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I’ll take smart data over big data anytime. Smart data is all about interpreting data to make a wise decision, whether you’re trying to understand your customers or attempting to outsmart your competition. Seventy years ago, the U.S. Navy and the Imperial Japanese Navy gave the world a dramatic demonstration of smart data in action during the Battle of Midway. The decisive and important naval victory for the United States still teaches lessons today about making wise choices with information.

As recounted in the recently published book Inferno: The World at War, 1939-1945, by Max Hastings, the battle of Midway unfolded June 4-7, 1942, near the Midway atoll. The Japanese forces, led by Admiral Isoroku Yamamoto, conceived of the assault in order to achieve a knockout blow against the U.S. Navy — which was reeling only six months after the bombing of Pearl Harbor and military setbacks shortly thereafter.  But the U.S. forces, led by Admiral Chester M. Nimitz, held a distinct advantage: its codebreakers had broken the JN-25 code used by Japanese forces to communicate with each other. The U.S. knew where the Japanese were going to strike and used that information to repulse the attack. But of course breaking the code in and of itself did not guarantee victory. The deciding factors were:

1. A bold decision

Breaking the code meant that the Americans expected Midway to be the target – but even still, no one knew for sure. Someone had to decide whether to place faith in the accuracy of the intelligence uncovered by U.S. Commander Joseph Rochefort – at a time when intelligence gathering was an inexact science at best. Writes Hastings: “[E]xactitude of knowledge was still lacking. In a vast ocean, it remained hard to pinpoint ships, or even fleets . . . despite Commander Rochefort’s magnificent achievement, uncertainty and chance characterized Midway.”

In that context, “Nimitz made a wonderfully bold call: to stake everything upon the accuracy of Rochefort’s interpretation.”

Nimitz

Nimitz consequently deployed two task forces to Midway in anticipation of a Japanese attack. Had he been wrong and the Japanese attacked elsewhere, the already-vulnerable U.S. Navy could have faced disaster at a time when the United States was struggling to deploy effectively for war.

2. Arrogance and negligence

On the other hand, Yamamoto’s forces doomed themselves by arrogance and failure to collect intelligence. Yamamoto devised a complex plan of attack that allowed for zero margin for error. As Hastings writes, the plan “required him to divide his strength; worse, it reflected characteristic Japanese hubris, by discounting even the possibility of American foreknowledge.”

Yamamoto

Making matters worse for Yamamoto, the Imperial Japanese Navy had been unable to discern the location of the U.S. Pacific Fleet – a failure of intelligence gathering that was characteristic of Japanese forces. The lack of knowledge troubled Yamamoto. He should have listened to his gut. Instead, he arrogantly assumed the Americans could not have possibly anticipated the oncoming attack.

Instead of finding a lightly defended Midway atoll, the Imperial Japanese Navy encountered an American ambush. Even still, the more experienced Japanese fighter pilots fought skillfully and wreaked havoc on American forces. But here again, smart data – or lack of it – came into play. Yamamoto’s forces did not dispatch enough reconnaissance aircraft to scout the strength of U.S. forces once it was clear that a battle was under way. As a result, the Imperial Japanese Navy made a number of crucial missteps, failing to coordinate effective attacks on the U.S. ships and failing to protect its own ships against American fighters.

As Hastings reports, the combination of Japanese missteps and wise judgment on the part of the American commanders resulted in a decisive victory for the United States. After Midway, the Imperial Japanese Navy, although perennially dangerous, would thereafter fight a defensive war. Meantime, the American industrial machine, awakened by the outbreak of the war, began to deploy an increasingly large and proficient fighting force that would eventually wear down the Japanese.

You don’t need to be a soldier to learn the lessons of the battle of Midway. Good data form the foundation of your decision-making; but human judgment and an ability to view yourself humbly and openly are essential. I’ve long contended that inadequate human judgment has contributed to Facebook’s sometimes-clumsy attempts to make use of the information it collects about its vast community of members. And whenever you receive a misguided marketing offer from a business, usually the problem is with a failure to interpret data collected about you. For instance, Ticketmaster sends me too-frequent email updates about the Blue Man Group based on one Ticketmaster purchase I made to see the Blue Man Group in 2009. Although I enjoyed the show, I’ve not seen it again and don’t really plan to do so anytime soon. But based on one purchase I made three years ago, Ticketmaster wrongly believes I want to receive updates about the Blue Man Group on an almost weekly basis.

Having perfect knowledge of your market and the behavior of your customer gives you, at best, historical data. In the case of Ticketmaster, the company has an accurate snapshot of my purchase behavior. But you still need to interpret that historical data to decide how and where to invest and to act. The customer insight that comes from interpreting data determines whether you are sending spam — or sending an engaging, relevant offer.