Bulletproof Your IP Strategy through Business Analytics
An excellent and easy to understand example of this strategy is cited by Davenport and Harris in their book, Competing on Analytics.
The cited case study is Netflix. The very nature of Netflix’s business requires them to track customer rental habits and it should come as no surprise that they use that data to drive business decisions. One aspect of their business is distribution rights for DVDs.
A very basic decision in this part of their business is the appropriate volume of DVDs to purchase in order to distribute a given film. If they order too many copies of a film with very little interest among their customer base, the distribution obviously will not be profitable. If they do not order enough, they will not be able to meet the demand, fracturing their sales model, which is to say customers will stop subscribing. Netflix promises their customers they will receive their DVD order in about one business day and there is no contract; cancel at anytime.
Given their business model, it is critical that they use analytics to optimize their distribution decisions. In this example the company bought the rights to Favela Rising, …