The IoT – high ambitions, slow conversion: What’s going wrong? – Part 2

When constant strategy changes endanger the overall success.

As discussed in the first part of this series of articles, many IoT initiatives fail because of the dilemma between short-term revenue expectations while it is strategically unclear how to realize these. But the probably most common and at the same time likely most dangerous reaction remains the “Agile IoT” reaction or as it should better be called “Moving Target” reaction.

The following article tries to address why this reaction could be the most dangerous and insidious form of reaction in IoT and why many companies may not even realize that they are jeopardizing their success in IoT or even believe that they are on the right track – usually under the “safe” cloak of agility.

The harsh reality in many German companies – Due to various challenges, e.g. lack of management decisions, undefined market strategies and therefore unfathomed customer requirements, there is no common direction for IoT initiatives. In every project and often even in every Sprint Planning (development planning) there is a new discussion about what is actually the most important in the application and what are the requirements of the potential customers.

Constant change of direction (‘Moving Target’ reaction)

Moving Target’ behaviour leads to above-average development times, as no clear vision and market requirements have been defined. Often the development team is left to decide how to combine 2-3 completely different business models in one ‘platform’.
It is left up to them, for example, whether they should first focus on the development for credit card payments, because customers may want to pay flexibly in the long term, or whether they create a particularly good development environment so that potential customers and partners can develop applications on the platform themselves.

Worst case – When agility delays development

If you put development teams in the unsolvable situation of the development of an ‘egg-laying wool sow‘ (German saying for: “all-in-one tool”), you are virtually inviting the competition to pass by, because development projects no longer take a few months, but can easily drag on for several years. And this despite, and possibly even because of agile working methods that allow for repeated course corrections.

Vision as a guiding star for innovation and development activities

How can companies protect themselves against this?

No matter what industry and maturity level – one of the keys to a sustainable IoT strategy and implementation is the definition of a long-term vision and ambition and not to be guided by fear and reactions to megatrends and sometimes rather not to take the easiest and most obvious path.

The only way to decide whether you have set up your IoT vision for the long term and how your IoT services differ from those of your competitors is to validate them yourself.

Use the intentionally exaggerated general reactions in this series of articles (Part 1 see here) as a reality check of your ambitions and motives:

  • Do you fully exploit the potential of IoT for you (internal efficiencies + external service potential)?
    • Which internal efficiencies through IoT have you not yet tapped?
    • Do you know the added value that IoT can create for your customers? Which IoT solutions are your customers willing to pay for?
  • What are the problems of your customers that can be solved with IoT? What can your company contribute/what do you want to be for your customers (in the future)?
    • Do you have realistic ambitions?
    • Do you have the resources & skills to realize your vision?
  • Are you investing in scalable solutions?
    • Have you defined in which markets you want to invest and in which not and why? (Is the value of your solution greater than your costs?)
    • How open is your IoT strategy? Are you ready to work in the ecosystem?
    • Which partnerships could you promote?

Common vision enables planning

Just as many companies want to play in too many markets at once, they also want to be too many things for their customers at the same time.

Once you have defined your IoT strategy in a market-driven way  (including target markets, customers and product range and, most importantly, which ones are NOT), you have created the basis for solid planning that allows clear communication of milestones, ambitions and progress.

Making success measurable

In order to solve the dilemma described at the beginning and to present individual projects as steps of a larger goal – the defined IoT vision – one important step is to make success measurable. Do your IoT solutions support Usage Analytics? or can you already transparently evaluate indirect transformational KPIs (such as the number of sales projects where service components were sold or pull through from other products)?

Linking IoT strategy to corporate strategy

Once defined, a solid strategy allows the definition of core competencies. In which activities do you differentiate yourself? What are core competencies that you should develop yourself? And in which areas can and should you trust partners? If it is part of your corporate strategy to differentiate yourself through premium service quality, for example, then it is definitely worth considering setting up your own service operation team. Where against it from a cost and efficiency point of view it is usually more reasonable for smaller companies to fall back on an external partner, because an own 24/7 operation team needs at least 4-9 FTE.

Long-term implementation – recruiting, change management & further training

Since almost all strategic responses to the opportunities in IoT are largely new territory for industrial companies, new skills, clear change management and training programs for existing teams are needed for everyone. A clear strategy and planning enables a clear definition of the required skills and thematic focus topics to train existing teams and enables a clear communication line to implement the change. Do you already have a clear view on the “softer” factors for the successful implementation of your IoT strategy?

Natalie ist eine der weltweiten Leads im Aufbau der Serviceabteilung für IoT & digitale Services für Danfoss Cooling. Sie treibt in ihrer Funktion, als Leiterin des Produktmanagement Digitale Services, die IoT-Markt- und Produktstrategie voran, baut globale Partnerschaften auf und gestaltet die Go-To-Market Strategien. Zuvor leitete Natalie für Gartner Consulting Top-Management-Engagements bei globalen Fortune-500-Unternehmen rund um KI und IoT.

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