Without small data, big data is like a loose cannon

Global brand guru Martin Lindstrom highlights the importance of small data in understanding customer preferences

What is Small Data?

Seemingly insignificant behavioural observations can give us insights about human desires and unmet needs. That’s Small Data. This kind of data is the source of some of today’s biggest breakthroughs and brand turnarounds.

Small Data is a subjective approach whereas Big Data is more quantitative. What are the flaws with leveraging only Big Data? Any examples of how companies lost out by relying too much on Big Data?

Companies across the world are convinced that they are on top of what’s going on with Big Data. But nothing could be further from the truth. It has become fashionable to refer to Big Data but unless it is counterbalanced by Small Data, the former is a loose cannon without any direction. 

Big Data looks at correlation, Small Data focuses on causation — the reason behind a particular observation. You can’t begin to draw a correlation before first identifying the causation, because it almost always points to a larger context. For example, in 2012, Google concluded that it could predict a flu outbreak days before it would happen based on search terms, and that doctors and pharmacists across the country would be able to order medicines in advance. This was deemed revolutionary. Yet just recently, the Center for Disease Control revealed that the data from Google was twice what it should have been. They found that when one begins searching for terms such as flu, people around follow, resulting in a misinterpretation of the data. The same happened in this case. Like others, Google focused on correlation but forgot about the causation.

In another example, not long ago, a major US bank misinterpreted the increased “churn” at the organisation. Thinking that customers are on the verge of exiting the bank, it prepared letters asking them to reconsider the move. Before mailing the letters, though, the bank executives discovered something surprising. Yes, Big Data had uncovered evidence of churning, but the data didn’t peek into the customers’ lives, and so it couldn’t explain the cause. The churn wasn’t because customers were dissatisfied with the bank. The real reason? These customers were getting divorces, which explained why they were shifting around their assets.

Every day, large corporations base their future on Big Data. Yet as they come to rely on the same, they are slowly moving away from the consumer and true market conditions. The bank had relied on correlations generated by Big Data, but an essential piece of the puzzle was missing. They had overlooked causation. Small Data is thus essential to balance the scales in our data-obsessed culture.

What is subtext research and how did you develop this concept?

Over the past few years, it has become evident that the business world has completely lost its contact with consumers. Recently, at a gathering of executives in New York, only two of 3,000 executives present said they had spent time at a consumer’s house. The unspoken reply was: “Why should I? I’ll find never-ending streams of tables modeling how consumers feel about my brand on my computer.”

We’ve come to rely on Big Data to understand our most important asset — customers — but cracks have begun to appear in the varnish. Businesses are starting to realise that Big Data can overlook some of the most important aspects of the customers’ desires and needs. So, we invented a tool to explore and understand consumers called subtext research. 

What does subtext research and small mining tell you about consumer psychology that is typical to India?

India is a country of contrasts — the old vs the new, mother-in-law vs the daughter-in-law. Indians are incredibly curious yet incredibly conservative. For a brand to be successful in India, it needs to target both these sides to truly resonate with the population.

If I were to start a business in India today, what should it be? What is India’s unmet demand?

In India, competition is driving the push towards technology and modernity. Moreover, aspirations are glued towards the US and Europe. But as everyone seems to be headed in this direction, there is a widening gap for brands that preserve traditions and local culture. This might not be that visible right now, but visiting India, I feel that the population is increasingly feeling like it is losing touch with the core values and traditions. Brands who are prepared to celebrate these conventional values will have a huge future in India.

What are some of the imbalances in the Indian culture?

The need to be modern yet be true to old traditions is increasingly causing conflicts.

Which would you say are India’s top five brands?

From an international point of view, India doesn’t have five brands — just two: Tata and Taj.

How can Indian corporates leverage small mining to make better products and build lasting brands?

It is telling that when IKEA was preparing to foray into India, they spent almost a year visiting homes across the country to understand consumers. Few Indian companies are doing this, either because the executives feel they already know the consumers or because they feel they are too good to visit their homes. The reality though is that no one knows the consumer based on Big Data. One needs to get out into the real world, explore the realities of the consumer — how they live, feel and engage with their friends. Only by doing this will you begin to notice things that are out of balance, explore new and undiscovered needs, pick up consumption patterns based on rituals, traditions and memories. 

The next step is innovation by using this Small Data. I believe true innovation happens when you combine two ordinary things in a new way. There’s lot more to it but these are good starting points for any baked foods or snack company to follow. 

When researching small data, how do you go about constructing a representative sample set that reflects the needs and aspirations of the majority, especially in a country as complex and diverse as India?

Having visited more than 2,000 different homes across 77 countries, I have realised that the differences between humans are limited when it comes to our deepest emotions. Taking aside the government, religion, weather and tradition, we are almost identical. Despite the major differences across various regions in India, it is surprising that one can accurately determine the success of a brand — or even invent a completely new brand just by visiting 40 or 50 homes. Once you peal off those four factors you end up with a very clear picture. It’s like when you go to the doctor for a health check up. The doctor doesn’t ask you for 10 liters of blood just a couple of drops.

How do family-owned Indian businesses alter their approach towards brand building, compared with the professionally managed companies in the West? 

Politics is a major factor in creating powerful brands in India. I tend to say that I’m more a politician than a brand builder because my role increasingly is to seek consensus among family members, and then to reflect this on to the brand. Here’s the issue. If a strong consensus is not secured the brand will become weak, and this is where most Indian brands fail. They find it difficult to reach an agreement about which way to steer the brand and end up compromising on things.

To overcome this, I ask the companies for the directive up front. If I’m not able to secure a consensus, I step up and take a call to drive the brand ahead. This often brings out amazing results as the family is able to step back. If anything goes wrong, they can blame me, but if things go right, they can pat their own backs. 

It’s relatively easier for B2C companies to leverage Small Data. How do B2B companies use it to gain insights and build a brand?

Honestly, no. Today, there’s not much difference between B2B and B2C. The smartphone means that personal and professional boundaries have blurred. 

What do you think about the recent trend of Indian godmen leveraging religious devotion to launch FMCG products? Is there any precedent to this worldwide?

I had predicted this trend back in 2003. It is not just an obvious trend but a very clever and powerful approach. With such branding, they are tapping into the strong religious bias Indians have. 

You used neuroscience to come up with the Holistic Selling Proposition. How widespread is the use of neuromarketing in India?

It’s not being used here. It is still very early days.