A Strategist’s Guide to the Internet of Things


The Internet of Things -Estimates of potential economic impact by 2020 range from about US$2 trillion to more than $14 trillion.

The Internet of Things -Estimates of potential economic impact by 2020 range from about US$2 trillion to more than $14 trillion.

The digital interconnection of billions of devices is today’s most dynamic business opportunity.

As new and challenging as today’s IoT is, it offers a large and wide-open playing field. The companies that gain the right to win in this sphere will be those that understand just how disruptive the IoT will be, and that create a value proposition to take advantage of the opportunities (An excerpt from an article in Startegy+Business by Frank Burkitt).

Humanity has arrived at a critical threshold in the evolution of computing. By 2020, an estimated 50 billion devices around the globe will be connected to the Internet. Perhaps a third of them will be computers, smartphones, tablets, and TVs. The remaining two-thirds will be other kinds of “things”: sensors, actuators, and newly invented intelligent devices that monitor, control, analyze, and optimize our world.

This seemingly sudden trend has been decades in the making, but is just now hitting a tipping point. The arrival of the “Internet of Things” (IoT) represents a transformative shift for the economy, similar to the introduction of the PC itself. It incorporates other major technology industry trends such as cloud computing, data analytics, and mobile communications, but goes beyond them. Unlike earlier efforts to track and control large systems, such as radio-frequency identification (RFID), the Internet connection gives this shift almost limitless versatility. The IoT also opens a range of new business opportunities for a variety of players. These opportunities tend to fall into three broad strategic categories, each reflecting a different type of enterprise:

  • “Enablers” that develop and implement the underlying technology
  • “Engagers” that design, create, integrate, and deliver IoT services to customers
  • “Enhancers” that devise their own value-added services, on top of the services provided by Engagers, that are unique to the Internet of Things

How will your company build value in this new world? That will depend on the type of business you have today, the capabilities you can develop for tomorrow, and, most of all, your ability to understand the meaning of this new technology.

Evolution and Opportunity

At present, the Internet of Things remains a wide-open playing field for enterprises. It’s young, heterogeneous, and full of uncertainty. Estimates of potential economic impact by 2020 (as tracked by the Postscapes information service) range from about US$2 trillion to more than $14 trillion. Companies small and large, old and new, are scrambling to stake out their territory. But the greatest long-term business value of the Internet of Things will involve getting to know customers—both consumers and businesses—more intimately, and providing new digital services and experiences to delight them.

Rarely, if ever, has a single technological platform combined this much complexity, speed of development, global reach, and novelty among customers. Consider the range of interconnected systems, products, and services the IoT will enable, from simple monitoring of home temperature and security to the “quantified self” (the tracking of personal health, diet, and exercise metrics), to fully networked factories and hospitals, to automated cities that respond to the movements and interests of thousands of people at once.

Yet for all its power, the IoT is still at the early-adopter stage; in the words of innovation theorist Geoffrey Moore, it has yet to “cross the chasm” into the mainstream. It thus behooves business strategists now to figure out the role they want to play, the capabilities they will need to move forward, and the types of innovation they should pursue.

Technologies of the IoT

To deliver these products and services requires a combination of five major types of technological offerings.

  1. Endpoints
  2. Simple hubs
  3. Integrating hubs
  4. Network and cloud services
  5. Enhanced services

These five technological options, from endpoints to enhanced services, provide a menu of diverse opportunities for companies building IoT businesses. Some might start making stand-alone endpoints, and move up to producing hubs. Others might parlay their expertise at integrating hubs into providing network and cloud services—or vice versa.

With all these possibilities, companies run the risk of moving in too many directions at once—and thus being overwhelmed by more focused competitors with more distinctive IoT-related capabilities.

Your Company’s IoT Strategy

A wealth of opportunities exist for each of the three types of IoT strategy models: Enablers, Engagers, and Enhancers. Entering the fray, however, should not be undertaken lightly. The IoT market’s newness and heterogeneity will make it difficult to negotiate, even by those companies with the strongest capabilities and the clearest, most compelling value propositions.

Many challenging issues remain. Customer demands and expectations are still hard to discern, and the hardware and software standards for the IoT are still evolving. Billions of endpoints and intelligent devices must be integrated. The data they produce must be managed and analyzed. This is no small task, especially given increasing concerns about security and reliability.

If your company wants to stake a claim with the Internet of Things, you first need to develop a distinctive “way to play”—a clear value proposition that you can offer customers. This should be consistent with your enterprise’s overall capabilities system: the things you do best when you go to market, aligned with most or all of the products and services you sell.

With those elements in place, if you tread carefully and methodically, the time is right. To develop a strategy for the IoT, you could proceed by addressing, in order:

  1. Your own role in the IoT.Given your existing value proposition and capabilities, are you best suited to be an Enabler, Engager, or Enhancer?
  2. Industries and markets.Assess how your business environment is being (or could be) transformed by the IoT. If you are an Engager or Enhancer, what endpoints, hubs, and services are already being sold in your market? How are they expected to combine? What sense do you have of the demand for them? The more IoT activity that already exists in your industry, as it does in healthcare, automotive, manufacturing, and home-related sectors, the more rapidly you will have to move.
  3. Customer or business engagement.Because value in the IoT will be created through the transformation of customer experience, you need strong capabilities in experience design. Even if you are an Enabler, without direct customer contact, or if opportunities for engagement appear limited in your industry, the IoT could eventually transform your business. What capabilities do you already have in this area, and what will you need to develop?
  4. Connected products and services.Assess your current lineup of offerings to determine which can be enhanced through IoT connectivity, and what new ones could be developed expressly for the IoT. For new launches and innovations, take into account how connectivity will be established, how your company will analyze and use the resulting data, and which other companies you might collaborate with—all set against the proposed revenue model and income stream.
  5. An enhanced connection.Most Engagers will deploy an initial wave of basic connected devices and services. Then they will build further services by using analytics to gain insights from the wealth of new data that the IoT provides them. As these deployments unfold, Engagers will look for ways to increase value. This is where Enhancers will come in. What new business models might emerge? Would you want to develop any of them, or do you want to partner with other companies that can help serve this need?
  6. Your organization’s capabilities.Your company will need to distinguish itself in this space. What will you do that no other company does as well (or at all)? What improvements and investments will you need to make? Where will the necessary time, money, and attention come from; what activities will you need to divest or downplay so their resources can move here?

You may also need to develop some “table stakes” capabilities that all IoT companies must have. These include the ability to manage and analyze huge quantities of data, to integrate diverse portfolios of services, and to build business relationships with other IoT-related companies, some of which may have very different cultures. You probably already have innovation processes in place, but they may not be customer-centric enough. You may also need to foster more opportunities for people in your company to experiment and learn rapidly about what works and what doesn’t.

One virtue of the IoT is the degree to which companies lacking in technological expertise can lean on the devices and platforms that others build. Even so, the creation and delivery of IoT services will require you to design and prototype their new services, to manage them once implemented, and to analyze the resulting wealth of data.

To read the full Article: http://www.strategy-business.com/article/00294?pg=all

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About Georges Abi-Aad

CEO, electronic engineer with MBA in marketing. Multicultural; French citizen born in Lebanon working in the Middle East and fluent in French, English and Arabic. I have more than 30 years of proven experience in the Middle East with European know how. I am good in reorganization and in Global strategic management business. I am a dependable leader with an open approach in working with people, forging a strong team of professionals dedicated to the Company and its clientele. Perseverance is my key word. Married to Carole and having 2 children: Joy-Joelle and Antoine (Joyante!).
This entry was posted in Business Analysis, Global strategic Management, internet of things, Technology, Turnaround and tagged , , , , , . Bookmark the permalink.

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