There are many stories to show how the Internet of Things (IoT) accelerates innovation and permeates out daily lives. And of courses there are the ones of failure, long lead times, and exceeding budgets. The success stories unveil new customer value, improved services, and even new disruptive, business models. They talk about revenue and cost savings. About opening new markets and about reinvigorate others. The favorite stories of many are about unexpected newcomers to put incumbents to the risk of getting ‘Amazoned’.
More in general, I agree with Grey Heron’s Chris Kocher: “Now is the time to decide how to build and monetize a sustainable business around your technology, IP and to IoT innovations”.
Throughout human history, stories have been powerful tools to explore, to share and to build common understanding. Today, with all these pervasive new technologies, stories on how to explore their potential and reap their benefits may be instrumental to individual organizations get hold on their future.
Nothing new, everything different
IoT is build on commonplace objects exchanging information with each other and with computers. It makes objects respond to one another. IoT is not a newly developed system. In fact, most of it is existing technology. Microcontrollers, sensors (measuring a physical quantity and transform this in an analogue or digital signal processed by a computer), actuators (transforming electrical signals in movement, sound or light), communication protocols, data processing and storage. They are all have been around for decades.
What’s new are the extreme lower cost of all these components. The impact of Moore’s law on the exponential growth of processing power can be rephrased as “Put processing power to the waste” or – more bluntly – “Digitize or Die”. The exponential growth of network capacity and ubiquitous communication prompt to “Put bandwidth to the waste” or – to paraphrase the former – “Connect or Die”. And then there are these enormous streams of data and the technology to store and process these data in the cloud.
The cloud is a technology defining the 21st century. It transforms IT to a service-based industry with its ability to rent computing services rather then owning and maintain the physical infrastructure and cumbersome software packages. In the cloud hardware or software resources are consumed as a metered, pay-as-you-go service. By outsourcing infrastructure or applications to the cloud, you lower your total cost of ownership by making fixed costs variable.
The trick today is not to invent a new gadget or software app. Today it is all about ingenious ways to cut and paste all these components. Storytelling is a wonderful way to help to discover the meaning of things. A storyteller explains and connects with his audience on an emotional level. The stories talk about feelings and try to get the same feeling to the audience. And do-it-yourself has never been easier. Open up for a flow.
Disney’s ‘The Beauty and the Beast’ may be told to many. Boccaccio’s ‘Decameron’ should not be read to a kid. The location to tell a story, in other words, impacts the storyline. This holds for IoT.
If you are a large company, you want your story to discover the power to leverage your customer relations. Together with your customers, you generate insights into nascent needs and opportunities and test bed new offerings. If you are a start-up, you are fighting for your first customers. Then, a tight focus, the generation of feedback, rapid response and the creation of immediate traction appear to be key.
As an incumbent you may also want to leverage your installed customer base to partner with others to bring their offerings through your distribution channels. For a new entrant this make look the opposite. Cooperation with an incumbent creates opportunities to go to market effectively and to increase credibility.
Product companies with hardware devices may look for the ‘hardware premium’ and turn one-time sales into ongoing revenue streams. Service companies may add new value by integrating IoT devices and support them.
Pick your storyline
Stories touch your hart and focus on the key benefits you want to achieve. The driver in most IoT-stories is simple: reduce cost. Think: streamline operations, improve efficiency, shorten development cycles, reengineer operations, shorten supply chains or reduce inventory cost or the cost of customer acquisition.
Another set of stories focusses on the addition of revenue by selling new products, better satisfy customer needs, boost customer loyalty, reduce churn, enter new markets, create new business models or invent referrals.
- Adding connectivity to an existing product brings remote device management in a mobile app. It enables you to change a premium for your product. See how LIFX or Philips Hue make light build remote programmable, or how WeMo Switch enables Wi-Fi control over plugged-in devices. Train wheels, windmills, aircraft engines. Keep thinking.
- Bundling services creates a longer-term relationship with a customer after purchasing a product. NEST, the smart thermostat is a platform to offer a suite of management services. As does Nexia Home Intelligence.
- Harvesting data and enter the growing market for data. The many data collected by premium cars – in services like Mercedes Me, VW’s Car-Net, Audi Connect to stick to Germany - lead to security features, maintenance help and navigation support, but also generate a lot of data on driving behavior of the type insurance companies are fond of. In warehouses Rentokil’s pest control also generates a wealth of data on food safety.
- Living in an ecosystem means not only selling a product or a service, but also using a shared platform with other players in the ecosystem: hardware manufacturers, software developers, service providers and the like. A shared platform brings many benefits to its participants.
In a third set of stories fillets and re-engineers a value chain and brings new business models:
- SmartEquip displays a wealth of technical drawings of machines and engines. It is a format for real time communication between manufacturers, their dealers and with fleet owners. SmartEquip gives access to technical data for diagnoses, a quick identification of required parts and to support repairs. The manual process – looking up parts, key in work orders and bills – is over. A whole supply chain is reengineered, a new control center in place.
- Quick different, jet.com mobilizes the user. Smart pricing schemes reward buyers in their online shop when they buy items from the same distribution center. The reduction of costs of packaging and shipping for Jet.com is shared with the customer. I also like the way Jet.com reaps additional benefits during the check-out process with an opt out of the ability to return merchandize for free in exchange for a price reduction and the use of debit cards rather then credit cards for purchases.
- One of my favorites is Sensity. This company turns city lampposts into public hubs. A post lights up public space in a smart way. But it also measures, observes and communicates and may provide a whole city with a network for all kinds of smart technology. A new way of looking it city lightning and an eco-system to host many smart city initiatives.
Lean and structured thinking
With these kind of storylines comes a principled approach to new product development, Lean Start-up:
- Develop a minimal viable product (MVP) to begin to learn as quickly as possible,
- Eliminate uncertainty with tools to test your vision continuously. Put a process around the development of your product,
- Tuning the MVP: define actionable metrics to demonstrate cause and effect,
- Validated learning by running experiments,
- Mobilize the power of feedback – listen to the stories of your users.
- Work smarter not harder.
Working in a large institution. No sweat. The Internal Start-ups Cookbook tells about ways to develop new things to fit in the cooperation’s long-term vision and strategy and don’t come from its roadmap
Those who tell stories rule the world
In his plea to pertain to handicraft, the Dutch novelist Jamal Ouariachi urges the storyteller to hand facts and visualize thoughts, leaving conclusions, judgements and interpretation to the listener. But watch out: it is not simple to tell a good story. Experience shows it is hard work. You have to rework the script over and over again …. until it twinkles!
Pieter van Hoogstraten