Smart, connected products require a fundamental rethinking of design. At the most basic level, product development shifts from largely mechanical engineering to true interdisciplinary systems engineering. New design principles are becoming foundational for competing in a smart, connected world. Download Now (.PDF)
A manufacturer of smart, connected products is a cross between a software company and a traditional product company. This mix demands new skills across the value chain, as well as new working styles and cultural norms. New human resource management principles are becoming foundational for competing in a smart, connected world. Download Now (.PDF)
The ability to remain connected to the product and track how it’s being used shifts the focus of a company’s customer relationship from selling—often a predominantly one-time transaction—to maximizing the customer’s value from the product over time. This opens up important new requirements and opportunities for marketing and sales. New marketing and sales principles are becoming foundational for competing in a smart, connected world. Download Now (.PDF)
Smart, connected products create new production requirements and opportunities. They may even shift final assembly to the customer site, where the last step is loading and configuring software. But more radical still, manufacturing now goes beyond the production of the physical object, because a functioning smart, connected product requires a cloud-based system for operating it throughout its life. New manufacturing operations principles are becoming foundational for competing in a smart, connected world. Download Now (.PDF)
Smart, connected products improve service and efficiency and enable a fundamental shift from reactive service to preventive, proactive, and remote service. For manufacturers of long-lived products, such as industrial equipment, after-sale service can represent significant revenues and profits—partly because traditional service delivery is inherently inefficient. Technicians often must inspect a product to identify the reason for a failure and the parts needed to correct it and then make a second trip to perform the repair. New service principles are becoming foundational for competing in a smart, connected world. Download Now (.PDF)
Until recently, IT departments in manufacturing companies have been largely responsible for safeguarding firms’ data centers, business systems, computers, and networks. With the advent of smart, connected devices, the game changes dramatically. Security may report to the chief information officer, the chief technology officer, the chief data officer, or the chief compliance officer, but whatever the leadership structure, security now cuts across product development, dev-ops, IT, the field service group, and other units. New privacy and security principles are becoming foundational for competing in a smart, connected world. Download Now (.PDF)
In order to create real business value, companies need to identify how smart, connected product data can enable each function to transform their business processes and improve operational effectiveness or create strategic differentiation. Significant value across business functions is achieved from the Basic Insights that can be generated from “just one number” and identifying a specific IoT use case for a defined stakeholder is the best way to define and realize that value. Download Now (.PDF)
Many of the organizational shifts that smart, connected products are bringing to manufacturing mirror changes that have already taken root in the software industry. Smart, connected products require functions within manufacturing firms to collaborate in new ways. As a result, firms' structures are rapidly evolving. A new functional unit focused on data management is starting to appear. Though rare, units focused on ongoing product development and customer success are also beginning to be recognized.
Manufacturers have traditionally focused on producing a physical good and capturing value by transferring ownership of the good to the customer through a sales transaction. Smart, connected products allow the radical alteration of this long-standing business model. The manufacturer, through new capabilities and access to product data, opens up a spectrum of new business models for capturing value. Also, new competitors offering products with smart, connected capabilities or performance- or service-based business models can emerge quickly and reshape competition and industry boundaries.
The path to competitive advantage ultimately rests on strategy. Our research reveals that in a smart, connected world companies face 10 new strategic choices. Each choice involves trade-offs, and each must reflect a company's unique circumstances. The choices are also interdependent. The company's entire set of choices must reinforce one another and define a coherent and distinctive overall strategic positioning for the company.
Until recently, IT departments in manufacturing companies have been largely responsible for safeguarding firms' data centers, business systems, computers, and networks. With the advent of smart, connected devices, the game changes dramatically. The job of ensuring IT security now cuts across all functions. Data privacy and the fair exchange of value for data are also increasingly important to customers. Overall, knowledge and best practices for security in a smart, connected world are rapidly evolving.
At the corporate level in multibusiness companies, overlay structures are being put in place. For example, a separate new unit, with profit-and-loss responsibility, is put in charge of supporting the company's smart, connected products strategy. The unit aggregates the talent and mobilizes the technology and assets needed to bring such new offerings to market, working with all affected business units. The Bosch Group is one company that has formed such a dedicated unit, Bosch Software Innovations. It enables the company's product-based business units and external customers to build services for smart, connected products.