26 October 2020
Reading Time: 3 mins
26 October 2020
Reading Time: 3 mins
Any company that currently makes or operates a physical product needs to be thinking about IoT. There is no reason not to embrace it – IoT creates a more direct relationship to your customer, a better user experience, and hugely valuable data. If you don’t connect your product to create a differentiated offer, someone else will.
But recognising the opportunity is the easy bit – embracing it may need significant structural change. How can companies organise themselves to ride this wave of disruption and create differentiated disruptive products?
To be successful in embracing IoT, or any disruptive technology, companies should divide their business into four ‘Zones’ – an approach established by Geoffrey Moore in his book Zone to Win. Two of these Zones focus on innovation, and two on the core business. Each needs different leadership style, culture, financing and governance.
The Incubation Zone is where companies experiment with new technology, check it works, and explore where it can differentiate them. This asks: if we applied this technology, what can we do that we could not do before?
This zone should take a lean startup approach: try lots of small bets, test ideas quickly, develop minimum viable products, fail fast. Take promising products forward to small scale deployments, which explore how it works in the real world, capture user feedback, and iron out remaining wrinkles.
This zone needs a ‘Creative and Collaborative Culture’, with visionary leaders and agile teams. It should support free-thinking, thoughtful experimentation, calculated risks and learning from mistakes. It should combine tech enthusiasts with product managers to balance innovation with keeping a firm eye of eventual business value.
Once the product is shown to work, it should be handed over to the Transformation Zone, where it is scaled to a point where it creates revenue.
Experimentation is now over, the product has to work. This is your roll out of a million connected devices. There must be a singular focus on one promising offer, and it must have sufficient support and investment from the top.
This zone needs a ‘Compete Culture’, which focuses on moving fast and delivering results within tight timescales, with directive leaders keeping everyone on a clear path.
Only once the product is generating significant and sustainable revenue, should it move on. This will either be to the Performance Zone, where the core revenue-generating business happens; or the Productivity Zone, which supports the performance zone to ensure it is constantly running optimally.
A major reason companies fail on disruptive projects is to neglect the Transformation Zone. Many have great innovators who then hand over embryonic projects to the main business. But the main business is focussed on well understood, repeatable processes and is not in a position to take on a new unproven product which needs highly dedicated and specialised support. A project generating 1% revenue, will be an unwelcome distraction for the main business. It should remain as a transformation project until it a sizeable revenue generator.
This Zone to Win approach needs to be backed by a vision and buy-in from the top and a high-level commitment to use IoT to transform the business. The CEO needs to be particularly involved in the Transformation Zone – this is where the big change happens that can put a company on the IoT map, and makes a CEOs reputation.
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