of customer churn -- people were leaving and management concluded they must be unhappy for some reason. A survey was prepared to find out why, but before it was sent out, thankfully someone decided to actually go and chat with some of customers who had closed accounts.
"Just half a day of interviews, with consumers in their homes, revealed that these consumers were not leaving; in fact, they had just gone through a divorce and one of the two has to change their accounts," Lindstrom reveals.
This sort of actionable, human level insight offered by "small data" is why "if you take the good upcoming entrepreneurial business leaders right now, like the Gopro founder, [they are] very much hands-on with the real audience," Lindstrom feels.
Too busy for small data?
Why don't more business leaders rely on small data? One major culprit is the root cause of many of today's leadership woes -- busyness. "Because we're so busy, we use that as an excuse for not being present," Lindstrom says.
Thankfully, this problem is relatively easy to remedy. Take control of your schedule and re-prioritize talking to customers, Lindstrom urges young business leaders and would-be entrepreneurs. "If I were 15 or 18 or 20 or 25 years of age right now, the first thing I would do is to understand deep consumer psychology by spending time in consumer homes ... because that is going to be the biggest asset in the future. Every company wants that," he concludes.
When is the last time you got out of the office and actually talked to a customer?