Why Entrepreneurs Should Look Beyond Big Data Big Data is sexy, but entrepreneurs may have more to gain by using their intuition.
By Dorie Clark Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Big Data, and its enormous power to quantify and illuminate phenomena, is all the rage. But author and entrepreneur Martin Lindstrom says it may be overrated. "Big Data is about analyzing the past," he says, and it's "safe and accepted" in our society to predict future trends based on what's happened before. But that may not yield the most accurate information.
Instead, he's a believer in "Small Data," the title of his new book, which he describes as a method that's about "infusing creativity and preserving the instincts" of entrepreneurs, which he says can be their most valuable assets. One example of this approach he cites is media magnate Rupert Murdoch.
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"Love him or hate him," says Lindstrom, "he reads 50 or 100 newspapers a day and he can put himself in the shoes of a reader and call his editor and say, "I don't like the headline because I don't think they'll like it' and he's mostly right. It's all instincts. That's making a company unique, because if you go through a cookie cutter format, plug the same data into the same machine, with the same people analyzing it, [you'll get the same results as everyone else]. It's instinct, and Small Data, that gives it a twist, and helps you see the world from a different angle."
Lindstrom's own methodology is a form of hands-on anthropological research, in which he visits people's homes and gathers information about their attitudes, behaviors, and desires that they may not be aware of or choose to articulate. After as few as eight interviews, he says, "you'll start to see a pattern, and what fits into that pattern and what doesn't. It's pretty strikingly obvious."
He takes as many as 300 photos per home visit (with the homeowners' permission) and meticulously reviews them afterward looking for clues in décor choices, layouts and more. He's visited countless thousands of homes over the years, which has allowed him to build up what he describes as an intuition that's "born over time and that you may not see in the moment."
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For instance, he'll look at the objects on display in people's "perception room," i.e., the room in which they entertain visitors. "If you have a huge bookshelf in your perception room, you likely weren't very well educated when you were a child, and you want to compensate for that by feeling close to literacy," he says. "Our life is all about balance -- feeling out of balance and how to get back into balance. If you have a lot of old, antique things, you want to show that you're sophisticated, and if you have a large number of keys hanging from the side of your pants, it's likely you never really had control as a child, and you want to compensate for that later on. It's not like that's the case 100 percent of the time, but often it is, and it's an intuition you articulate over time. Why did I feel that about that person? What did this have in common?"
Lindstrom's Small Data approach may not seem as overtly "scientific" as Big Data, but he says that immersing clients in the process gives them a visceral sense of its validity. "I can't count the number of times I brought the CEO of a company along on [consumer] interviews and it changed their entire view of the company vs. what was in their reports."
But he doesn't ask clients to take simply take his analysis on faith. Instead, he says the ideal mix is developing a hypothesis through a hands-on, research-based Small Data approach, and then validating it quantitatively with Big Data. For example, he discovered that the number of refrigerator magnets people had was correlated with how sentimental they were -- almost a metaphorical desire to "freeze time" as captured in the photographs on display.
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Notes Lindstrom, "What I can do now is, instead of asking people questions like, How self-contained are you? and How many friends do you have?, I can say, "How do you place your magnets on the fridge? How big is your painting? How do you place your shoes?' You can combine those seemingly insignificant observations with Big Data" to produce unusual and telling insights about what customers want and need.
For instance, studying the cooking and wardrobe habits of Indian mothers-in-law and daughters-in-law helped Lindstrom and his team make recommendations for how to design the packaging of a breakfast cereal and understanding the isolation of rural and suburban North Carolinians trapped in a car-centric culture sparked his recommendation that a local grocery store chain should double down on its feeling of community by emphasizing its homey roast chicken offering.
Any entrepreneur can benefit from the power of Small Data, says Lindstrom, and it all starts with noticing. As more and more people keep their heads down and their eyes glued to their smartphones, we're missing crucial information about the world around us. "It provoked me to be more observant over time, because others have become less observant," he says. "I like to go the opposite way."
