Abstract

۱٫ Introduction

۲٫ A changing business landscape

۳٫ Methodology

۴٫ Findings

۵٫ Discussion and conclusion

Declaration of competing interest

References

Abstract

     The Internet of Things (IoT) has disrupted many existing industries and provided new business opportunities to new and incumbent firms. In this paper, we focus on how companies change the way they work and organize themselves in light of IoT. Based on a single case study of Bosch, one of the largest incumbent German engineering firms, we shed light on how a product-centric company that focused on manufacturing for more than a century, adapts its business model to transform into an IoT company. We outline the changes that occur in terms of the company’s (1) value proposition, (2) value creation, and (3) value capture. Our findings show how some of the imprinted company values play a crucial role in this transformation. Through a mechanism we call imprint anchoring, we find that these core company values serve as a leverage for Bosch to transform into an IoT provider.

Introduction

     The Internet of Things (IoT) was introduced by the British technology pioneer Kevin Ashton, who first coined the term Internet of Things back in the 1990s (Ashton, 2009). Since then, a plethora of definitions for the Internet of Things emerged. What all these definitions have in common is the idea that IoT digitizes the physical world by allowing an exchange of information between connected devices, using connectivity technologies and semiconductor elements (Whitmore et al., 2015; Benamar et al., 2020). IoT is increasingly applied across all industries: each day, the number of connected devices increases, creating a powerful source of data that allows for new applications and services. Forecasts predict that there will be 38.6bn connected devices by 2025 worldwide, and up to 50bn in 2030 (Strategy Analytics, 2020).

     The introduction of IoT has led to a number of possibilities and new economic opportunities. IoT has the potential to disrupt existing industries, offer new market opportunities, and shift the balance of power of existing players as well as new entrants. Especially for incumbent organizations with more traditional, manufacturing-centric business models, the impact is immense. Many companies now need to expand their current product offering from a purely physical portfolio to one that includes digital solutions as well (Porter and Heppelmann, 2015). In most cases, this has proven to be a challenging task. According to Gebauer et al. (2020), one of the reasons is the difficulty to successfully modify these companies’ established business models. Therefore, in this paper, we investigate how incumbent firms adapt their business model when morphing from a manufacturing, product-centric company towards a company offering IoT solutions.

Findings

     The transformation into an IoT company was for Bosch a major change. It wasn’t seen as the next innovation project, but as an important strategic move towards the future, that would require a significant mindset change, and become very central. One of the managers said how IoT would be “the future […] a topic that is not just the tenth pig to be herded through the village, but central […] no getting around it” (Business Model Expert). Whereas for certain business areas, IoT was not that different from Bosch’ traditional way of doing things, in most areas, IoT certainly represented a different world, requiring significant changes in the company’s business model:

     To a certain extent, IoT and traditional business go hand in hand. In manufacturing, it’s obvious. The collection and networking of data. The I4.0 stories. That’s where it becomes relatively concrete and it’s close to previous processes. In the traditional core business however, we are confronted with two different worlds.