Deriving Business Value through the Internet of Things – “Strategy of Things”

Intro:

Here comes a new (the next) technology wave :  The Internet of Things (IoT). However, unlike many of the previous technology waves, where the focus was on automating business processes and moving to electronic media – the business value of pursuing the set of technologies that make up “IoT” may not be immediately apparent.  What’s more, there are many choices and paths one can take in this space, and its not at all clear which path makes the most sense.

IoT holds the promise of revenue gains through product improvements, cost savings via improved efficiencies and competitive advantage through the exploitation of advanced analytics.  It is therefore vital that one take an iterative and Proof-of-Concept centric approach to developing the strategy to explore, employ and maximize this new technology.

Its hard to imagine the hype getting any worse – yet it is hype that is well founded. The list of “disruptive” technologies that fall under the IoT umbrella is daunting: all sorts of wearables & embeddables, smart factories, smart infrastructure, smart home, smart offices, smart cities, autonomous vehicles – and the list goes on. The implementation of these technologies will fundamentally change the way we live and the way we work. There is no question that these technologies will impact your business.  The only question is when the change occurs and if your business will survive the change. In this context, one does not think about employing automation or decision support systems – one begins to plan for Decision Making systems. Decision Making systems that have boundless real-time information pools to draw from, flawless memories, and an ability to learn and continually improve. These systems will have the ability to take action based on their decisions in the physical and electronic worlds.

If you think this is all futuristic propaganda that won’t happen in your lifetime – just talk to some of the folks in the auto industry. Their entire world will be turned upside down in next 3-5 years.

So what is one to do? Clearly one needs to assess this new IoT buzz, and understand what it means to the business and the future of that business. Oh – and of course, one will need to put a strategy together. Based on the introduction, I would argue that one also needs to do this “quickly”. Most importantly, one needs to realize that this is an evolving technology wave. So it is imperative that one stays on top of the evolution and make adjustments to the Strategy as appropriate. But how best to go about making this happen?

I will spend the rest of this blog talking about one Design Thinking inspired approach that does this and why this approach is better than what I’ve seen used in most strategy efforts. This blog will introduce the process at a high level. I’ll post a separate blog for each of the major steps in some more detail. I will also talk about the philosophy that underpins the process.

Just for added clarity, let me use the following sketch to set the context for this process.

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In general, a company will have a Business Plan that, among other things, defines business goals and objectives. The company will then have one or more strategies on how to achieve those business goals and objectives. A set of tactics and associated plans will then be developed that strive to implement those strategies. Through the utilization of the tactics and the implementation of the plans, the realization of the business goals and objectives can be operationalized, with the associated business outcomes. Obviously, there is a certain amount of change that occurs at each of these stages, which is dependent on the type and maturity of the business.

I mention this context because the word strategy is one of the most overused words in the IT vocabulary.  Too often it is used to describe any activity that requires some upfront thought and planning.

When a new and potentially impactful technology emerges, a company will assess what changes need to me made to the above landscape. The business goals and objectives are often not impacted, but the strategy that aims to achieve those goals and objectives may very well need to change. For a situation such as IoT, there is a very high probability that the fundamental business plan will be impacted. Depending on the industry – IoT could change what you are selling and who you are selling to and certainly the value proposition that you are offering…

Once the organization feels that the time has come to update one of its strategies, they will often execute a process that resembles the one shown below.

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One is immediately hit with a few doses of reality here. First the process is clearly  “waterfall” in nature. Although individual tasks overlap to help give it some flexibility, each step is completed in a specific sequence and there is an expectation that “done means done”. One does not “re-open a can of worms” during the start of implementation step to revisit the business goals. The teams running these strategy efforts are very quick to note that the resulting strategy document (which is often what is produced) is a “living and breathing” thing. Of course it will change over time … Yet, although most admit upfront that the results of the Strategy effort will very likely change – from a process and planning perspective – it is most often a single event – develop a strategy. The updates to the strategy are allowed for in many plans – but they are really meant to make tweaks based on some tactical lessons learned along the implementation path.

Now, I have used this “traditional” process successfully many times – although the success was proportional to the level of understanding of the problem that we were solving. Developing a “strategy” to modernize a organization’s case management system does not represent the same understanding challenge as how best to employ Convolutional Neural Networks to reduce Warranty costs.

Clearly, the IoT technology wave represents both significant impacts to the business and significant ambiguity on the nature of these business impacts. When talking about IoT strategy, one needs to understand that the underlying business goals and objectives will almost certainly change, and that the nature of the change will not be well understood.

So, I would propose that you don’t go at this in the usual way – but, instead, consider the following approach.

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The more time that I have spent with this approach the more I like it. In fact, I prefer to use this as a general problem solving and strategy development approach (its not just for IoT challenges)  – as it produces results that are better quality and often in a shorter period of time than the traditional waterfall version.

Notice that implicit in the approach is an acknowledgement that one will need to go through the process more than one time – its iterative. By using the process, I am saying that I understand that the problem will take at least two passes to get right – but possibly more.

It is apparent that when planning this effort, one needs to allow for at least 2 iterations. It is also very clear that every iteration will revisit and quite probably change the problem statement and the fundamental business goal and objective definitions. Should we decide to space the iterations out – introduce a long time gap between iterations – we need to be prepared to allow for the basic goals of the engagement to change. I can tell you that most of the efforts I’ve observed and have been involved with – there was no allowance for this. Although lip service was given to the fact that “things may change as we go” – as soon as one tries to make meaningful changes to the fundamental problem statement – the “Scope” hammer is brought out. The third rail of IT projects is used by those responsible to keep things on track,

Yet – what use is it to keep things on track – if the destination is the wrong one?

Another point I’d like to highlight about the process – when done well it should force the team to answer the question – what can be done to simplify the solution. The time honored motto – the best solution is always the simplest one – is so often the first thing that falls by the wayside – especially when employing a new technology that the organization has no experience with. Too often – the focus of the team moves to maximizing the use of the new technology – and simplicity is often an early casualty of this mindset.

There are other key points that I would go through – but this posting is already way too long. I’ll post a set of smaller posts that talk about each of the major steps of the process – and I’ll spread the remaining comments among those posts.

In summary – for those unfamiliar with Design Think – I hope I’ve given you some reason to look into it. For those who live and breath design thinking  – I hope to have shown a decent application of some of its principals applied in a more pragmatic and “technical” way. Finally – for those new to IoT – I strongly urge you look past the superficial hype and finding where this new technology wave will be taking your business.

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