Industry analysts predict a huge market opportunity for Internet of Things (IoT) solutions. The only thing larger than the opportunity is the hype over IoT. Suddenly, everyone has an “innovative” IoT platform, “smart” connected devices, machine learning and “disruptive” pricing models.
But don’t be fooled by the hype. While IoT may be built with innovative technologies, the real innovation is what they allow organizations to become — intelligent, agile, and adaptive.
This article describes what true IoT innovation looks like, the five innovation paths, and some best practices to create IoT enabled innovation.
IoT enabled innovation doesn’t come out of a box
The real IoT innovation is not in the solution. It’s in the disruption of what they do, how they do it and who they do it for. IoT enabled innovation allows organizations to become intelligent, agile, and adaptive in creating new value for its customers. What if:
- Automobile companies stop selling cars but offer “transport as a service” instead?
- Insurance companies know exactly when your water heater is going to fail and schedules an appointment with a plumber before it fails?
- Cities provide services personalized for all of its residents?
Innovation happens when:
- Different IoT devices work together as one throughout the organization
- The technology platform collects, analyzes and shares information across the IoT ecosystem
- Machine learning integrates with data analysis for prediction, autonomous decision-making and optimization
- Managers integrate infrastructure, processes, policies and people with, not on top of, the enabling technology and IoT platform
- The customer engagement experience creates new business processes, policies and organization structures
What can you innovate with IoT?
There are five paths of innovation. The more of these paths that the innovation occurs on, the more disruptive it will be. Disruption occurs when innovative products and services are delivered innovatively and profitably through innovative business models.
1. Customer Experience
Customer experience innovation transforms the “customer journey”. It re-imagines how a customer uses a product or service and how sellers create value. It uses data collected to create new processes, business partnerships, organizations and technology to support the new journey. As an example, predictive maintenance transforms how technicians and operations managers perform services.
Product innovation transforms how a product provides value for the user. It focuses on functionality and not technology, although it may be enabled by new technology or a service.
This means more features to do new things, enhanced features to do current things better, or different form factors for new uses. For example, sensors on farm equipment measure soil moisture and allows the customer to plant and water better for improved crop yields.
Technical innovation is what most people think of when they hear the word “innovation”. It is often used in place of “product innovation” but they are not the same. Technical innovation transforms the enabling techniques and is not specific to a product or application. Examples could be augmented and virtual reality or machine learning.
Services innovation transforms how, what and when a service is rendered, and who it is being offered to. It enhances a current value, or creates an entirely new value that was not possible before. A product can also be transformed into a service (e.g. car rentals).
5. Business Model
A business model describes how an organization creates and delivers value to its customers. Business model innovation redefines the value and aligns it with how the customer wishes to receive and consume it. This enhances or creates new value to existing customers or to an entirely new customer base. IoT solutions offered as a service is one example.
Turning the Internet of Things into the Innovation of Things
IoT enables innovation, but is not innovation by itself. It creates change and value when it is integrated with other devices, processes and teams across the organization.
Start with problems
Identify the biggest pain points and gains (productivity, experience, cost reduction, speed, etc.). Re-imagine processes, policies, and teams. Start with a clean sheet and ask what you could do if you had the data. Then ask your teams, customers, suppliers, and channel partners.
Examine all five innovation paths
Innovation rarely occurs along a single path. For instance, Uber innovates around customer experience, service, technical, and business model. Whether you create or use innovation to solve complex problems, it’s good practice to review the various paths to realize its full potential.
Source innovation ideas
Create a process to source and vet ideas from employees, suppliers, channel partners, and customers, regardless of title or roles. Innovation comes from anyone, anywhere and anytime. Some companies, such as Procter & Gamble, use an open innovation strategy to solicit ideas from anyone outside the company.
Start small, learn and expand
Innovation doesn’t happen overnight. Start with small projects and add an IoT element to it. Create quick wins to gain experience, confidence, support, and knowledge of what is possible. Run small tests, measure and learn, learn, learn. Fail fast, learn fast, and try again.
Mine the data
The Innovation of Things is about data, data and more data. Insight comes from understanding the data to create innovation. Combine internal data with external data, as well as data from multiple sources. Assess your organization’s expertise, tools, data sources, and types. Then build a strategic plan to update your data capabilities.