You have an amazing new product, and sales are going well, very well indeed. Your device is well designed, robustly manufactured, skillfully assembled, and best of all, your customers love it. Sure you have competition, but they do not offer a product as good as your machine. So, you are home free!
Success is Elusive
Well, not exactly. The proverbial product pendulum perpetually swings back and forth between success and failure. One day your a hit, and the next day you are a failure. Success is elusive and it can vapourize in an instant. The average marketing lifespan of an IT app product today is less than 2 years and the average in service lifespan for a machinery product is about 5.1 years. With a classic hardware solution product, you see revenue just once, when you sell your product to the buyer.
So, what do you do? What is the best way to remain successful? How do you increase revenue opportunities and still maintain or reduce risks? How can you create a tighter working relationship with your customers?
The IoT Solution
Add IoT to your product. Connect your product to the world. Add cloud and artificial intelligence. That is how you stay ahead. You blend the worlds of hardware and software backed by all the best of the technology world and you have a new product. Your business model must be fluid and flexible. You must constantly be reinventing and changing the game before the competitors catch up and match or exceed your offerings. It is an iterative process.
You design your products for an IoT experience and not just for an IoT product.
What is an IoT experience? It is a product that offers user-centricity, meaning in an age when customers demand personalized and almost real-time service, designers at every level must account for more context. Keep in mind, designing for environmental context helps inform optimal design decisions. The location and lifestyle of your targeted user when using a product or service offers useful cues for feature, form, and interaction development. Sensitive dynamics tend to impact the nature of the brand interaction. Keeping the user’s context central to the design process also forces companies to recognize when they are building technology for technology’s sake, and consider where leveraging partners could extend the value and even create new revenue streams.
IoT has the potential to humanize products like never before. Brands must strive to bring genuine personality to product experiences by capitalizing on incorporating technology seamlessly into our lives and investing in humanizing products to unlock emotional connections.
Work or begin with what you have. Do not waste time reinventing the wheel. Look around when building your IoT product. What are the existing systems, services, or components you have already mastered that could give your project a boost?
When looking into using the power of the IoT to humanize your product, aim for a product or service that just fits into a user’s daily routine. Automation of a task they are already doing is an easier way to find a place in their lives. Working on an IoT product unlike anything customers already use is risky.
Users find functionality issues better than most testers out there. You do not want your customers digging up issues post-release, which could translate to hardware recalls. These recalls are a lot more costly to fix those than simple software updates.
The IoT Value Proposition
So, if you do blend in a hardware and software solution, why would you be motivated to do it at all? What is the value of this strategy?
- You will realize unique customer insights as to how your product is used, when it is used, why it is used, who uses it, and where it is used. This information is powerful input to the design process and permits the iterative updates to be a better fit the customer’s needs
- By do this action, you can add value to the customer and provide feedback to them. Often they are not aware how they use your product, so they can benefit from these insights too
- It changes your business model. You can realize revenue throughout the lifespan of the product and not just from the original one-time transactions. You gain an annuity revenue model and the financiers love this revenue spread out over time as it drive consistency and predictability. There are several variations on the annuity revenue model that include:
- Subscription model,
- Outcome based model,
- Asset sharing model,
- The “Razor Blade” model,
- Data Monetization Model,
- Pay per Usage Model,
- Offer a Service Model.
- After-sales support is a huge value add-on. Since you are connected to the product you can offer a services contract to keep the product operating at peak performance.
- Preventive maintenance is the key to an effective after-sales support offering. If you can use AI and analytics to predict the next failure and address deficiencies before they happen, you can minimize downtime and help your customers better manage service outages and lost revenue. Repairs can be scheduled and planned proactively instead of reactively. There is significant value to the customer with a preventive maintenance strategy.
- Diagnostics allow for a faster determination of where the problem is located and what actions need to be taken to remediate the issues. Intelligent diagnostics reduce downtime and enhance productivity and customer satisfaction.
- History logs provide empirical evidence and can be correlated to other logs and events to determine larger scale systemic issues in the end to end ecosystems. This evidence can lead to cause and effect analysis to better understand how, where, why, and when problems develop.
- Performance optimization allows users to shift away from a static model towards a dynamic model. A dynamic model is one that makes micro tweak adjustments throughout the process to optimize performance in real-time. These small adjustments can save costs and enhance product quality for your customers.
- Input into future design efforts can be harvested from the data flows from the product. By marrying the data flows from a large fleet of products you can gain insights on both the macro and micro levels. By better understanding the use of your products, you can apply this new knowledge into future designs to optimize for the these trends, patterns, and experiences.
- Cost reduction is a key ingredient to extending the lifespan of a product. With the data, information, and knowledge collected from the individual products and the overarching fleet of products, you can look for ways to take out costs and fit the products to the exact needs and performance levels of the users. Often, variations of a single product are spawned to create a family of products.
- Open Architecture and standards based design are paramount characteristics to any IoT product implementation. These characteristics allow for easier integration with other disparate products within the ecosystem, especially if they are from other vendors. This strategy also permits a lower cost IoT implementation as you can acquire technology and integrate it using known, published standards rather than invent it all from scratch on your own. If IoT is not your core business, then it is much smarter to acquire these resources and add them into your product
How do you approach IoT Integration?
So how do you approach this strategy? What do you do if you want to add IoT to your product to make it better?
Before you start, do an honest inventory of your own Capabilities Management. Do you have the right resources and budgets to execute properly? What is the best approach to acquiring these resources if they are not readily available? Partnering and outsourcing make a great deal of sense to augment your own capabilities.
Since IoT is likely a foreign idea to a classic manufacturer, a winning strategy is not to go it all alone. So, partnering and outsourcing from others who know how to succeed with IoT is always a smart idea. Buy, rent, or lease the IoT aspects and then incorporate them into your product. Go to world class partners who have integrated their IoT stack into other products before and have the practical experience to help you to win too.
There is no need to go for the gold in the first try. Take a crawl, walk, run, approach and develop your IoT solution in stages. You have time to refine the product and to optimize it. But, you must have embraced the right IoT solution from the outset for this iterative approach to be successful. For example, not all IoT solutions are the same. Some have no update capabilities over the network. So, any patches or updates must be done physically at the devices. This is a clumsy and expensive approach that is counter-intuitive to the who concept of adding a network connection to your product. So, to be agile, you want to be able to patch or update the firmware over the IoT wireless network.
The iterative approach also goes well for the initial implementation and not just for the ongoing enhancements to the product. Following a design model of that allows for – Prototypes, Customer Proof of Concept, Test and Evaluation, Initial Release, Updates, Version Releases, and Patches. This built-out model makes life easier, more compartmentalized and simpler.
Hardware is important, but focus on the software. Too often, the initial versions are heavily hardware based solutions. However, this can hurt you later when you want to update or release new versions of the product as hardware based model of IoT demand physical changes to the product and therefore visits to the field by technicians. These truck rolls are simply too expensive. By developing a software based approach, you can leverage the network attributes to make changes and this can be done conveniently and in a controlled, coordinated fashion with minimal intrusion and interruption to your customer’s business operations. And, obviously at far lower costs.
I like to embrace the Design Thinking workshop strategy to develop the initial ideas of how you can implement IoT into your products. You can solicit input from all stakeholders – Employees, Customers, Business Consultants, etc. These stakeholders know much better what the product show do and look liked compared to just having your own engineers design in isolation from the users and the application of your product. The closer you can align your solution to fit the needs of the users, the more success you will earn. And, remember, it is a iterative process. So, the product’s development is a journey and not a destination.
Since the process is a journey, you naturally need a roadmap as a part of your development and deployment strategy to provide the requisite Updates and Patch capabilities. Too often vendors try to remain hyper reactive to the customer’s demands and jump to make instant changes to the product in response to user requests. This is a subjective issue. If you have major issues with your solution, then sometimes corrections must be made instantly. But, these unplanned changes can be complex, disruptive, and costly. For minor updates and patches, it is much smarter to follow a plan with biannual or annual changes that are scheduled and predictable. These changes must be well tested in advance of any deployments and risk mitigation is essential to your success.
Be practical and functional. Do not over sell based upon the sex appeal and sizzle of the new IoT technology. Form is important, but function rules in adding IoT to your first products. Form comes in the second and third generation of products. Do not misunderstand, eventually you need to have form and function operating in balance and harmony. But, from the outset, it is okay to reduce the dependency on form for the sake of the core functionality. If your solution looks great, but lacks basic capabilities and business value to the end users, it will not gain the business traction that you desire. But, plan for the form attributes from the outset and embed them into the roadmap. I am not saying pay zero attention to form, just recommending that you place more initial development emphasis on functionality.
You can add IoT to your existing products to change the game and stay ahead of the competition. You can adapt your business model to earn revenues in a smoother and more banker friendly manner. You can secure the resources and capabilities that are necessary with partners and outsource approaches.
You can add IoT to your products and increase the form and functionality of your solutions to drive greater business value and deeper insights to benefit your customers and your own needs. IoT is a powerful and essential capability for every product.
Reach out if we can help you on your IoT journey.
Ashwini, A. (2017). How To Design An IoT Experience, Not An IoT Product? Medium. Retrieved on September 8, 2019 from, https://medium.com/swlh/how-to-design-an-iot-experience-not-an-iot-product-678638d5e8cc
Elizade, D. (2019). 7 IoT Business Models That Are Transforming Industries. Daniel Elizade.Com. Retrieved on September 9, 2019 from, https://danielelizalde.com/monetize-your-iot-product/
Taylor, B. (2015). The Average Lifespan of 7 Popular Tech Products. Chron, Hearst Newspapers, LLC. Retrieved on September 9, 2019 from, https://blog.chron.com/techblog/2015/12/the-average-lifespan-of-7-popular-tech-products/
About the Author:
Michael Martin has more than 35 years of experience in systems design for broadband networks, optical fibre, wireless and digital communications technologies.
He is a business and technology consultant. Over the past 15 years with IBM, he has worked in the GBS Global Center of Competency for Energy and Utilities and the GTS Global Center of Excellence for Energy and Utilities. He is a founding partner and President of MICAN Communications and before that was President of Comlink Systems Limited and Ensat Broadcast Services, Inc., both divisions of Cygnal Technologies Corporation (CYN: TSX).
Martin currently serves on the Board of Directors for TeraGo Inc (TGO: TSX) and previously served on the Board of Directors for Avante Logixx Inc. (XX: TSX.V).
He serves as a Member, SCC ISO-IEC JTC 1/SC-41 – Internet of Things and related technologies, ISO – International Organization for Standardization, and as a member of the NIST SP 500-325 Fog Computing Conceptual Model, National Institute of Standards and Technology.
He served on the Board of Governors of the University of Ontario Institute of Technology (UOIT) [now Ontario Tech University] and on the Board of Advisers of five different Colleges in Ontario. For 16 years he served on the Board of the Society of Motion Picture and Television Engineers (SMPTE), Toronto Section.
He holds three master’s degrees, in business (MBA), communication (MA), and education (MEd). As well, he has diplomas and certifications in business, computer programming, internetworking, project management, media, photography, and communication technology.