Smart Services and Internet of Things Business Model Innovation

It’s interesting to compare consumer focused smart connected business models to industrial B2B models.   The industrial players are moving so slowly to evolve their business model designs they risk implementing solution concepts developed in the late 1990’s by about 2020.  Why is this?

Apple, Google, Amazon and others present an interesting case for how B2B companies should be thinking about designing and developing smart services business models.   Players like Apple and Google have developed a business design mode that pulls together technologies from multiple domains and packages that solution in a way that wins buyer acceptance. Add to this the momentum and creativity these players are creating within their communities of users and developers — they are all driving entirely new forms of collaboration, content and peer product development.

The traditional notion of M2M applications has largely grown up in a B2B context — equipment manufacturers developing remote services and support automation tied closely to their equipment service contracts.  These models are focused almost exclusively on customer support and automation — not on new smart services value beyond support.  As these two classes of business models inch closer to each other in the marketplace it is increasingly evident that the consumer Smart Business models provide many lessons for the “cloistered” equipment manufacturers in B2B arenas.

In the B2B arena, most manufacturers of large ticket capex equipment all raced out of the gate with new connected remote services automation and have been stuck in their originating business model ever since.  They could not see beyond the impacts of service delivery efficiency and productivity to the business benefits of large-scale collaboration.

In both our research as well as our consulting work focused on designing new business models, we have observed many new and creative value added services and business design innovation opportunities which, for the most part, often appear to “aggressive” or “risky” for the typical industrial B2B players.

Download Our Perspective On New Business Model Innovation Processes

We are presently finishing a research and analysis report focused on new business model innovation opportunities for product OEMs.  This research work will be presented at the LiveWorx innovation conference in Boston June 17 sponsored by ThingWorx and PTC.

The research underscores the fact that there are nearly infinite opportunities for manufacturers to develop innovative connected product business models. Some highlights from this research will include:

  • Business Model Transformation – selling results, outcomes or performance – not equipment;
  • New Value-Added Services – providing peer benchmarking, targeted personalization services, predictive systems optimization based on analytics and modeling;
  • Product Design and Engineering Insights – collecting machine operating history across an entire generation of machines to determine priorities for future designs;
  • Sales, Fulfillment and Supply Chain Services – developing a better understanding of installed base characteristics and behaviors for predictive modeling of demand for channel partners and ecosystem participants;
  • Ecosystem Orchestration – developing brokerage services for multiple, parallel vendors for orchestration of services around machines and systems;
  • New User Experience Design – designing more effective machines and/or systems based on a more intimate understanding machine behaviors and how users interact with the system; and,
  • Installed Base Support Services – helping customers maintain installed systems and equipment on a collective or systemic basis through careful management of configurations, installed products contracts management and life cycle management.

To create and capture value, companies will need to recognize the new opportunities for innovation driven by collaboration and participation—from customers, from partners, from your own people. This will require new thinking.

The smart systems we are describing here have no managerial hierarchy, command and control decision-making or proprietary ownership of ideas. These new value networks will be self-organized by people and companies who are motivated to explore and develop ideas they care deeply about. Collaborative innovation will extend beyond ideas about new products and services to the very manner in which business is conducted. To discover, design and develop smart systems, organizations will need new tools and methods.  We hope to see you in Boston.

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