A Strategist’s Guide to the Internet of Things—Part 2

The digital interconnection of billions of devices is today’s most dynamic business opportunity.
by Frank Burkitt

With all these possibilities (from Posting 1), companies run the risk of moving in too many directions at once—and thus being overwhelmed by more focused competitors with more distinctive IoT-related capabilities. Hence the importance of the three IoT strategic models—Enablers, Engagers, and Enhancers. Few companies can take on more than one of these ways of creating value. The Enablers will focus on the underlying technologies and services, from endpoints to network and cloud services. The Engagers will make use of hubs and network and cloud services to provide market-facing offerings. The Enhancers will focus on value-added enhanced services that extend and enrich customer engagement 

“Enablers” that develop and implement the underlying technology
Enablers: Building the Technology:Enablers are primarily technology-oriented companies, such as Cisco, Google, HP, IBM, and Intel. They build and maintain the critical IoT infrastructure that allows Engagers to create their own connected services. 

“Engagers” that design, create, integrate, and deliver IoT services to customers
Engagers: Connecting to Customers: These companies provide the direct link between the IoT and the market. They use the endpoint, hub, platform, and service offerings created by the Enablers to produce services for consumers and businesses. Though most of them did not begin as IoT companies, and many come from non-IT industries—appliance manufacturers, automakers, insurance companies, and retailers are prominent among them—they expect enormous opportunities as the IoT gains traction. 

“Enhancers” that devise their own value-added services, on top of the services provided by Engagers, that are unique to the Internet of Things
Enhancers: Creating New Value: Like the enhanced services that they often deliver, the Enhancers are just beginning to appear in the IoT ecosystem. They provide integrated services that reframe and repackage the products and services of the Engagers. They succeed by finding new ways of creating and extracting value from the data, relationships, and insights generated from IoT activity.

A Strategist’s Guide to the Internet of Things—Part 1
The digital interconnection of billions of devices is today’s most dynamic business opportunity.
by Frank Burkitt

http://www.strategy-business.com/article/00294

If you thought Internet of Things was not important to your company, then think again

Humanity has arrived at a critical threshold in the evolution of computing. By 2020, an estimated 50 billion devices around the globe will be connected to the Internet. Perhaps a third of them will be computers, smartphones, tablets, and TVs. The remaining two-thirds will be other kinds of “things”: sensors, actuators, and newly invented intelligent devices that monitor, control, analyze, and optimize our world…. 

,,,, This seemingly sudden trend has been decades in the making, but is just now hitting a tipping point. The arrival of the “Internet of Things” (IoT) represents a transformative shift for the economy, similar to the introduction of the PC itself. It incorporates other major technology industry trends such as cloud computing, data analytics, and mobile communications, but goes beyond them. Unlike earlier efforts to track and control large systems, such as radio-frequency identification (RFID), the Internet connection gives this shift almost limitless versatility.... 

…At present, the Internet of Things remains a wide-open playing field for enterprises. It’s young, heterogeneous, and full of uncertainty. Estimates of potential economic impact by 2020 (as tracked by the Postscapes information service) range from about US$2 trillion to more than $14 trillion. Companies small and large, old and new, are scrambling to stake out their territory. Expectations are high: One in every six businesses is planning to roll out an IoT-based product, and three-quarters of companies are exploring how to use the IoT to improve their internal operations and services. (See “Embedding the IoT in Your Business,” by Chris Curran.) Much early work is likely to focus on boosting efficiency and cutting costs, but the greatest long-term business value of the Internet of Things will involve getting to know customers—both consumers and businesses—more intimately, and providing new digital services and experiences to delight them. 

Rarely, if ever, has a single technological platform combined this much complexity, speed of development, global reach, and novelty among customers. Consider the range of interconnected systems, products, and services the IoT will enable, from simple monitoring of home temperature and security to the “quantified self” (the tracking of personal health, diet, and exercise metrics), to fully networked factories and hospitals, to automated cities that respond to the movements and interests of thousands of people at once…. 

….For these devices and many others, the greatest potential value of the IoT lies in that connection to the Internet, and to the many integrated services offered there:
To deliver these products and services requires a combination of five major types of technological offerings. As you progress up the technology “stack,” the devices become more complex and their connectivity increases. 

1. Endpoints are the single-function sensors and actuators that reach out and touch the world around them, monitoring for changes and providing feedback to adjust to those changes
2. Simple hubs are the devices that connect endpoints to broader networks. When integrated into products such as vehicle engines; washing machines; or home heating, venting, and air conditioning (HVAC) systems, the computing intelligence and storage embedded in a simple hub allows these products to adapt over time to the user’s behavior and to optimize for efficiency.
3. Integrating hubs that connect simple hubs and outside connections are relatively complex devices providing a diverse array of services that fit more or less seamlessly together. In May 2014, Apple introduced one of the first truly integrating hub offerings. Called the HomeKit, this platform is designed to bring together simple hubs from different vendors and present all of them in a single user interface on a smartphone or tablet
4. Network and cloud services provide the infrastructure of the Internet of Things. They can either be public (accessible to the population at large) or private (protected behind an organization’s firewall). These services deliver the seamless and transparent connection to the Internet that hubs require, along with the cloud computing power needed to collect, store, and analyze vast amounts of data from myriad endpoints.
5. Enhanced services is a nascent category, comprising the most technologically sophisticated components of the IoT. Enhanced services will make use of the information collected and analyzed by other platforms and services to deliver broad-based interactive functions. For example, today’s single-company telematics systems, like Progressive’s Snapshot system, are integrating hubs, connecting monitors on automobiles with software that links insurance rates to driver performance

Know Your Customers’ “Jobs to Be Done”
• Clayton M. Christensen
• Taddy Hall
• Karen Dillon
• David S. Duncan

We discussed this concept in our Org Growth class at Kellogg. It is a very powerful concept in creating new growth value propositions.

What a company need to home in on is the progress that the customer is trying to make in a given circumstance—what the customer hopes to accomplish. This is what we’ve come to call the job to be done. 

We all have many jobs to be done in our lives. Some are little (pass the time while waiting in line); some are big (find a more fulfilling career). Some surface unpredictably (dress for an out-of-town business meeting after the airline lost my suitcase); some regularly (pack a healthful lunch for my daughter to take to school). When we buy a product, we essentially “hire” it to help us do a job. If it does the job well, the next time we’re confronted with the same job, we tend to hire that product again. And if it does a crummy job, we “fire” it and look for an alternative. (We’re using the word “product” here as shorthand for any solution that companies can sell; of course, the full set of “candidates” we consider hiring can often go well beyond just offerings from companies.)… 

… Successful innovations help consumers to solve problems—to make the progress they need to, while addressing any anxieties or inertia that might be holding them back. But we need to be clear: “Job to be done” is not an all-purpose catchphrase. Jobs are complex and multifaceted; they require precise definition. Here are some principles to keep in mind:“Job” is shorthand for what an individual really seeks to accomplish in a given circumstance.But this goal usually involves more than just a straightforward task; consider the experience a person is trying to create. 

The circumstances are more important than customer characteristics, product attributes, new technologies, or trends 

Jobs are never simply about function—they have powerful social and emotional dimensions 

… A deep understanding of a job allows you to innovate without guessing what trade-offs your customers are willing to make. It’s a kind of job spec.
Of the more than 20,000 new products evaluated in Nielsen’s 2012–2016 Breakthrough Innovation report, only 92 had sales of more than $50 million in year one and sustained sales in year two, excluding close-in line extensions.  On the surface the list of hits might seem random—International Delight Iced Coffee, Hershey’s Reese’s Minis, and Tidy Cats LightWeight, to name just a few—but they have one thing in common. According to Nielsen, every one of them nailed a poorly performed and very specific job to be done. International Delight Iced Coffee let people enjoy in their homes the taste of coffeehouse iced drinks they’d come to love. And thanks to Tidy Cats LightWeight litter, millions of cat owners no longer had to struggle with getting heavy, bulky boxes off store shelves, into car trunks, and up the stairs into their homes… 

…. How did Hershey’s achieve a breakout success with what might seem to be just another version of the decades-old peanut butter cup? Its researchers began by exploring the circumstances in which Reese’s enthusiasts were “firing” the current product formats. They discovered an array of situations—driving the car, standing in a crowded subway, playing a video game—in which the original large format was too big and messy, while the smaller, individually wrapped cups were a hassle (opening them required two hands). In addition, the accumulation of the cups’ foil wrappers created a guilt-inducing tally of consumption: I had that many? When the company focused on the job that smaller versions of Reese’s were being hired to do, it created Reese’s Minis. They have no foil wrapping to leave a telltale trail, and they come in a resealable flat-bottom bag that a consumer can easily dip a single hand into. The results were astounding: $235 million in the first two years’ sales and the birth of a breakthrough category extension. 

https://hbr.org/2016/09/know-your-customers-jobs-to-be-done

Discussions on digital: How strategy is evolving—and staying the same—in the hypergrowth digital age

Strategy is evolving in unexpected ways, as Silicon Valley thought leaders discuss in McKinsey’s latest Discussions on Digital podcast.

This article was written in the context of a digital marketplace. Many of my brick & mortar clients feel digital market issues are not germane to them but I believe it is an excellent laboratory to study what the future will bring for all markets—faster and faster change

 Is a three-year strategy horizon a relic of a previous era? 

Jon Weinberg, head of strategy at Sephora: I think there’s a role for a three-year vision in any company at any phase, because you still need to have the North Star that you’re shooting for. But the old system, when strategy was an annual executive get-together, just doesn’t work anymore because things are changing so rapidly in the digital space over the course of that cycle. It has to be embedded throughout the year, offsite and otherwise, or through executive-team meetings on a periodic basis. You have to make sure you’re bringing strategic dialogue into those interactions on a monthly basis—at a minimum, quarterly—given how rapidly things can change 

Jacques Pommeraud, former SVP and general manager of cloud services at Salesforce: My view is that the role of strategist, first and foremost, is the mobilizer. People need to understand where the company is going and take autonomous decisions. The main value of a strategist is to understand the vision for three years and mobilize the organization around the vision and what people have to do to get there. Then management has to empower flexibility and reactivity to adapt to current events, essentially. 

Jacques Pommeraud: Yes, but at the same time the way to manage a company has changed a lot in the last couple of decades, from “top down, the leader knows it all, let’s execute,” to a model that’s more like a federation, where you expect empowered teams to make the right choices and follow in the general direction. So it’s even more important to have a strategy that allows that federation of little teams to do what they have to do and not refer up the chain every time 

Jon Weinberg: The analogy I would use, coming from retail, is that there are two real philosophies to the customer-service model. One is principles based, the other is rules based. The migration has been from rules based to principles. Once you know the framework, you can make decisions to reprioritize allocations at the lowest level, because you can’t have the C-Suite constantly reprioritizing every dollar 

Jacques Pommeraud: At Salesforce what matters first and foremost is what we call “customer trust.” Then it’s “customer success.” Once that’s clear, everybody can make the smart choices at their levels without having to go all the way to management. One of the exercises we use—actually a great management tool—is called V2MOM. It’s vision, values, methods, and metrics—that summarizes the management method. Twice a year, there’s a memo explaining the vision for the company. What are the values that matter, and what are the methods? For example, trust, customer success—how do we measure them? And that cascades all the way to every single employee. It’s in the system, so you can measure it in real time 

http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/discussions-on-digital-how-strategy-is-evolving-and-staying-the-same-in-the-hypergrowth-digital-age?cid=other-eml-alt-mip-mck-oth-1701