What it takes to get an edge in the Internet of Things

#News(IoTStack) [ via IoTForIndiaGroup ]

Internet of Things (IoT) technologies have evolved rapidly in recent years and continue to change how we interact with our surroundings. For companies, IoT brings new ways to monitor and manage objects in the physical world, while massive new streams of data offer better avenues for decision making (often mediated by machines). The steady fall in prices of sensors and communications technologies, combined with a parallel rise in understanding of how they can be applied, have raised the strategic importance of IoT. As we have shown elsewhere, this can produce immense value in settings ranging from retail and healthcare to manufacturing and technology.

Despite the promise, we continue to see substantial differences in how well companies apply IoT in their businesses. Targeting IoT applications correctly and managing them effectively is far from easy, leaving many companies stuck and unable to move beyond pilots. To better understand what differentiates successful initiatives from struggling ones, we surveyed IoT executives at 300 companies—those that have moved beyond experiments and have scaled up IoT use in their businesses.1 We asked them about the practices that directly support their IoT strategy, as well as other factors that may influence it, and sorted leaders from laggards based on their self-reported economic impact from IoT.2 We found that while a number of IoT “habits” play a role in successes, three are particularly relevant for C-level executives who may be considering heavier investment in IoT or searching for reasons their programs have failed to gain traction.

Habit 1: Begin with what you already do, make, or sell
There’s no single path to IoT success. Some companies focus on connecting existing products to make them more attractive and useful to customers. Others exploit opportunities to achieve operational improvements that increase efficiency and lower costs. Still others push more boldly, using connectivity to create entirely new products or remake business models (even moving into separate IoT businesses). Our survey found that companies that achieved scale in IoT did so by pursuing a variety of strategies—and all with at least some degree of success. However, when we looked more closely at the gains, we found that the most successful companies often played to their strengths—rather than betting on unfamiliar markets or new products (Exhibit 1). These IoT leaders, the group getting the most economic benefit from IoT, were nearly three times more likely to add IoT connectivity to existing products they sell than the laggards were. Conversely, laggards—those in the bottom quintile of economic returns—were significantly more likely to focus on developing new IoT products or services.

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