Going from Gimmick to Greatness: The Mindset Required for Internet of Things Success
As the Internet of Things transitions from hype to reality, product companies will need to be expansive in their response to its disruptive force. It won’t be enough to add a Bluetooth chip to current products. As Michael Porter pointed out in his seminal piece about smart, connected products, this revolution will force product companies to ask the most fundamental of questions, “What business am I really in?” The answers will be profound (example: Ford is a mobility company, not a car company) and will have broad reaching implications for how product companies organize and compete.
If this seems daunting, it should. But that doesn’t mean that you immediately need the master plan for the next 20 years. It isn’t possible to know every move right now. You will, however, need to think differently if you expect your decisions to keep you on a path towards IoT success. Three key shifts in mindset are the most critical. Let these guide your decision making and your chances of greatness in a smart, connected world will increase significantly.
Mindset Shift 1 – Innovation: From Service to Start-up
In the typical product company, innovation is thought of as a service or support function to the existing business units. Its job is to help them improve their products or processes. But in the Internet of Things age—in which your industry may be undergoing fundamental transformation—the existing business units may not be the right ones anymore. The job of the innovation function becomes the creation of new businesses. These new businesses must leverage the assets of the existing ones (brand, infrastructure, distribution), but will also be fundamentally different. The innovation function will need to be “separate but connected”: unencumbered from today’s norms, but connected enough to tap today’s assets.
Mindset Shift 2 – Differentiation and Design: From Category-led to Customer-centric
The business schools and management consultancies (I’ve been at both) teach us that competitive strategy is category-led. Your decisions should be primarily guided by the competitive dynamics within your industry, as defined by what you make today. In a smart, connected product world, this “McKinsey” model of thinking is dead. If we don’t yet know what the industries will be or who the competitors are, how can we use them as guide posts for our own strategies? In the new world, there is only one guiding light: people. The needs, desires, values, behaviors and motivations of the people you aim to serve should be your focus. The teams you set up to take you through the Internet of Things transition need to be human-centric and design-led.
Mindset Shift 3 – Digital: From Communications to Commerce
Digital isn’t just a way to reach your customers anymore. In the smart, connected product world, digital will be the core of your business model. It will give you the power to architect more meaningful experiences and offerings for your customers and to monetize them in entirely new ways. The innovation teams and new businesses that you set up, must have Digital DNA, seeing new technologies not just as new ways to communicate with customers, but as fundamentally new capabilities for serving them and creating value.
The Internet of Things will be highly disruptive. It isn’t enough to treat smart, connected products as the next feature or product of today’s business. To achieve greatness in this new world you’ll have to think and behave differently. Adopt these mindsets and you’ll be putting yourself on the right track.
If you’d like to read more about how set up your Internet of Things efforts for success, please download our white paper on creating truly meaningful IoT offerings.