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Will Your Organization Die at the Connected Chasm?

Since the introduction of mainframe computing in the 1950s, progressive waves of technological innovation have shaped — and reshaped — the landscape in every industry.  Yet the changes precipitated by advances in mobile, internet, and PC technology will pale in comparison to today’s “connected tech” wave.

Definition

Internet of Things refers to the interconnection of physical objects (“things”) which use internet connectivity, sensors, actuators, or other embedded electronics to send and receive information.

Ride the IoT Wave, or Get Crushed By It

For one thing, the scale of this wave is different; tsunami might be a better analogy. There are estimated to be over 11 billion devices connected to the internet today compared to 6 billion just two years ago. Gartner predicts 20 billion connected devices by 2020, as the pace of adoption accelerates.
Source: Gartner (January 2017)
At the same time, S&P 500 corporate turnover (a proxy for corporate longevity) is increasing according to Credit Suisse reports. The need to innovate has never been more urgent or more critical to survival as connected technology drives creative destruction across industries. Those without a strategy to ride the IoT wave will be crushed by it.

Look Before You Leap

Before strategy, spend time on vision; if you use the wrong lens the results can be devastating.

Take Kodak as an example of a company that failed to navigate the previous waves of technological change. At its height the company owned 80% of the market for its core business (film) and even invented the technology (digital cameras) that led to its demise. Kodak did not fail to realize the forces of disruption or fail to invest in innovation. It failed to ask the right questions. Rather than use digital technology to promote sharing of “Kodak moments”, the company instead focused on encouraging consumers to print digital photos in an effort to protect its film-based business model.
Though the company survived it’s 2012 bankruptcy filing, it is a shadow of its former self, a victim of incrementalism. Compare this protectionist strategy with Lego, a company which began as a wooden toy business over 80 years ago. Instead of asking how it could protect its core business during a difficult period in the early 2000s, it asked a much different question: What if plastics were banned in five years? Focusing on a radically different vision for its future gave Lego broad latitude to think “beyond product” (and beyond retail) to pursue a wide variety of revenue sources including e-commerce, film production, digital platforms for children, and robotics. This strategy led to double-digit growth for much of the last decade, and Lego is now (as of 2017) the world’s largest and most profitable toy manufacturer, as well as the world’s.
Related

In Crossing the Chasm, Geoffrey A. Moore describes the chasm as the gap between early adopters and the early majority in the technology adoption lifecycle.

Crossing the Connected Chasm

It takes more than vision to succeed, of course. Companies that want to capture their share of the $14 trillion that is projected to be added to the global economy by 2030 must first cross the “connected chasm”. And that requires a mindset shift. Companies must move beyond a traditional “revenue per unit sold” mentality to understand that data generated by a connected product or system of connected products may be more valuable than the product itself. Without this understanding, companies produce limited results and don’t build traction towards a vision. They get stuck at the chasm.

Getting in the right mindset is about looking holistically at the transformational opportunities connected devices represent. Opportunities to get real time intelligence about your supply chain, your products, your sales process, even your customers themselves. Once you’ve taken the time to understand the full potential of IoT and the new ways of business enabled by the technology, your first project should take you towards that vision.

Taking the Right First Steps

If you have the right vision and the right mindset, don’t worry if the connection between the first project and the vision is not immediately obvious to an outsider.

Take SpaceX as an example. The company designs, manufactures and launches advanced rockets and spacecraft with a goal of enabling people to live on other planets. With that vision set, they evaluate smaller projects against that goal. While the media is talking about a Tesla getting launched into space on the Falcon Heavy rocket, SpaceX is thinking about how a rocket capable of carrying a large payload can be used to ship supplies over long distances (like to Mars.) While Chicago hires The Boring Company to build a high speed train to O’Hare International Airport, Elon Musk learns how to construct a large network of tunnels so colonists can live underground (on another planet.)

Companies seeking revenue growth and larger markets die if they can’t “cross the chasm.”
Source: SpaceX

Whatever your vision, this is no longer the time to weigh options and analyze. The pace of change and IoT adoption is accelerating. This is the time to set your vision, get in the right mindset, and take the right first step.

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