Creating business value in the IoT age
While in the traditional manufacturing organisations, well-engineered products with competitive features were created after identifying consumer needs, pricing strategies would be designed to counter competition. In today’s environment, products can be connected with other products and consumer behaviour can be understood in real-time by tracking them. Business models need to evolve from just ‘manufacturing products’ to ‘manufacturing and renewing experiences’.
Let’s look at some of the fundamental shifts that businesses will need to make via IoT to create value through engaging customer experiences:
From ‘reactive’ to ‘predictive’ understanding Businesses will need to anticipate consumers’ emerging needs in a predictive manner, rather than reacting to them. This will require fundamental changes in the way consumer research is carried out today.
From ‘stand-alone products’ to ‘continuously refreshing products’ Products today are designed to prevent obsolescence, with businesses relying on capturing value from the variants based on the latest technology. Through IoT, businesses will need to make products that get continuously refreshed with the latest updates and able to synergise with any technology interface, old or new.
From ‘single-point data collection’ to ‘data convergence’ Unlike today’s data collection that happens at every point of purchase for future product or service requirements, businesses will need to utilise customer data that is continuously being fed into various platforms or other services, to create seamless experiences for future consumer needs.
From ‘the next big product’ to ‘the next big usage’ Businesses today aim to maximise profits with discreet product sales, by looking to create the ‘next big thing’ in the market. Through IoT, businesses can make recurring revenues from the same product by adding value-added services, subscriptions, updates, etc.
From ‘IP ownership’ to ‘personalisation’ Customers may get locked-in due to personalisation with the help of information gained over a period of time. This might bring in profitability for businesses, which can then leverage more products and services to their platform.
From ‘internal capabilities’ to ‘collaborative capabilities’ Businesses today focus on developing internal capabilities to create products and services. This allows them to create their own intellectual property (IP), and thus brand differentiation in the market. With IoT, this focus might change to establishing partnerships so that everyone in the connected ecosystem makes money in the long-term.
The good part with the IoT revolution is that businesses will not be caught unprepared with technology that makes their existing systems and products obsolete. IoT is meant to synergize with legacy technologies, as long as the focus is to create valuable experiences for consumers. At the same time, businesses need to shed their inhibitions with adoption of new technology. They need to capitalise on the opportunities to create customer and stakeholder value through technology, because the IoT revolution is not just around the corner, it has already begun!