Creating and Capturing Value with the Internet of Things (IoT): Define Your Strategy
The Internet of Things (IoT) promises to make manufacturing companies smarter, but organizations who are just getting started on the smart factory and products journey often do so with some trepidation. In a panel discussion at MAPI’s 2017 Executive Summit, a small group of CEOs and presidents met to discuss strategies for creating and capturing value from IoT. The panel, facilitated by Blue Canyon Partners, featured executives with experience from firms including Emerson, Zebra Technologies, Johnson Controls, and Komatsu. This blog post is the first in a three-part series outlining the key takeaways and lessons learned from the session. It will also explore what the panelists in hindsight would have done differently on their IoT journey.
Embrace Digitization to Transform Your Business
IoT is the foundation of the global industrial transformation. It promises better production productivity, a hyper-connected manufacturing ecosystem, deeper insights into what customers want, new revenue streams and more reliable products. However, when using IoT to enhance your business there’s clearly no-one-size-fits-all approach. The key to success with IoT is to embrace digitization where you think it will drive the most innovation. Whether the IoT objective is internal or external, start by systematically understanding the goal, clearly outlining the capabilities needed for success, and developing a solution that supports your long-term objectives. As one panelist explained, “we wanted to create savings across our operations and while it was not possible to increase the speed of the shipments [from China], we could increase the number of shipments from our various Chinese-located businesses to manage the load more effectively. To do this, we needed to collect information from disparate systems, analyze millions of transactions, and normalize the information into a common language so it could be understood.”
Beginning with the End in Mind
There is no better way to set your company up for success with IoT than to start with the end in mind. A clear vision of the long-term goal for your company’s IoT strategy will help you establish short-term priorities and develop a set of reasonable expectations. The pursuit of the next big performance enabler or competitive differentiator can tempt any executive to explore new technologies as a way to keep up with the Joneses in their industry and beyond. In the face of all these new technologies, it is important to define the business reason for developing IoT capabilities. Otherwise, it is easy to get lost in data overload, spend too much time in blind alleys, and lose sight of the business outcome you expect your IoT investments will deliver. As one panelist commented, “The key question is… what are you trying to do with your business? If you just do IoT, you will have something, but it won’t go anywhere. You need to have a ‘why’ for taking on the initiative.”
Lessons Learned Often Come at a Price
When hindsight is 20/20, cautionary tales are abound. Here are some of the things panelists wish they had done differently when setting their IoT strategies:
- Recognize when you are throwing good money at old and outdated platforms.
- Define a problem that needs solving and establish what data can solve it, instead of collecting data in search of a problem.
- Clarify the IoT strategy to efficiently collect data that will deliver near-term results.
- Understand what customers want and what they are willing to pay for.
- Understand market dynamics for new technologies to set prices (and avoid giving it away for free).
- Challenge the organization to always search for actionable decisions from data analysis.
- Monitor for disruptive threats – other companies can close the gap on your market position through new business models.
The next blog in this series will explore challenges panelists encountered accelerating IoT including cybersecurity, talent, and organizational challenges.