Everyone in the Smart Systems and Services arena seems to be stuck these days. Stuck in a proof of concept; stuck trying to get leadership to invest; stuck trying to get past the “platform” to create real customer value creation; stuck trying to figure out how to wire together these over complicated multi-vendor solutions – stuck, stuck, stuck!
For every gain we see in the IoT arena we see, there seems to be five more obstacles and misunderstood opportunities. On the technology supply side, platforms, standards consortia and infrastructure alone will not auto-convert into customer solutions. For the adopters, often equipment and machine manufacturers, trying to address these new emergent opportunities with traditional stage-gated processes and clueless IT organizations under siege will not move the ball down the field.
Perhaps, we need to be thinking about all this differently?
In chemistry, a catalyst is an agent that speeds the chemical reaction that produces a desired compound. Similarly, in business, a catalytic strategy is one that hastens the arrival of a desired end result. In business, those results involve a “value compound,” a unique combination of technological and business elements which, when offered to customers, result in accelerated market development, value network advantage, or advantageous market structure.
Of course, simply “rowing harder” may hasten the arrival of this state somewhat. But in business as in chemistry, catalysis is in essence the process of sneaking around a barrier that others are struggling to climb, and thereby arriving at the destination much more quickly. In other words, it is following an entirely new path. The catalyst itself may be the person, company or other entity whose introduction into the business situation creates the shortcut to an advantageous structuring of one’s competitive arena.
Sometimes a catalytic strategist succeeds by being the first to correctly identify clearly defined customer needs and developing the value compounds that will attract the most desirable segments of those customers. In other situations, clearly defined customer needs cannot lead the way. In either case, the key to catalytic strategy is to create a unique business system, which puts one a leap ahead of others in shaping and attacking a market. A strategy is only as good as the system built to execute it.
Flexibility, innovation, and the ability to move quickly are essential elements of catalytic strategy. But from what we are observing in the IoT and Smart Systems and Services arena, the velocity of change in the marketplace and the number of variables in play exceed many managers’ ability to make confident and informed decisions. At too many companies, management’s natural response to this environment is to try to slow the world down so they can understand and control it. Companies do this by attempting to lock in their customers, signing binding and inflexible agreements with suppliers and partners, approaching new markets through traditional means, and acquiring emerging competitors simply to roll them up or remove them as market threats. These actions, while seemingly logical, in fact often run contrary to effective strategy in the evolving, ever more inter-connected world.
THIS IS ALL ABOUT DOING THINGS DIFFERENTLY
In our continued work with industry leaders who are pioneering new Smart Systems and Services and who have been able to drive sustainable growth and innovation over the long term, five major differences have emerged:
Designing New Experiences & Systems: By looking at the customer experience through the user’s eyes and through the creativity of multiple parallel participants, players can gain a deeper appreciation of the viability of their offering. Domain knowledge provides a rich context in which to address new opportunities, and it also minimizes the time investment to get new business development teams moving forward.
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Organizing Clever Combinations of Smart Systems Technology: Companies can deliberately anticipate sustaining technologies; innovation that creates new (and unexpected) opportunities can be systematically developed by leveraging cross-industry perspective to solve problems in radically new ways.
Rapid Experimentation & Business Systems Innovation: Success will depend upon understanding and choosing new or modified business models and acting quickly. Continuous experimentation is a must as new opportunities will often fail and re-form as learning grows.
Extending Skills Through Relationships, Ecosystems and “Strange Bedfellows”: Seemingly superior offerings can often fail because there is little understanding of how to participate or to incentivize to participate at all. Inviting users’, customers’ & partners’ participation facilitates an acute understanding of the customer experience and the potential business system to support the solution. New solutions will increasingly be comprised of coalitions of self-motivated participants that pursue a common goal, not mere subcontractors tied to “command and control” schemes.
Aligning The “Business Architecture” With The “Technology Architecture”: For the first time in the evolution of networked businesses, these two “architectures” must be viewed in close proximity. The two thrusts need to be mutually supportive without inhibiting one or the other. However, trying to coordinate and leverage the respective roles of technology architecture and business architecture often creates contention. We see the continuously evolving relationship between these two dimensions as fertile ground for innovation. . They need to be interwoven and mutually supportive. In fact, we believe success in either increasingly goes to the company that effectively utilizes the combined potential of both.
Global expansion; re-engineering; lean practices; mergers and acquisitions. For most companies, these strategies for growth and value creation have reached the point of diminishing returns. Smart Systems and Services will increasingly have less managerial hierarchy, command and control decision-making or proprietary ownership of ideas. Diverse collaborative networks will be self-organized by people who are motivated to explore and develop ideas they care deeply about. Business innovation will extend beyond ideas about new products and services to the very manner in which business is conducted.
We believe the truly successful companies in Smart Systems and the IoT will accelerate the development of this market and use the resulting change and complexity to their advantage. Their unique and innovative business systems will work to give them great advantage, even if competitors imitate the system. Catalytic strategies don’t just hasten market development, but also help structure markets and competitive environments to give distinct advantages to the business innovator who moves first.