IoT Opportunity Identification

Once the overall strategic framework has been defined, the next question to be asked is: How can we break this all down into concrete opportunities? Say an OEM has agreed that they want to pursue the Connected Vehicle as a key strategy, and have allocated a set amount of resources to the strategy in general. As we saw in Part I, the Connected Vehicle is a very broad concept, with many different related opportunities, from connected horizon initiatives to community-based parking. And most likely, there are further promising opportunities in this area that have not even been identified yet. So how can an OEM that has identified the Connected Vehicle as a strategic area ensure that the best opportunities are identified and eventually funded?

IoT Opportunity Categories

The first thing that is helpful is to come to an agreement within the organization on what types of opportunities are to be looked for in the context of IoT. Questions like “Let`s see what kind of things we can connect up and maybe add some services to” is not going to be a helpful approach. Instead, it can be helpful to provide an overview of the most likely categories or opportunities that should be identified. For example, the table below differentiates between New Business and Internal Improvements on the top level. For each of these two areas, a number of general categories like Maintenance Improvements or Data Centric Business Models are defined, together with some typical KPIs and examples. Applying this example to your own business domain can be helpful in structuring the search for the best IoT opportunities.

IoT Business Opportunity Categories

IoT Opportunity Categories (Source: own diagram)

IoT Idea Generation Process

The next step is to understand the different options that are available for managing the idea generation process in a large company, and how to best apply these options to the generation of IoT business opportunities. There are usually two main ways to generate ideas in a large company: Either open idea generation (green field approach), or a more structured idea generation approach, where ideas evolve in a given context, such as how they relate to the company’s current value proposition, for example. The latter approach is usually organized as a top-down process. It typically involves an internal strategy team or external consulting firm that performs a thorough analysis of the market, including the partner eco-system, and the potential impact of the IoT on the company’s and even the industry’s value chain.

Open idea generation typically produces more disruptive ideas. Companies should therefore have multiple channels in place to gather these ideas; channels such as employees, customers, and even developers.

Example: Bosch Web 3.0 Platform

Bosch has implemented a web-based ideation platform called “Web 3.0 Platform,” that allows Bosch employees (or distinct communities) to input and vote for ideas. Quick Scan is an input and filter method (evaluating market, revenue and feasibility) that provides an initial rating of the idea when it is first input. The core team (employees of Bosch Corporate and business units) conducts dedicated workshops with subject matter experts to assess the ideas in more detail. Usually, the Osterwalder canvas is used to draft the business model for the selected ideas. Having passed another quality gate, projects are set up. For more details on this process, see “Business Model Development” and “Organizational Setup.”

So far, there are more than 600 ideas related to connected vehicles in the database (collected within a timeframe of 18 months), and the first concrete project launches, such as “360 degree parking”, for example. We asked Bosch representatives responsible for the Web 3.0 Platform about their experiences with the platform. Peter Busch, Senior Expert at Bosch Corporate Research spoke about the challenges facing project teams when the company’s business plan has already become obsolete by the time an idea has reached a certain quality gate. The “window of opportunity” for IoT ideas cannot be aligned with company business plans defined in earlier years. Since Internet-based product lifecycles (including development phase) are much shorter than those applicable for traditional products in the mobility area, this alignment issue becomes even more challenging. On the one hand, there is huge pressure to produce IoT ideas quickly, while on the other hand large companies especially have a very lengthy planning and development phase. He added that there are further IoT-specific aspects causing issues: The IoT opens up a transversal context, touching on several domains; something that contradicts the vertical focus of Bosch business units. “Since IoT ideas are often relating to multiple business units, it is difficult to get all right people on board,” explains Sven Kappel, Senior Expert for Embedded Software & Connected Services at Bosch. A key factor in the success of the project is to identify the business units’ common interests in order to align their involvement, in spite of their differing strategies.

Another issue identified by Sven relates to the fact that the organization does not always have the capacity to identify ideas and develop them in a timely manner. It therefore requires new ways of finding resources, such as open-source communities, or the Bosch Startup Platform (BOSP), the company´s own business incubator established in 2014.

Employee Incentives

Another important point to consider is the question of how you want to encourage continuous innovation among your employees, with the aim of improving the company’s processes and coming up with new solutions.

There are good reasons to involve employees in the innovation process: They might be closer to end-users and the customers they serve, accumulating more knowledge of their needs.  Furthermore, they usually represent multiple functions, ranks, and locations, reducing the risk of “silo mentality.”

There are established programs offering incentives to employees at large organizations. The Siemens 3i – Program (the 3 i’s standing for “Ideas, Impulses, and Initiatives,” the name given to a system for submitting suggestions established in 1997) is such an example: Employees can submit their ideas for new services or process improvements and receive monetary reward in case of success, such as, for example, a reward of ten percent of the annual cost savings. In Germany, more than 100,000 ideas are brought to life per year within the 3i-Program [SI1].

According to Peter Fürst, Managing Partner at five i`s innovation consulting GmbH, money is definitely not the only incentive and should be handled with care. Especially for new product and new business ideas, appreciation and visibility of ideas and accomplishments support motivation more sustainable.

Peter Fürst believes that it is not only the submitter of an idea that should benefit from an incentive- or appreciation-based system: As many ideas grow from the impetus of more than one person, the achievements of all these creators of an idea should be honored. Otherwise people will cease interacting about their ideas, fearing the other person might steal the idea and submit it first. Within such a climate, creativity is deadened rather than supported.

One possible way of addressing this could be to establish an “innovators club” that offers its members attractive benefits in terms of continuing education and social networking, such as giving them the opportunity to visit interesting trade fairs and conferences, for example.

Idea Refinement

Many good ideas do not look too pretty when first conceived. They need care to grow and to mature before they can really convince possible stakeholders. Fortunately, there is no shortage of ideation methodologies that offer support for idea refinement. At this point, we would like to highlight two approaches that we found helpful.

The first approach is the St. Gallen Business Model NavigatorTM [BM1]. The University of St. Gallen (USG) has done extensive research into different types of business models and the reasons why they are successful. Based on an analysis of more than 250 business models, USG has identified a set of repetitive business model patterns that can be applied to construct new business models. The USG now offers a set of cards detailing the different business model patterns that can be used to refine new business ideas, during regular workshops held by the university. This, in combination with the research USG has done on IoT-specific business models, is now a powerful tool for creating and refining IoT business models.

Another interesting tool for idea refinement is the Innovation Project Canvas developed by five i’s innovation management GmbH [IP1]. The Innovation Project Canvas is an extension of the original Osterwalder Business Model Canvas and has already been proven to be applicable for IoT concepts, such as in the field of smart home appliances, for example. The following figure provides an overview.

Innovation Project Canvas_ with AIA

Innovation Project Canvas with AIA (Source: five is innovation management, 2014)

What is particularly useful about the Innovation Project Canvas is that it works in three phases. In the first, the interdisciplinary team focuses on possible customer groups, and on developing a compelling value proposition. The team refines the idea until convinced that it can offer significant benefit to the target group(s). In the second phase, the team discusses possible solutions that can deliver the value proposition and business model. Again, the result of this phase is revised and further improved.
Finally, in the third phase, an agile development strategy is planned. The team identifies the most critical unknowns, or risks, and focuses on addressing these in the next phases of development.

The Innovation Project Canvas brings together all of the key members of a future project team in order to promote a common understanding of the project’s aims and content. The unified development of an attractive value proposition with a profitable business model quickly reveals the true potential of an idea, wins over enthused customers, and increases the commitment of the individual team members.

The output of the idea-refinement phase, the detailed idea sketch, can be used for presentations at the next quality gate level. After approval, it can be used to develop the business model.

Opportunity Qualification

At Bosch, the QuickScan method is used to qualify and select opportunities. Silke Vogel, Strategic Marketing Manager at Bosch Corporate, describes this method as follows: “The QuickScan method has been developed by the Web 3.0 core team members as means of quickly identifying promising business ideas leading to “the pot of gold.” The method focuses on three main criteria that are key in our view to creating success stories: market attractiveness, technological feasibility, and profitability. For all three main criteria, a specific set of sub-criteria have been identified using five-point scales and detailed descriptions. In this way, all core team members evaluate the business ideas bilaterally, based on a common understanding, making the final scores of each business idea comparable to one other.”