Are the most successful companies just better at using data to develop products that beat the competition? Probably.
In a 2013 report, Booz & Company found companies that actively use digital tools during product development were 77% more likely to say they outpace the competition than companies that don’t. While we’ll want more data to prove out this relationship, a few things are clear.
First, most companies get it. That is, they understand the potential power of using what Booz calls “digital enablers” to improve their product development processes. From customer immersion labs to product usage analytics, smart product managers and executives are investing in tools that provide an empirical basis for making key product decisions. According to a survey of execs at over 350 companies, Booz says companies on average spend 8.1% of their R&D budget on digital enablers.
Second, let’s not get carried away… Just because companies understand the potential of data and tooling to deliver better results doesn’t necessarily mean success is a sure bet. As the report’s authors note, “usage of digital tools does not necessarily correlate with the tools’ effectiveness.” From Wizeline’s perspective, an effective product insights tool must save time, cut waste, reduce opportunity cost, and/or increase your market success rate. The last thing anyone wants is another tool that sucks up time and drives crappy results.
Finally, and most important, the Booz report hints at that emerging correlation between usage of digital enablers and higher profitability. As noted above, survey respondents whose companies make “significant use” of digital tools were 77% more likely to say they outperform the market than were those who report “low or moderate” usage.
In terms of companies that effectively use data to inform their products, Amazon, Netflix, IBM and General Electric come immediately to mind. But clearly there are scores of companies working to make better products with data. The only question is, are they focused on the right data and using the best analytics tools?