The Harvard Business Review article, How Smart, Connected Products Are Transforming Competition, identifies ten strategic choices manufacturers must make to capitalize on the Internet of Things.
In this ninth installment of a series of video interviews, the article’s co-author Jim Heppelmann takes a look at new business opportunities using monetized connected product data.
Should the company enter new businesses by monetizing its product data?
A lot of companies wonder if they should think about entering new businesses by monetizing product data by selling it to outside parties. The purpose of a firm’s value chain is to convert business inputs into business outputs. To the list of business inputs, we can now add data which is a resource that some business professionals have begun to refer to as the new oil. So data may lead to new services or even new businesses.
For example, data about product usage or process efficiencies could be anonymized across many customers and then offered to each as a service to allow them to benchmark their use of these products against a peer group of similar companies. Or data about a product’s components could be very valuable to sell back to the suppliers so that they understand how well their components are performing. Or data about driving conditions is interesting to insurance companies, but could also be valuable to cities or road repair crews.
Companies might find that the data they already collect is valuable in interesting, orthogonal ways to new business entities. They might also realize they could easily capture additional data that would be valuable to others.
So our recommendation is, first, to think through those orthogonal use cases, ways that data could be used that’s secondary to the primary reason why you collected it in the first place. And then, second, to find ways that you might think about monetizing that data. How might we license that data to other parties and who are those parties? Third, give some thought to the potential risks and threats to your company, to your partners, and to your customer relationship associated with supplying this data to other sources.
And then fourth, spend some time thinking about how to mitigate potential risks. For example, a lot of customers anonymize the data and remove the customer references so the data can be combined with other anonymous data sources and used for benchmarking purposes.
In their upcoming October 2015 Harvard Business Review article, How Smart, Connected Products Are Transforming Companies, co-authors PTC CEO, Jim Heppelmann, and Harvard Business School Professor, Michael Porter, will focus on the impact of smart, connected products on companies’ operations and organizational structure. Reserve your copy››
- Your IoT Plan: Which Product Capabilities Should You Pursue?
- Embed IoT Functionality in the Product or Cloud?
- Open or Closed System for Your IoT Strategy?
- Should You Develop or Outsource Your IoT Infrastructure?
- What IoT Product Data Should You Capture and Analyze?
- How to Manage and Share Connected Product Data
- IoT Choices: When to Disintermediate a Channel or Service Partner
- Should You Change Your Business Model with Connected Products?
- Creating New Value with Connected Products and Systems