Abstract

۱- Lost in the woods

۲- The Internet of Things

۳- Value creation

۴- Illustrating our point

۵- Self-study questions: What have we learned?

۶- Conclusion

References

Abstract

Are you ready for what’s coming? As senior managers look to connect products, processes, and services to the growing field of the Internet of Things (IoT), this is an important preliminary question. Leveraging the IoT for firm benefit involves revisiting certain ideas that may have gone unquestioned for a long time. In this article, we begin by reviewing the complexity of the IoT, the complexities of an increasingly interconnected environment, and the increasing need to develop partnerships in order to create innovative solutions. We then offer practical insights from a case in which three actors with reciprocal specialties cooperated to create an IoT solution in the form of a connected appliance. While a shared spirit of optimism prevailed throughout the endeavor, reaching the finish line meant jumping a few hurdles along the way. Finally, we describe a number of fundamental issues related to business models, partnership strategy, data ownership, and technology diffusion that every enterprise should address before diving headfirst into the Internet of Things.

Lost in the woods

Are you ready for what’s coming? As senior managers look to connect products, processes, and services to the growing field of the Internet of Things (IoT), this is an important preliminary question. Analysts–—including Gartner (2015) and McKinsey (Manyika et al., 2015)–—have predicted significant growth in the number of connected devices and areas of application, creating value for both private consumers and businesses. Connected devices are currently attracting a significant amount of attention among practitioners as well as researchers. IoT is often spoken of with the same reverence that the World Wide Web enjoyed in the late 1990s and cloud computing just a few years ago. However, as the promise of a hyperconnected future in which everything is connected to everything else appears to be drawing ever closer, we appear to become less and less certain regarding just what this future will look like. Estimates for the number of connected devices range from 25 to 50 billion by the year 2020 (Lee & Lee, 2015; Weinberg, Milne, Andonova, & Hajjat, 2015). While the hefty margin of error might provoke a smirk or be dismissed as the result of pure guesswork, it is also symptomatic of a deeper, more serious issue. What can be gained by directly connecting products to the internetthat cannot already be attained with the current range of gadgets and contraptions? What are the consequences and critical issues of a transition to a connected world? Are firms obligated to incorporate another feature into their products ‘just because,’ or is there an actual rationale somewhere behind the hype? Leveraging the IoT for firm benefit involves revisiting certain ideas that may have gone unquestioned for a long time. As Erik Brynjolfsson and Andrew McAffee (2014) outline in their book The Second Machine Age, radical innovations such as electricity and computers were slow to yield proper dividends. It took many years for people to realize how to use the new technology to their advantage, and those who got there first enjoyed a significant competitive advantage while the competition scrambled to mimic their approach. While it is not our intention to overinflate the significance of the IoT by making direct comparisons to the introduction of electricity or the proliferation of computers, we can make a direct comparison concerning the initial confusion and inability to see the full potential of a new innovation. Researchers and practitioners are still in the midst of making sense of the IoT. The attachment to existing norms, value chains, and business models casts long shadows that prevent proper exploitation of products that can continually disclose how, where, and when they are used. Realizing the idealistic notion of a smart product is as much about exploring motives and expectations as it is about resolving technical issues.