Publisher of IoT-Inc.com, Speaks About Using IoT to Win in the Outcome Economy
Bruce Sinclair counts as one of the true veterans of the Internet of Things (IoT). He traces his IoT beginnings to 2008, when he was CEO of a networking company that sold a smart home-enabling platform to internet service providers. Now publisher of the influential iot-inc.com and author of IoT Inc.: How Your Company Can Use the Internet of Things to Win in the Outcome Economy, Sinclair is frequently sought for consulting and speaking about IoT strategies.
Sinclair will share his views of the business of IoT at the Ayla Connect user conference, being held April 10 to 11, 2018, at the Omni Hotel San Francisco. At 9:00 am on Tuesday, April 10, Sinclair will talk about “Using IoT to Win in the Outcome Economy.” He’ll also conduct a product workshop from 12:45 pm to 3:00 pm on Wednesday, April 11, on “Building a Great Connected Product.”
We spoke to Sinclair about his upcoming Ayla Connect activities and his broader views on the IoT.
What do you plan to highlight in your Ayla Connect talk?
I’ll cover much of the same territory as I present in my book IoT Inc., which is to advocate for thinking about IoT from a slightly different perspective than what’s common today. Too many companies are still approaching IoT as technology and as a shiny new thing to play with, rather than as a business opportunity.
I’ll present some key lessons and tools to help ensure that people don’t get stuck in what the World Economic Forum calls ‘pilot purgatory’: the inability to transition from pilots to large-scale deployments. Pilot purgatory is similar to prototype purgatory, where a company gets budget for the engineering team to develop a prototype, but then there’s no budget or commitment to scale. Statistically, only about a quarter of prototypes scale successfully to become revenue-generating businesses.
What is the outcome economy, and what is its significance for IoT?
To quote the WEC again: “In the outcome economy phase, companies will shift from competing through selling products and services to competing on delivering measurable results important to the customer.”
My belief is that outcomes are IoT’s ‘killer app.’ Instead of focusing on IoT technology, companies evolve their business models and harness multiple IoT products from multiple companies to achieve specific business outcomes. Put another way, instead of using IoT to solve point problems, it’s focusing IoT on solving higher-level business challenges.
Why aren’t more IoT products successful today?
Cisco recently estimated that close to three-fourths of IoT projects fail. That’s because the incremental value they deliver doesn’t exceed the incremental cost of developing and launching the product. And the reason is that they’re not thinking about value first.
Ayla sees this issue all the time. It’s relatively easy to spin up an IoT network and put some shiny things on it, and even to use the data to find out useful things about the connected products. But making the transition to an IoT product that can scale and actually make money requires thinking about more than just the technology.
What’s one way that companies can shift their perspectives on IoT?
Imagine the difference of looking at ‘IoT’ as ‘IT’ versus using IoT to its full potential. That comes back to outcomes—creating value with IoT by designing solutions that meet higher-level business outcomes. IoT technology should be seen as just the means to an end, with the end being an outcome that the company wants to achieve.
It sounds like you’re advocating for the ownership of IoT projects to expand beyond companies’ technology teams. Is that an accurate assumption?
Yes, absolutely. Right now, the tendency is to treat IoT as a technology stack, like a networking stack. That tendency is understandable if you think of ‘IoT’ as an internet-based endeavor.
In reality, companies need to shift the way they see IoT by 180 degrees, and it needs to involve everyone at the company. For example:
- The business people who are building the business need to factor IoT considerations into their business models, P&L, product strategy and management, pricing, positioning, and marketing.
- Customer-facing teams—sales, customer success, support, consultants, and all the rest—must weave IoT concerns into everything they do.
- Senior engineers have to understand the technology beyond how they understand it today, which means thinking about the business implications at every level of connected-product design and development.
What are some of the technology factors of IoT that need greater attention?
Data science is of utmost importance to IoT. It’s really where the technology starts. Data generated by connected products becomes information that ultimately is what delivers the value. Think of IoT as a data gathering and translation machine. In this world, data science is king.
Another concept that’s vital is the digital twin: a digital replica, or virtual representation, of a physical thing. Digital twinning is considered part of what is known as the fourth industrial revolution.
Lots of the people leading the IoT charge today are networking or hardware engineers. But look at the trinity of value for IoT:
As you can see, that trinity of value doesn’t include any hardware or sensors. The data science component is the most important for IoT, and it’s where there’s the biggest talent gap.
Are there specific markets or industries where this approach makes the most sense?
The great thing is that viewing IoT from the perspective of outcomes is applicable to any market or industry.
I’ll be giving examples that include a dryer manufacturer, Tesla, and smart agriculture, but the approach works equally well for communications service providers, for instance.
No matter what the market, the key to IoT success in the outcome economy is to start by defining the business outcomes that you want your IoT projects to achieve.