The term “Smart Something” has been over used by a lot of corporations who want to sound trendy and showcase their capabilities to digitally transform their portfolio. Unfortunately, the The “Smart Something” does not respond to the challenges which companies need to face in taking advantage of digital technology, or IoT, as it’s commonly known.
I believe that the “Smart Something” (Smart Energy, Smart Industry, etc.) buzz words and trends have run their course.
The industry has already moved beyond this concept.
As Warren Buffet once said: “Only when the tide goes out do you discover who’s been swimming naked.”
The IoT is at its inflection point as I describe in ‘Digitize or Die‘ and corporations that market themselves as “IoT enablers” will now need to factually showcase their capabilities to deliver better Capex and/or Opex optimizations to their end customers.
Assessing the gap between the “Smart Something” marketing concepts and the reality
#1: Internal – Assess the digital denial level
A good way to assess if a corporation is “digital” and has successfully transformed itself and its portfolio is to listen not to its end users or customers but to its employees.
If you hear things like:
- We are too big to fail
- We have plenty of time
- We don’t need anyone
- This is just a passing fad
- We have been doing it this way for fifteen years
- We know our market, our customers, and our channels
- These technology trends don’t apply to our products
Then you can be convinced that this corporation is in Digital Denial and will face huge issues when the tide goes out. Unfortunately, it’s very common to attempt to convince and appease naive members that digital transformation trends such as the Internet of Things do not apply do their businesses. They prefer to believe that IoT is merely a buzz word or the newest fad. Watch out for these or other False IoT Beliefs.
#2: External – Assess the factual digital contribution
The way to assess if the “Smart Something” is just a digital rebranding or is a truly innovative game changer is to evaluate the difference between the IoT architectures’ contribution VS the contribution of its equivalent Analog architectures.
Digital contributions can be of various shapes such as:
- Financial: Capex, Opex
- Satisfaction: Customers, employees, partners and so forth
- Operations: reduction in lead time, evaluation of unhealthy stocks and so forth
“Smart Something” is transforming our industries’ business models
Vertical Business Models
Vertical business models, which postulate specialized devices targeted for specific environments, promise to change the way whole segments of the economy operate.
For example, one would think that an elevator has nothing to do with high tech and Internet of Things technologies. Connecting elevators and their components by itself brings no value, but unleashing the data that was inaccessible before opens new opportunities, new services, new business models, and more.
Connecting elevators could enable companies like Schindler Group, Kone, and Otis Elevator to have a more predictive approach on maintenance and therefore reduce unavailability time and raise end user satisfaction while at the same time increase their profitability by reducing curative maintenance interventions.
Horizontal Business Models
Horizontal business models, at the same time, strive to allow multiple vendors to use a common standardized technology stack. This allows these vendors to take advantage of cloud-based standards and equipment to simplify communications and control. This integrates devices of all kinds into a common structure, making it easier for users to operate and allowing manufacturers to focus on designing devices, software and services.
For example, tomorrow’s houses will be the nest of such horizontal business models, connecting all sorts of devices in a manner reminiscent of Lego™ bricks, enabling infinite variations and combinations to be created to suit specific needs. IoT will create the conditions that enable customization and personalization of the environment. Additionally, massive amounts of data about you, your environment, and your rituals will be created, stored, and analyzed. IoT will create the conditions that will see artificial intelligence relying on big data analytics becoming the next digital transformation.
If you are an analog company, you must get ready to take advantage of these evolutions and assess if those digital transformations will impact your business in one way or another. To begin the process, you need to understand why IoT is a unique opportunity to accelerate and leapfrog your competitors.
IoT Unicorns
Some of today’s analog players might be tomorrow’s unicorns if they succeed with their digital transformation.
“As we head into 2016, the IoT has gained mainstream awareness, yet organizations are still struggling with how to deal with the complexities of the vendor ecosystem in terms of developing and deploying connected products and services,” says Carrie MacGillivray, Vice President responsible for IDC’s Mobility and Internet of Things teams
Our manufacturing world and its ecosystem of partners, developers, and customers is undergoing a paradigm evolution. It’s a profound change which is already affecting markets once considered protected from any revolutionary technology shifts, such as housing and traveling. Airbnb, and Uber take over these industries as the super-unicorns, and car manufacturers such as Renault, Volkswagen, and Ford are getting attacked by Tesla, Google cars, and so forth.
The IoT will connect not only things with things, people with things, and people with people, but it will unleash an unprecedented flow of data. Owning the source of data, building value from it, and improving the business relevancy of your offers to the end user will be among the game changers. The game will be less about selling products than owning the relationship and the data. Tomorrow’s winners will be the ones that have managed to not only connect their customers, but have made sense of the consequential flow of data to the end user.
Digital transformation has been happening for more than twenty years; the IoT is one of many milestones of digitalization in our society and economy, but it is unique in that it will release an amount of data and information that was previously inaccessible. This will then create the conditions to allow the next digital transformation, which will include virtual reality, analytics, artificial intelligence, and deep knowledge.
In the coming years, some businesses will be able to adjust, change, and thrive in this new era. Others will battle to survive but will come out better for it in the end. Still more, perhaps the majority, will not recognize the change or will be unable to adjust. Within a few years, they might be struggling to survive after competitors will have managed to leverage these transformations to their benefit, and consequently, overtake and commoditize their markets.