d | Lack of a detailed vision & roadmap – no feasible implementation plan!
A well-defined strategy consists of those ‘killer’ use cases that enrich the existing product portfolio with additional digital services that solve customers’ pain points. Many companies are good at identifying use cases for their customers – they know them and their sector best. There are lots of good ideas how to support customers value chains even further (nonetheless often they lack real customer centricity and close collaboration, see section e). The problem we experienced therefore is less the what but rather the how: How are the services prioritized, developed, brought to the market, continuously improved.
e | No acceptance in the market – customer centricity is missing!
Another issue we often experience is a lack of acceptance of the developed services in the market. This has various reasons. First, the services are fully developed within the company without interacting with the end users and their requirements. Second, most sales organizations are not suited to distribute digital services due to lacking capabilities and incentives. Third, the business model and underlying monetization concept is not well-established nor validated with end customers. Especially monetization of services should be clarified upfront to save the investments of digital services that are not suited for the market or users. Important questions to answer include: What services are customers willing to pay for? How much are they willing to pay for a service? In what form are they willing to pay for? How do we integrate new digital services to our existing portfolio and sales organization?
f | Wrong expectations from management (final products instead of pilots that are continuously improved)
We probably do not need to state here how different the development of IoT products is compared to that of purely physical products. However, this difference is also shown by the results that can be realized. IoT products rely heavily on scale effects. This does not only apply to costs but also to the quality of products and services. The more devices are connected, the better the experience for customers and seller. This also closely relates to the aspect mentioned before that companies tend to try creating a final platform in the very beginning already instead of allowing it to develop and improve continuously. When first implementing an IoT strategy as a hardware provider, it is important that top management is aware that the new services will probably not be of final quality at initial introduction. Instead, a series of software updates will ensure to improve the services over time putting into practice all the insight won from the data collected by the (pilot) IoT products. In fact, this possibility of upgrading the product after it has already been sold is one of the most valuable characteristics of IoT products. Managing expectations of the board accordingly may help drastically to meet them and hence, to successfully implement a strategy.
In the past five articles, we summarized the aspects we consider as most critical for a successful introduction of digital services. Next, we would like to conclude the theoretical explanations given with real-world success stories. Find out how we managed to overcome the outlined issues together with some of our clients in the last part of the blog series!
Check the article published in Linkedin!
- Thomas Steigerwald, Manager Smart Products & New Business Models – Check Thomas LinkedIn profile
- Leonardo Serra, Senior Consultant Smart Products & New Business Models – Check Leonardo’s LinkedIn profile
- Josefin Stiel, Consultant Smart Products & New Business Models – Check Josefin’s LinkedIn profile