Five Avoidable Complications Of Corporate IoT Innovation Programs5 January, 2017 / Articles
As the Internet of Things (IoT) moves from early hype to production deployments, organizations that have historically made physical things now face significant challenges. Not only do they need to connect their products to the internet, but also support them. Because of this, I’ve seen many IoT innovation efforts take longer than expected or flounder without clear direction.
I work with organizations that struggle with how to digitally transform their business. These companies learn — sometimes the hard way — that it’s one thing to talk idyllically about turning a product-centered business into a service-centered utopia, but quite another to actually make it a reality. It’s not so much that the ideas of integrating into the IoT are poor, but rather the surprise at how much cross-departmental coordination and how many organizational changes are required in order to succeed.
Based on experience working with companies on IoT innovation programs across industries such as smart home automation, smart buildings and smart industrial equipment, I’ve found five main symptoms of IoT programs that are destined for trouble. Knowing where your project is having problems is the first step towards getting them back on track.
Lack of Clarity Or Executive Sponsorship
If corporate leadership doesn’t understand the “why” behind their IoT initiatives, then the how doesn’t matter. A lack of clarity from the top on why the IoT is important to the strategic success of the company leads to an increased risk of program failure.
Successful executives create a clear, compelling and actionable vision for the future that explains core differentiators for the business. For example, an executive might write out: “By 2025, be the market leader in monetizing the value of supply-chain data for the animal feed additives market, as measured by obtaining #1 global market share position and greater than $10 billion in annual revenue, with 20% of that revenue coming directly from data subscription sales.” This type of vision statement is clear, specific, and also allows flexibility in how the goal is achieved.
Organizational Misalignment Around Corporate Objectives
Organizational structures — for example, a business unit, a cross-departmental steering committee, or a corporate innovation team– need to be aligned toward, and empowered to, execute the IoT vision of a company.
Leading organizations empower IoT leaders and teams with a clear executive mandate, corporate funding, and clear decision-making powers. For example, in one instance, I saw an IoT business unit created and led by a strong leader with both business and technical skills. He was given a significant corporate budget for investing in IoT programs and ideas across the company, and a mandate to ensure that the company defined, measured, and fulfilled its IoT vision. Having a clear business unit with a strong leader and a real budget allowed the company to create a path towards success with this initiative.
Low Cross-Departmental Participation
Digital transformation initiatives require participation from nearly every area of a company. IoT programs should try to effectively engage cross-departmental resources in a coordinated way.
From what I’ve seen, cross-departmental collaboration is easier when a common framework is put in place that facilitates a uniform approach to building connected products at scale. Just make sure your framework is flexible enough to integrate different types of devices, business models, user experiences and software.
For example, I’ve found that combining a technology framework that facilitates the flow of data from devices with a business framework for creating new business models can help accelerate and support cross-departmental collaboration instead of dividing it.
Culture That’s Slow To Adopt Organizational Changes
Although change is hard, corporate cultures that can’t adapt quickly to new market pressures, new technologies, and new ways of doing business are not well-equipped for effective digital transformation initiatives.
Getting the wheel of IoT innovation culture rolling requires a focus on early successes, quickly figuring out new processes and learning from market failures, and identifying and empowering IoT leaders within the company early on.
Not Understanding What The Market Wants
Without exposing an IoT project idea to the “tough love” of real-world objections or contrarian lines of questioning, it can’t be fully prepared for execution or designed for long-term success. Similarly, a lack of early and frequent external market feedback leads to circular thinking, which can hinder success.
I’ve seen successful enterprises initiate rapid IoT proof-of-feasibility projects that integrate a variety of technologies to validate technical feasibility, business model mechanics, user experience, and data integration. This has helped them quickly learn what they need to build in anticipation of what the market really wants.
No worthwhile business endeavor is easy. McKinsey & Company estimates that over 70% of all organizational change programs fail, which means you have a better chance playing craps in Las Vegas than you do successfully executing a digital transformation initiative. The difference is that the IoT may be one of the biggest technology movements of the next decade.
These symptoms of faltering IoT programs are warning signs to companies early in their IoT journey, as well as wake-up calls for those that have over-extended their organizational capabilities.
Companies that embrace the IoT as a strategic decision, become organizationally aligned around that vision, facilitate cross-functional collaboration, foster a culture that adapts quickly, and seek frequent market feedback are best suited to turn their ability to innovate into a competitive advantage.