Ignite | IoT Strategy Execution

Overview

Many large companies find it extremely difficult to deal with disruptive paradigm shifts. This is not a new observation. In 1942, Joseph Schumpeter coined the seemingly paradoxical term “creative destruction” as a way to describe “the free market’s messy way of delivering progress” [EC1] (actually, it can be traced back to the works of Karl Marx, but let’s not go there…). Probably the most cited example of a company that was unable to deal with disruptive technologies is Kodak. Even though Kodak was one of the inventors of digital photography, the company failed to transform itself from a leader in film-based photography to the new, digital business models. Schumpeter’s gale seems like a perfect summary of the dilemma many large companies face – the inability to re-invent themselves from the inside, and the extremely fast pace at which start-up companies are creating new digital businesses on the green field.

While some people use the term “Kodak moment,” in our view there never was such a distinct, defining moment in the history of Kodak – the company’s decline took more than a decade and had multiple different causes. In the context of the IoT, every company has to ask itself how much of a potentially disruptive paradigm shift the IoT represents, and how long this shift will take in their respective vertical markets. These are exactly the issues that the Ignite | IoT Strategy Execution methodology aims to address: create a better understanding of what the transformative IoT roadmap should look like for an individual company, learn how a portfolio of IoT opportunities should be managed, and establish how individual IoT initiatives can be identified, approved, and executed.

Now, we don’t expect many CEOs to read this book and then directly apply the Ignite methodology to their IoT strategy. However, many managers will get ideas from this section that they should be able to apply to their own situation and maybe use them to influence top management. And possibly even more importantly, we have been asked by many people working on the project level how they can better sell their ideas, get resource commitments or generally ensure management buy-in for their IoT projects. In this kind of situation, it is not only important to understand how you can structure your own IoT business case, you will also need to look at how this business case is seen by management in the context of other business opportunities – and how you should develop your own business case in order to sell it successfully.

Most of what we discuss in this section will be more interesting for those in our “machine camp” who work for large industrial companies with complex product portfolios. However, people in our “Internet camp” working for the large incumbents in this space may also be very interested.

The figure below summarizes the key elements of the Ignite | IoT Strategy Execution framework, which is divided into six areas: IoT Strategy, IoT Opportunity Identification, IoT Opportunity Management, Initiation, IoT Center of Excellence, and IoT Platform.

Ignite | IoT Strategy Execution methodology

A company’s IoT Strategy needs to reflect the extent and speed at which they should shift towards the IoT: Should the company become a pioneer and attempt to gain rapid market share but at the risk of failure? Or should they become a follower that will only implement a new IoT solution if there is certainty that the customer will accept it and buy? Some companies consider the IoT as just one of many important paradigm shifts happening at the moment, and invest only limited resources into IoT adoption. Other companies see the IoT as the fundamental paradigm shift of the next decade and have made large investments in IoT programs alongside the establishment of far-reaching internal change management programs. The IoT strategy needs to provide vision, goals, and guiding principles. It should also provide a high-level description of how strategic alliances and partner ecosystems in IoT-related business areas should be developed. Finally, it needs to manage the portfolio of IoT opportunities and projects, as well as budget planning and management of the IoT roadmap.

IoT Opportunity Identification, the generation of innovation ideas for IoT solutions, can either happen as an open process, which draws on the innovation potential of employees, customers, and developers, or as part of a more structured approach, where ideas are derived from a given context, such as the company’s value chain, for example. Ideas that show the most promise need to be elaborated in more detail, using templates for idea refinement, for example.

Having made it through the first quality gate, the most promising ideas are then refined as part of the IoT Opportunity Management phase. A more detailed business model has to be prepared in order to assess feasibility and the business case. The following Impact & Risk Assessment phase ensures that all possible outcomes of the business model are given sufficient consideration.

Once an IoT opportunity has been approved, it can be moved into the Initiation stage. In this stage, management has to decide on the best way to set up the initiative; as a dedicated internal project, as a spin-off, or even as an M&A project, for example. For internal projects, these activities interface with the Ignite | IoT Solution Delivery methodology.

An IoT Center of Excellence (CoE) can help new projects gain momentum faster, by providing IoT consulting and change management support, for example. IoT maturity assessments can help an organization to better understand where it currently stands with respect to IoT adoption.

Finally, it can make sense for large organizations to provide a shared IoT platform that can be used by multiple projects to develop their solutions. This would usually include an IoT application platform, connectivity solutions, and technical and functional standards.

Again, we are not saying that every large organization that is serious about IoT has to develop the above elements to the full extent. In fact, some of reactions we got from people in the start-up world were along the lines of “Wow, you machine guys really feel better if you can look at structured flow-charts with boxes and arrows between them, right?” This might be a fair assessment from a start-up’s point of view. However, the importance of getting people in a large, multi-stakeholder organization to agree on a joint strategy cannot be underestimated. And being able to efficiently communicate this strategy is an important first step towards this goal.

Another caveat relates to the generic nature of the above “IoT Strategy.” Large companies usually already have established corporate strategy management and portfolio management processes, different types of CoEs, and shared IT platforms, etc. So in most cases it will be necessary to  look at these established structures and see how they will need to be adapted to reflect the different elements described in the Ignite | IoT Strategy Execution methodology. However, we believe there is value in describing them here from a generic, IoT-centric perspective, so that individual organizations can adapt them easily based on their own needs.