IoT Strategy

On a management level, the first question to be answered is “How seriously do we actually have to take this IoT hype?” Is this really the single most important disruptive force that will change our business in the coming years, is it one of many, or does it not matter at all? In a large, highly diversified company, the answer to this question may differ from business segment to business segment. Furthermore, the question may not come in the form of a question about IoT. It may come as a question like “How important will the Connected Vehicle be to me as an OEM, and when will it impact my business?” Or an industrial equipment company might ask “What is the strategic importance of connected services in the context of our overall Servitization strategy?” Some CEOs might actually hire a management consultancy firm to answer these questions, while others will decide this with their inner management circle based on experience and gut feeling.

What seems important is that the questions, and the answers to these questions, are explicitly articulated, and form a solid basis from which the management team can derive a vision, goals, and guiding principles.

This vision could include things like:

  • ACME Industries will transform itself from a pure product business into a market leading provider of connected industrial services
  • ACME Automotive will establish itself as the leading provider of an open Connected Vehicle application platform

This should be accompanied by a set of more concrete goals and business objectives, for example:

  • In the product areas of X, Y, and Z,  we will generate X% of annual revenue from connected services
  • In the product areas P, Q, and R, we will reduce maintenance costs by X% based on connected services

A set of key strategies and guidelines should support the following:

  • ACME Corp will establish an internal, IoT-focused, open innovation program in combination with a strategic value chain analysis to identify key opportunities
  • ACME Corp will earmark $X million in funding for the top 10 IoT opportunities
  • The split between internal and external projects and M&A focused activities should be roughly X% to Y%, subject to analysis of individual cases
  • In the area of XYZ, we should build an open partner ecosystem, while in the area of PQR we should aim to control the platform and only allow for selected partners, such as A, B, and C, for example

Senior management should also take on personal responsibility for a list of strategic tasks, for example:

  • The CEO will change the annual budget process to reflect  IoT priorities
  • The CEO will contact partners A, B, and C to initiate partnership discussions
  • The CFO will work with their M&A team to allocate X% of the M&A budget to the new IoT strategy