• Ozzie Paez

Competing in the Internet-of-Things


The Internet-of-Things, the environment emerging from billions of interconnected devices, has been growing quickly and is set to explode over the next two years. Interestingly, for most people and organizations, its emergence has been hidden in plain sight. It will not stay that way for long. The number of interconnected IoT sensors, devices, equipment and systems is estimated to reach between seventy-five and two-hundred BILLION by 2020. The implications for established businesses will be astonishing as innovative companies and startups architected around IoT aligned business models begin disrupting traditional markets. History suggests that many enterprises will be dethroned, acquired or go out of business.

Workers will not escape the IoT’s effects as many tasks will be automated and robotized. Jobs will be in flux as demands for new skills are offset by the demise of others. Consumers will also change, particularly in information sensitive practices like healthcare. The medical establishment is set to experience major disruptions in the years ahead as patients armed with detailed physiological data demand measurably better outcomes[1]. In the emerging IoT environment, complacency, lack of innovation and undisciplined digital leadership will doom many companies to irrelevance and bankruptcy.

Remaining competitive as the IoT takes hold will demand major upgrades in corporate strategy, management and leadership. The effects are already being felt. George Westerman and Andrew McAfee, of MIT’s Sloan School of Business, and their colleague, Didier Bonnet, analyzed the financial performance of hundreds of primarily non-tech companies over a period of three years. They captured the relative differences between those that effectively embraced and methodically leveraged digital technologies, and those that failed to keep pace:

“The companies that are succeeding–and they range across industries and sectors–we’re calling Digital Masters. And Digital Masters outperform their peers… [they] are 26% more profitable than their average industry competitors. They generate 9% more revenue with their existing physical capacity and drive more efficiency in their existing products and processes.[2]”

Columbia Business School professor, David L. Rogers, points out that new technologies by themselves are not the key to transforming the enterprise. He explains that “Digital transformation… is about strategy and new ways of thinking. Transforming for the digital age requires your business to upgrade its strategic mindset much more than its IT infrastructure.[3]”

Rogers’ insights align with my own experiences with companies that struggled and often failed during prior periods of technology driven disruptions, including the expansion of the business Internet during the late 1990’s Dot-Com revolution. It wasn’t lack of effort or corporate leaders’ unwillingness to change that undermined many established players. Most worked hard and spent millions on technology and pricy consulting services. What often derailed transformative efforts and put companies at risk was the inability of leaders to re-envision their markets, customers and themselves, and then continue adapting their business strategy in response to recurring waves of innovation. That’s a lesson that current business leaders should take to heart as they prepare for the disruptive effects of the emerging IoT revolution.

References

[1] Ozzie Paez, Upgrading health checkups with cutting edge tech, May 16, 2017, Ozzie Paez Research, https://ozpaez3.wixsite.com/ozziepaezresearch/single-post/2017/05/16/Upgrading-health-checkups-with-cutting-edge-tech---Part-1

[2] George Westerman, Didier Bonnet, Andrew McAfee, Leading Digital: Turning technology into business transformation, p. 4, 2014, Harvard Review Press.

[3] David L. Rogers, The Digital Transformation Playbook, preface, 2016, Columbia University Press.

#IoT #businessstrategy #businessmodel #leadership #technology