Business leaders are today aware of the potential of the Internet of Things (IoT) to fundamentally change product and service offerings, smart connected products, systems and production facilities, is that the way forward? However, two essential questions remain to be answered and that is – how and when? Decision makers are therefore right to regard IoT as an opportunity but also a threat. So what is the right IoT strategy for a medium-sized and product centric business? In this article I am sharing a few of my personal views on how to address IoT from a strategic perspective.
Wait and see
The most common strategy is wait and see. This involves taking a step back and then letting competitors and their customers make the first moves and mistakes. It is not necessarily a bad strategy. The obvious risk is that you react too late and that your competitors gain market share. In the worst case even manage to fundamentally change the market also for your existing products and services.
Strategic IoT projects
The second strategy is what I would call strategic projects. This type of strategy is typically driven by visionary leaders that decide to invest in a set of strategic projects, aimed at launching a “digitized” offer. The big advantage of this strategy is that no matter how successful you are in actually selling or making any money out of the projects, it will help to position your company and leadership team as innovative and forward-looking.
The disadvantage of strategic projects is that it is difficult to identify the right project on the first attempt. In addition, corporate management teams are typically very skilled at selecting projects based on profitability and risk. This means that radically new ideas, with high risk and very uncertain commercial potential will automatically be sorted out in the decision making process. Investments tend to lean towards projects that many can agree on the “most obvious project”.
Experimental innovation IoT strategy
The past few months I have met with a number of department managers with quite radical ideas related to IoT use cases. Many of these managers express that they feel unsure if their idea is within the scope of their mandate since IoT is driven as a strategic project on a corporate level.
I am increasingly convinced that many companies could achieve success with the third type of strategy the experimental innovation strategy. This strategy relies on decentralization. Instead of getting involved in selecting strategic projects, the role of the senior management team is to enable and ensure that their organization and different departments are actively pursuing IoT projects within their domains of expertise. By embarking on this kind of strategy, a company gains the ability to test many ideas at the same time. This ability to systematically evaluate demand for many different products and services is very valuable at a time where even the near future is difficult to predict.
IoT is very different compared to what for example “lean” meant to manufacturing organizations.
There is no “off the shelf” roadmap with cost, benefits, features and concepts. Instead, IoT concerns many aspects of the product, services, sales, the development process and logistics. An experimental innovation strategy for IoT would give companies the ability to systematically evaluate multiple concepts at the same time instead of focusing on one or a few centrally managed projects. This in turn will improve the chances of becoming a winner in the race for IoT innovations.
At PDSVision, we are passionate about IoT and are ready to help you with your strategy or in the implementation of your projects. I hope to see you soon!