Navigating Leadership, Innovation, and Empowerment in the Digital Age


The Problem

1:  For Large Corporates, Digital Transformation Is Often Slow and Painful

Many large corporates across multiple verticals today are being disrupted by the convergence of wireless, big data, and the Internet of Things (IoT).  From connected homes and autonomous automobiles to healthcare, retail and smart cities, whole industries are being transformed.   Connected factories reshape the industrial landscape and connected homes are reshaping the fabric of our daily lives.

Timeline of Digital Transformation. Large corporates around the world recognize these shifts and are already working hard to transform themselves to address this new reality.  The rise of the Chief Digital Officer role, the creation of new, centralized “digital innovation hubs,” and the desire for cross-business platforms & common architectures underscores this point.  Nevertheless, for most large corporates, this digital transformation proves challenging.  Often progress is slower than first anticipated.  Executives looking for returns on their digital investments lose patience as many new IoT solutions take time to scale and require a willingness to experiment for product-market fit.   

Costs. Furthermore, the ongoing operational costs of new cloud solutions that need to be launched in multiple global markets, often with multiple mobile apps (which should continuously evolve), and the need for new and more expensive digital and da ta talent doesn’t help the financial picture.  With digital innovation project costs rising annually, executives question when all the promises of these IoT projects will positively impact their bottom line. For most companies, connected IoT solutions have yet to move the needle.

Security & Privacy. Then there is the challenge of privacy and security.  With the proliferation of news on security breaches in internet-connected systems, it’s easy for executives to get skeptical of embracing technological innovations, including IoT.   While security breaches are often a sign of weak implementation of security measures in the architecture or design of a system, large corporates (especially in highly regulated verticals) tend to be risk averse.   They may be slow to drive broad adoption of their digital pilots in fear of security and privacy breeches.  Unlike startups, these corporates have a much more to lose as their brand and reputation reflects real market value.  

Ways of Working.  The impact of IoT on these verticals not only forces large corporate to rethink their products and business models, it also forces them to reshape and restructure their ways of working:

  • From waterfall driven product planning towards agile development and Lean startup mentality  
  • From transactional customer relationships to continuous, engagement-centric customer relationships. 
  • From top down management led decision making to dispersed, empowered teams 
  • From experience- and seniority-driven decision making, to data-driven decision making
  • From business units working in silos to define and deliver their products to cross company platforms that enable data sharing & transparency across businesses and across unique solutions for new value creation
  • From incremental innovation pulled by the market to design-driven innovations which do not come from the market; they create new markets. They don’t push new technologies; they push new meanings.

Culture.  Over time, these large companies learn that digital transformation will require much more than just hiring a few digital thought leaders to drive the change.  Culture, ways of working, product thinking, go to market — it all needs to evolve.  And this isn’t easy.  

2:   Big IoT Platforms & The Adoption Challenge

Microsoft, Amazon, Google, IBM, GE, Salesforce and many other large IoT platform providers smell the opportunity in the air.  With an ever growing ecosystem of connectivity APIs, cloud MicroServices, hybrid and edge solutions, AI and deep learning engines, remote diagnostics, security and software update services, IOT platform providers are well poised to help these companies across the diverse landscape of industries.  But accelerating these big corporates and realizing their digital transformation visions will take more than great technology. 

IOT platform vendors must ask, “how can we accelerate the adoption of  our IoT platforms and become the de-facto partner for key verticals undergoing this massive disruption?”

The reality is that winning the IoT platform war in large corporates is a hard for several reasons.

1. Customers don’t know what they don’t know.   The largest corporate customers (be it in automotive, healthcare, industrial, etc) who can drive the biggest long term value for IoT Platform vendors often don’t fully know what they want.  For them, IoT promises new digital business models, ongoing customer relationships, or operational cost savings are just that — promises.   Executives are being asked to make bets on digital without clear guarantees that these investments will pay off, or without clear timelines for when such investments pay off. Their “new digital team members” are asking them for space to “fail fast and learn.”   As such, there are a plethora of IoT pilots and small experiments (on a variety of competing IoT platforms) to test out IoT claims and prove that connected devices or new cloud services can create value or save operational costs.  But such sub-scale pilots often don’t convince corporate boards to go big.   “IoT pilot purgatory” is the where great corporate IoT visions and ambitions quietly rot.

2. Platform differentiation is getting harder and harder.  The IoT and Cloud Platform competitive landscape is diverse and aggressive.  Startups, in-house IoT innovation teams, and other large cloud platform companies are competing to become the de-facto IoT platform in large corporates.  Big players like Amazon, Microsoft, Google, IBM and Salesforce, large industrial companies like Siemens and GE, and hundreds of IoT platform startups focusing on niche problems are pitching similar stories: “Our platforms are designed to deploy applications that monitor, manage, and control your connected devices.  We help you connect and extract data from a vast number and variety of endpoints, sometimes in inconvenient locations with spotty connectivity.  We offer all kinds of data analytics, AI and machine learning to process massive amounts of information in real-time. We are your infrastructure stack.  We are your platform stack. We are your user experience stack.  We are cloud. We are edge. We are fog. We are hybrid.”   OK, thanks.   

While IoT experts may be well versed at differentiating this vast landscape, most of the business and innovation leaders driving verticals like automotive, retail, health and industrial companies find this IoT platform language utterly confusing.   At IoT expos around the world, every IoT platform provider claims to be faster, better and smarter than others.  There are many impressive customer references behind every platform backed up with cool demos, partner pilots and case studies.  Unfortunately, amidst all this chaos, more and more decisions are being made based on pricing (race to the bottom for cloud providers) and sales relationships.  

3. Complex Internal Decision Making.   IoT platform sales teams must navigate the organizational complexity in large corporates who are undergoing their own digital transformation journeys.  With so many different business units, central innovation teams, Chief Information Officers, Chief Data Officers, Chief Digital Officers, engineering leaders, innovation leaders, legacy software stacks, home-grown cloud solutions, and conflicting edge requirements, there are no lack of opinions.  Every leader has a different view on which IoT or cloud platforms best fits each business’ needs.  One business unit leader may prefer one particular IoT platform due to their focus on scale and cost sensitivity, whilst another business unit may pick another IoT platform due to their need for highly secure and regulated solutions, while a third business unit chooses yet another architecture due to their need for on-premise, edge computing.  Furthermore, there are many opposing views within each corporate on whether they need at IoT Platform to be PaaS, IaaS, or SaaS.  Some corporate teams prefer to leverage their own internal infrastructures and build on that while other teams are more open to greenfield end to end solutions for speed and agility.    In such a complex landscape, agreeing on a common IoT platform to support the whole company can be challenging.

Proposal: Corporate IoT Accelerators

Today’s Reality: Accelerators are for Startups

Accelerators Beyond Startups.  Accelerators and venture hubs are not new.  Usually, these are the playgrounds of young entrepreneurs and startups where they get mentoring, guidance, inspiration, help and support for a limited time. These formal and structured programs allow startups access to large IoT platform tools, capabilities, sales, marketing and technical support to get up and running quickly.   Google, Microsoft, Amazon, Salesforce, GE….they all offer these types of accelerators to help build and grow startups and bring them onto their ecosystems.   They also offer business resources that help startups define and validate IoT value propositions, build new cloud business models and market strategies, teach design thinking and provide go-to-market guidance.  

 But what about large corporates who are struggling with similar issues as they try to transform into software-driven companies building new, connected digital innovations?   Given all the digital transformation challenges corporates are going through as described above, why not offer some of these same capabilities to them?

A New Type of Accelerator – just for Big Corporates

How it could work. Like startup accelerators, IoT Platform players can eventually have several Corporate IoT Accelerator hubs in several different cities.  Each corporate IoT hub is staffed with local IoT platform experts who know the APIs, the SDKs, the MicroServices and tools and with IoT entrepreneurs and business experts who can help corporates worth through value proposition and product-market fit assessments.   Large, strategic corporates are invited to send cross-functional teams from strategic projects to the IoT Accelerator hubs for 4-6 months.  These teams would work together with the IoT Platform Company resources and focus on key business challenges that each corporate brings to the table.   These structured 4-6 month programs would be designed to help corporates accelerate specific, well defined IoT ambitions, from building new digital business models to optimizing smart factory floors to building ongoing engagements with customers via breakthrough digital experiences.   The types of support these hubs can offer might include:

    • Modernizing legacy software stacks and re-platforming existing applications towards IoT cloud-centric architectures 
    • Teaching corporates how to test new IoT ideas for product-market fit via user-centered, design-led thinking. 
    • Immersing corporate teams into a culture of balanced, self-empowered teams who “test often and fail fast” so that the corporates can better sharpen and validate their IoT MVPs before too much development dollars are invested
    • Agile & Lean Coaching and extreme programming training to help corporate dev teams modernize their development approach and techniques for developing the solutions of the future
    • Leveraging  deep AI and data science expertise to train corporates how to extract more value from their existing data and how to create a forward looking, value creating data strategy 
    • Teaching companies how to speed up the development and execution of IoT projects that large corporates may be struggling with due to heavy internal processes and too many (often non-digital) chefs in the kitchen
    • Ideating on how to leverage the myriad of tech tools & cloud services these IoT vendors offer to further extend value solutions and improve user experiences 

Disruptive Business Model.  To motivate corporates to join this Corporate IoT Accelerator, IoT platform vendors should consider offering a disruptive, at-risk business model.  Today, the friction associated with moving to new, cloud platforms often stems from business model confusion.  Calculating the end to end cloud and operations costs of an IoT platform is difficult for corporates who have to make so many assumptions about unclear, new business models (data volume, data frequency, number of messages, size, queries complexities, etc).  For many IoT solutions, the challenge in estimating scale and data volume often leads to business leaders’ unwillingness to commit to cloud platforms as they fear this can undermine their business model with unforeseen operational costs.

As such, the opportunity here is for one of the IoT platform players to do to the other cloud players what Google did to everyone in mobile with their Android platform — give it away for free.   Well, in the case of cloud platforms, maybe not totally free.  The massive fixed costs associated w building up data farms around the world prohibits any vendor from “giving away cloud capabilities.”  But by thinking long term instead of short term, there may be opportunities to win the IoT platform land grab by offering much more aggressive  “at risk” business models to large corporates.  There will likely need to be some commercial innovation and business model testing before a scalable new business model works.  

One potential business model to test: Revenue Share instead of pay-for-consumption.  Corporates who join the Corporate IoT Accelerator Programs may get free access to all IoT platform services and features, including cloud resources.  They may pay a minimal fee for the consulting resources that will support them during their 4-6-month program (to cover some of the fixed program costs).  Only if the new IoT solutions start delivering revenue will the IoT platform player get to rev-share.  As such, there is motivation for the IoT Accelerator teams to ensure the best, most likely to succeed value propositions hit the market.   And the Corporates will continue to get close support from IoT platform resources post accelerator programs as both teams will be highly motivated to ensure the efforts result in revenue generating, successful propositions.   Such a business model may allow corporates to take more risks as they feel the power of serious platform players beneath their wings, and finally get out of pilot purgatory.   The success of these corporates’ solutions will be directly linked to the IoT platform vendor’s ability to monetize their own IoT platform, creating a unique win-win relationship.  However, this is of course very high risk, so choosing the right partners, who are most likely to succeed, into the Corporate accelerator will be key.

Concerns and Questions

Long term vs. Short term returns for IoT Platform Companies

One concern with this proposal is that it may be very expensive for IoT platform vendors  at first.  It may take a long time before the corporates achieve the agreed metrics for success and for revenue share (or savings-share) to start to trickle in.  Given the nascence of IoT solutions and business models in many industries, there may need to be a lot of experimenting and learning before successful business models may emerge.  This will require patience and an appetitive for risks.  It will require a long-term belief that this “skin in the game” business model of at-risk will eventually lead to more stickiness and loyalties for that particular platform and ecosystem.   There will be significant upstart costs for the Corporate IoT Accelerator hubs, the resources needed for support and to cover the initial cloud data costs for customers.  


The timing is now

The IoT Platform landscape is ripe for consolidation.  Today there are too many players and too much complexity.  This limits a rich, healthy IoT ecosystem from blossoming.   So many choices means a lot of fragmentation around IoT apps and customer value.  To win this landscape war, companies need to target both startups as well as the large corporates.  The winning platforms will win both across many industry verticals.

Everyone seems to recognize that there is much magic yet to be created at the intersection where mobile, cloud, data, devices meet existing, long-time industries.  The cross-boundary services of tomorrow will reshape how we think of the traditional products and solutions we use today.  The biggest hurdle is not technology.  There are many architectures and many solutions that are “good enough.”  The biggest hurdle to realize this future is often culture, especially in large companies who are currently struggling with the disruption of their own industries.  The recipe for success that many executives have relied on for the past 20 or 30 years in product-centric companies will no longer work in digital first, service-centric age.   

I personally believe that riches will go to the IoT platform company who offers not just great technical solutions (cloud, analytics, edge, AI, etc), but also hands on guidance and support through the cultural revolution these companies are undergoing.  The biggest challenge with IoT is just how little we all know about its transformative impact.  We must learn, we must experiment, we must test.  While seemingly simple and obvious to most software startups, this is a huge shift for companies with big annual strategic planning processes and who make investment decisions based on ROI projects 1-3 years out.  

Which IoT platform vendors do you think will win the long game?   IoT Platform vendors: are you game for disrupting your current business models?

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