How Smart Should Your Smart Solution Be?

Determine the right the amount of “smart” in your IoT product to exactly match your strategic intent.

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Children sitting in a classroom with a paper that has an

Before bringing a smart product to market, you should ask yourself, how smart does this product need to be? If your answer is, “As smart as possible,” then slow down. The better answer is, “The least amount of smart to meet our business goals.” My goal in this piece is to help you develop a great smart solution strategy.

Three Levels of “Smart”

There are three levels of “smart” for a connected product. The first level takes the product and adds local controls for simple commands such as “on/off” or “re-order.” A middle level enables two-way communication (and data) to unlock a suite of add-on services. Finally, the third level constitutes a product-service platform where network benefits accrue to all participants.

Consider the humble coffee maker. There are three levels to make it smart, smarter, and the smartest.

Levels of smart product
Image Credit: Peer Insight Ventures

The question isn’t how to move to the right; it’s how to find the sweet spot for your product. Not every device needs to be connected, and not every connected device needs to become a product-service platform.

Find the sweet spot for your product. Not every device needs to be connected, and not every connected device needs to become a product-service platform. Click To Tweet

The IoT Program for ClearPool

To illustrate the choices, imagine you are the IoT Program Leader for ClearPool, a manufacturer of pool chemicals. Your success depends upon finding an overlap between your customer’s unmet needs and your business goals. Let’s start with the latter. What is the key outcome for your company sponsor? Consider these possible answers:

Answer A: “Protect our core products from commodity competition.”

Answer B: “Create a new growth platform based on customer data.”

Answer A requires only a tiny bit of smart. Answer B might need the kitchen sink.

If you are working on the protect our core products vision, a Level 1 smart product architecture is sufficient. It might include:

  • A simple pool pH monitor
  • “Healthy range” alerts
  • A reorder button (similar to Amazon Dash)
  • Cost of Goods (COGS): $40 one-time, $0/month ongoing

Alternatively, let’s say your sponsors want to create a growth platform based on customer data. Now your architecture must shift towards Level 3. The elements might include:

  • 2-way pool data gateway
  • Dispensing cartridge system (hardware + chemicals)
  • Mobile app
  • Professional pool service relationships
  • Open APIs
  • Cost of Goods (COGS): $150 initial, $12/month ongoing

The business models in this second scenario are rich and diverse—and so is the product complexity and unit cost. Is this level of expense/risk necessary if you simply want to protect your core product from low-cost competition?

Taking a step back, we can see that both of these example IoT product architectures are viable, but only one meets ClearPool’s strategic intent. By using their business goals to determine how “smart” the IoT product needs to be, ClearPool has already doubled its chances of success. They developed a good smart solution strategy.

So, ignore the advice to “Go Big or Stay Home.” Instead, right-size the amount of “smart” in your IoT product to exactly match your desired outcome. Think through and hone your smart solution strategy at every product development milestone.