Strategic Choices: #1 Which Capabilities to Pursue

Which set of smart, connected product capabilities and features should the company pursue?

The article, How Smart, Connected Products Are Transforming Competition, published in the November 2014 issue of Harvard Business Review (HBR), identifies the ten strategic choices manufacturers must make to capitalize on the IoT.

Co-author and PTC CEO Jim Heppelmann explains the first strategic choice, which set of smart, connected product capabilities and features should the company pursue, and provides a recommendation to get started.

Video Transcript

When you think about which smart, connected capabilities and features you might want to add to your products, it might help to think about the framework of the four categories of capabilities that we talked about in the article.

  • First is monitor, which is the ability to know what's happening with the product, with its operation and with its environment.

  • Second would be control, to be able to control what the product's doing or how it's configured.

  • The third category is optimize, the ability to change what the product's doing in light of the circumstances so that the product creates more value.

  • The fourth category is to automate the product, to give the product the ability to do its own information processing and to make some of its own decisions about how to best react or optimize in different situations.

If you think about these ideas, some of them might generate for you an operational efficiency. It might make it more efficient for you to sell the product or to service the product or to engineer the product.

  • Some capabilities might generate a differentiation. It makes your product or your offering better than the competition and distinctly different.

  • Some capabilities might generate new revenue streams. Maybe it's a service you sell with the product or new modules of capabilities you can introduce into the product even years after the product's been sold.

  • And then finally, some capabilities might not create any value at all, and of course that's what you want to be careful about because all of this stuff requires investment.

So we think in the end what you should focus on are those capabilities and those features that best reinforce your competitive positioning and help your company to create unique value and competitive advantage.


Our recommendation is to get together some of the thought leaders and the stakeholders in the different parts of your company, maybe even your customers, and bring them together in an innovation workshop. And to ask the questions: "What if we knew what was going on with the product? What if we could change the operation of the product? How would we use that in our business?" And identify the best ideas that bubble to the top of that type of a cross-functional process.

Then finally, because talk is talk and seeing something in action is very different, I really recommend a rapid prototyping or agile or rapid applications development process where you then develop a solution around the ideas you have, and you show it to the end user or customer who should benefit from the idea and get their feedback. Then go back and tweak the prototype a little bit and show it to them again. This is a quick way to get to an answer that works without spending too much time investing in solutions that later get rejected by the intended user.