The “Internet of Things” (IoT) is a hot topic, discussed and debated greatly over the past two years. Companies like General Electric, IBM, and even Google with its acquisition of Nest Labs have already rolled out strategies to capture large segments of the market.
Companies looking to get into the IoT business have to make sure their future strategy for dealing with smart, connected products is the right one, and the one that will bring the highest returns.
Nike, for example, recently announced that it is switching its strategy around smart, connected fitness devices. It will be exiting from the wearable hardware business to focus on fitness and athletic software/fitness apps in order to achieve greater future success, and to avoid hardware competition with tech giants like Samsung. “We are focusing more on the software side of the experience,” Nike CEO Mark Parker said to CNBC.
And Nike isn’t the only company focusing on the right IoT strategy. Fitness tech start-up Lark also changed its focus from hardware to fitness apps, and Lenovo is currently watching market developments before deciding which avenue to take into the IoT business.
Companies need to know where their competencies lie and when they are better advised to engage with partners to help further their strategic goals. According to management consultants Bain & Company, senior executives must have intense discussions when deciding on future strategies. Some questions they should consider before settling on a strategy are:
- Will the highest value be in hardware (advanced servers, new chips), software and services, or in data itself?
- What solutions will meet our customer needs and entice them to invest while also reducing costs, generating revenue, and lowering risk?
- What capabilities and assets do we need to develop and deliver these solutions? Who should we partner with, up or down the stack?
- Which standards should we back?
- What are the risks of not acting?
Once companies have solid answers to these questions and have decided on their strategy, they must then:
- Define and commit to investments. This means creating budget for the right technologies and employees with the right skills to identify, create, and execute IoT applications. It’s possible your IT infrastructure may need updating or you’ll have to invest more heavily in data analytics than in the past. A good first step would be to see what early adopters are doing, and learn about which applications create lasting value, and which tend to fail.
- Figure out what the privacy and security issues are, and manage them accordingly. Security issues are a big threat to smart, connected products. Businesses and governments must find a balance that will protect consumers from these threats, while also allowing room for advancement and innovation.
- Evolve your culture and business to adapt to a smart, connected world. The IoT will require new skills, employees with more diverse backgrounds, new channels to monetize fresh lines of business, and, most importantly, new business models. According to a report from Harbor Research, smart business models will extend beyond ideas about new products and services to the very way in which business is conducted. New business tools and methods will be needed for competitive advantage.
The world of IoT and smart, connected products is not something to be ignored and is not going away. It’s becoming clear that in order to capitalize on its benefits, organizations will have to ask some key questions, make critical decisions, and most importantly, be ready to transform.