Research Big Data Benefits
Surprisingly, R&D, product development and product engineering managers see monitoring product quality as potentially one of the biggest Research Big Data benefits. That indicates they may be more interested in using Big Data to protect established products than in inventing new ones. However, identifying customer needs for new products and enhancements to current products featured next on the list.
Consumer product companies such as Procter & Gamble, Starbucks Corp. and Kraft Foods Group Inc. have become known for using their websites to crowdsource new product ideas from consumers, university researchers and others. One of the pioneers of such “open innovation” has been P&G. The company’s “Connect+Develop” program receives more than 4,000 ideas a year for new products and product enhancements, from around the world.1 P&G says 50% of its new products have elements based on such external ideas, compared with 15% in 2000. R&D expenses have fallen, from 4.8% of revenue to 3.4%. Additionally, R&D productivity has skyrocketed by 60%.2 P&G CEO Bob McDonald believes Big Data and analytics are instrumental tools in improving R&D productivity at the company.3
A very different illustration of how companies are using Big Data to propel product development comes from Netflix Inc., the online provider of movies and TV programming. The $3.6 billion subscription service for movie and TV fans has created a huge database of the viewing preferences of 27 million U.S. customers (and 33 million worldwide) since it began distributing movies through the mail in 1999. In going beyond the film distribution business to the business of providing original content, the company used its Big Data capabilities to anticipate what subscribers might want. The company collects enormous volumes and varieties of data: 30 million ‘plays’ daily (what customers are watching); 4 million consumer ratings of its content per day; billions of hours of streamed video, device and device location data, social media data, and other digital information, according to one technology publication’s summary of a Netflix data scientist’s conference presentation in June 2012.4
Such data told Netflix there was a large market for a remake of the 1990 British Broadcasting Corporation miniseries called ’House of Cards’. Netflix’s chief content officer, Ted Sarandos, remarked at an investor conferencethat the company knows how many of its subscribers liked the star of the series (Kevin Spacey) as well as how many have rented the original BBC series. “You get a very addressable audience,” he told the conference participants. “Better than that, I know exactly who they are.”5 (One magazine said the company bid more than $100 million for the licensing rights to the BBC show for two years.) “We know what people watch on Netflix and we’re able, with a high degree of confidence, to understand how big a likely audience is for a given show based on people’s viewing habits,” one Netflix executive told a journalist.6 Netflix’s ability to market the production to its customer base in a well-targeted manner was, most likely, another consideration in licensing the series.
Clearly, R&D managers see the potential in using Big Data to identify new product opportunities.
Exhibit IV-14: Areas of Greatest Benefits for R&D
Q18-e: Degree of Potential Benefits Big Data Could Generate – Mean Summary R&D/ Product Development/Product Engineering
Research Big Data Challenges
R&D managers rated finding data scientists to be their biggest Big Data challenge. Next on the list was getting managers in other functions to share data and handing the three V’s of Big Data.
They perceived getting R&D managers to make decisions based on Big Data (rather than on gut) to be less of a challenge (though still moderate).
Exhibit IV-15: Greatest Big Data Challenges for R&D
Q-23: Greatest Challenges to GettingValue from Big Data: Mean Summary – R&D/Product Development/Product Engineering
« Previous Post
Manufacturing: Big Data Benefits and Challenges
Next Post »
Logistics: Big Data Benefits and Challenges
- From a P&G press release dated Feb. 7, 2013, ‘P&G Connect+Develop Launches New Open
Innovation Website’, http://news.pg.com/press-release/pg-corporate-announcements/pgconnectdevelop-
- P&G numbers cited in the McKinsey Global Institute study on Big Data, p. 69. http://www.
- P&G CEO Bob McDonald’s affinity for analytics was mentioned by Big Data guru Tom Davenport in his Wall Street Journal column, Feb. 13, 2013, “P&G Finds a ‘Goldmine’ in Analytics”. [↩]
- Derrick Harris, ‘Netflix analyzes a lot of data about your viewing habits’, GigaOM, June 14, 2012. http://gigaom.com/2012/06/14/netflix-analyzes-a-lot-of-data-about-your-viewing-habits/ [↩]
- From the Website Deadline, an article by David Lieberman, ‘Netflix Unfazed by Growing Competition from Amazon’, Sept. 13, 2012. www.deadline.com/2012/09/netflix-competition-amazon-ted-sarandos/#more-335796 [↩]
- From a Wired magazine story in November 2012: http://www.wired.com/gadgetlab/2012/11/netflix-data-gamble/ [↩]
- David Carr, ‘Giving Viewers What They Want’, The New York Times, Feb. 24, 2013. http://www.nytimes.com/2013/02/25/business/media/for-house-of-cards-using-big-data-to-guarantee-itspopularity.html?emc=eta1&_r=0&pagewanted=all [↩]