Making IoT Work For Your Organization: Lessons Learned in Digital Transformation
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ABSTRACT: As the Internet of Things moves from early hype to production deployments, organizations that have historically made physical things now face significant challenges. Not only do they need to connect their products to the Internet, but also support them. Because of this, I’ve seen many IoT innovation efforts take longer than expected or flounder without clear direction. Companies learn sometimes the hard way that it’s one thing to talk idyllically about turning a product-centered business into a service-centered utopia, but quite another to actually make it a reality. This talk will focus on the five symptoms of IoT programs that are destined for trouble and will also provide solutions for getting back on track.
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Making IoT Work For Your Organization: Lessons Learned in Digital Transformation
- 1. Making IoT Work for Your Organization Lessons Learned in Digital Transformation
- 2. The world is turning digital
- 3. Analysts are predicting big things • 30 billion IoT devices in service by 2020 - IDC, 2015 • 50 percent of new business products and services with IoT elements by 2020 - Gartner, 2016 • $11 trillion of economic impact via IoT technologies by 2025 - McKinsey, 2015
- 5. Anticipated impact on the rise 2015 23% 2016 18% 2017 17% Low or no impact * Source: Smart Industry 2017 State of Initiative Report 2015 32% 2016 22% 2017 14% Neutral impact 2015 45% 2016 59% 2017 69% High or critical impact
- 6. Digital strategies are maturing ‘15 45% ‘16 28% ‘17 19% ’15 30% ‘16 32% ‘17 33% ‘15 13% ‘16 20% ‘17 21% ‘15 12% ‘16 19% ‘17 27% No strategy Informal strategy 1-2 year horizon 3+ year horizon None or informal strategy Formal strategy with timeline 76% (2015) 61% (2016) 52% (2017) 24% (2015) 39% (2016) 48% (2017) * Source: Smart Industry 2017 State of Initiative Report
- 7. 1. Lack of executive sponsorship 2. Organizational misalignment 3. Low cross-departmental collaboration 4. Culture that is slow to adopt change 5. Inconsistent market feedback * Source: Benson, Mark D. “Five Avoidable Complications Of Corporate IoT Innovation Programs.” Forbes (December 2016). But people still present the biggest challenges
- 8. Result: programs are stalling 75% of IoT projects are stalling or failing *Source: The Journey to IoT Value, Challenges, Breakthroughs, and Best Practices, Cisco, May 2017 REASONS WHY IoT PROJECTS STALL 1. Lack of collaboration between IT and BUs (54%) 2. Lack of a tech-focused culture (49%) 3. Lack of IoT expertise (48%) 60% of those projects stall in the Proof of Concept stage( )
- 9. Change is hard for organizations... because change is hard for people
- 10. Conscious Competence Learning Model UNCONSCIOUS INCOMPETENCE UNCONSCIOUS COMPETENCE CONSCIOUS INCOMPETENCE CONSCIOUS COMPETENCE Generally unaware and blissfully naive Mastery as second nature Acknowledgement of competency deficit Success via concerted effort
- 11. The Trickiest Parts Are The Transitions UNCONSCIOUS INCOMPETENCE UNCONSCIOUS COMPETENCE CONSCIOUS INCOMPETENCE CONSCIOUS COMPETENCE Generally unaware and blissfully naive Mastery as second nature Acknowledgement of competency deficit Success via concerted effort
- 15. Each of these companies has a multi-dimensional IoT leader that champions personal and organizational change from the outside in
- 16. IoT programs are similar to assembling a complex puzzle REQUIRES PEOPLE HAS LOTS OF DISCONNECTED PIECES DOESN’T INCLUDE DIRECTIONS
- 17. When solving a puzzle, there are two primary strategies INSIDE OUT OUTSIDE IN
- 18. IoT initiatives fail because they typically invite misalignment from the start
- 19. Any organization that designs a system will produce a design whose structure is a copy of the organization’s communication structure. Melvin Conway
- 20. IoT architectures mimic the organizations that produce them HIERARCHICAL MILITARISTIC SELF-ORGANIZED CULT-FOLLOWING LOPSIDED Legal Engineering TERRITORIAL *Adapted from Manu Cornet
- 21. Successful organizations view IoT as a strategic decision
- 22. A cohesive digital strategy ensures everyone is working toward the same outcome
- 23. Inverted Conway Maneuver Any organization that establishes a clear, compelling, and actionable vision will produce a set of software architectures that will be highly aligned with that vision. Mark Benson
- 24. Five best practices for how organizations can build a sustainable IoT competency
- 25. 1. Baseline current IoT competence 2. Establish a clear, compelling, and actionable IoT strategy 3. Focus on early wins targeted at reducing risk 4. Embrace the standardization and reuse of IoT elements 5. Close the knowledge gap by innovating from the outside in Best practices for building an organizational IoT competency * Source: Benson, Mark D. “Building An Organizational IoT Competency: What You Need To Know.” Forbes (April 2017).
- 26. The way organizations respond to the IoT trend will define their success over the coming decade
- 27. Thank You. Mark Benson https://twitter.com/markbenson https://www.linkedin.com/in/markbenson http://exosite.com http://markbenson.io https://twitter.com/exosite https://www.linkedin.com/company/exosite
Notas do Editor
- Hi. My name is Mark Benson. I’m the Chief Technology Officer at Exosite. Exosite is an enterprise software company with industry-specific IoT applications, a scalable and secure IoT data platform, and a rich ecosystem of partnerships across the IoT value chain. Based on my experience working with dozens of companies on IoT initiatives across a wide variety of industries and situations, I’m here to tell you about battle stories and successes that I’ve seen with digital transformation initiatives.
- We are in the midst of a major confrontation between an irresistible force and an immovable object. The irresistible force is technology disruption, and the immovable object is the change monster – the inability of multi-divisional organizations to make the changes necessary to remain competitive on the global stage. If we look at the amount of time it takes for new technology to reach 50 million customers, we find that the telephone took 75 years, television 13 years, Facebook 3 years and 8 months, Whatsapp 15 months, Angry Birds game app 35 days and Pokemon Go just 19 days. It’s never been easier to rapidly assemble technology components in a way that meets a large audience and disrupts established industry players. And with the Internet of Things, analysts are are predicting some very big numbers…
- 30 billion IoT devices by 2020 50 percent new products with IoT by 2020 11 trillion dollars from IoT by 2025 $11 trillion is starting to approach the value of the entire US GDP. How could these numbers be so big? I think what we’re seeing is a reflection of the fact that the Internet of Things is not an industry itself, it’s a macro-economic mega-trend that is affecting all industries. All of the products and services around us are becoming Internet-connected versions of themselves. So, how are organizations responding?
- Smart Industry recently conducted their third-annual longitudinal survey of the way in which the Internet of Things is affecting durable goods manufacturers…
- The survey of nearly 300 US industrial manufacturers showed that the anticipated impact of the Internet of Things is on the rise. Companies that view the Internet of Things as having low or neutral impact are asymptotically approaching zero. And nearly 70% of organizations believe that the IoT will have a critical impact on their business over the coming decade. And if we look deeper, we’ll find that these same companies are responding with digital strategies…
- Digital strategies are maturing rapidly. Nearly 50% of companies have a formal digital strategy with specific timelines for success. But people still present the biggest challenges…
- Exosite recently led a think-tank discussion with 50 leading companies at Frost & Sullivan’s GIL Summit and identified five common hurdles that organizations face when attempting to roll out a company-wide IoT strategy, the results of which were published in Forbes: Lack of clarity and executive sponsorship of the corporate vision. Organizational misalignment around the corporate objectives. Low cross-departmental participation and preparedness to support IoT. An internal culture that is slow to adopt the necessary organizational changes. Inconsistent or disjointed market feedback. Considering the fact that we’re talking about technology-driven digital transformation, it’s interesting to see that none of the top hurdles have anything to do with technology. It’s people that are causing the biggest problems. The data is showing us that although the technology is hard, pulling off an organizational change initiative is harder. And the result of all these people problems? IoT programs are stalling.
- It’s been extensively reported that 75% of all corporate change initiatives fail. And 60% of those programs stall in the Proof of Concept (POC) phase which means they are not really getting off the ground. That means that you have a better chance playing craps in Las Vegas than you do pulling off an IoT change initiative successfully. That’s a rather depressing thought. What’s more interesting is why those programs are stalling: Collaboration between IT and the business units (54%) IoT expertise: internal and external partnerships (48%) A digital technology-focused culture pervades (49%) Collaboration, new partnerships and knowledge, and a culture that readily embraces new technology? You can’t be good at these things unless you are ready to change. Why is change so hard for organizations?
- Change is hard for organizations… Because change is hard for people. Thomas Fuller, a 17th century English historian and churchman once said... “All things are difficult before they are easy.” In fact, we know from Malcolm Gladwell’s Outliers that the journey for an individual to obtain mastery in a subject takes roughly 10,000 hours. Let’s talk about the psychology of learning and change. Who here has heard of the conscious competence learning model?
- In the field of psychology, the “conscious competence” learning model describes how individuals move from incompetence to competence in a certain subject area as they move from unconscious incompetence (naiveté́ about the competency deficit) to conscious incompetence (acknowledgment that there is competency deficit) to conscious competence (demonstrated competency through a concerted effort) to unconscious competence (competency as second nature). There is no shortcut to mastery. Identification of skill gaps followed by planning, practicing, growth through failure, and finally attaining mastery of the subject as second nature. And the trick is in the transitions...
- In fact, >90% of the work is in the transitions. Moving from one stage to the next requires significant time, effort, practice, and experience under pressure There are two forces at play: consciousness and competence Let's take those two dimensions and examine how they interplay...
- Moving from Naïve to Knowledgeable requires Training and learning from others who know more Moving from Knowledgeable to Experienced requires planning, execution, coaching, learning from failures, and repeated success under pressure. This is the longest part of the journey Moving from Experienced to Masterful requires repeated success under a variety of conditions. This is the phase where experienced practitioners can turn into masterful artists The same is true for organizations attempting to become good at doing IoT...
- For an organization to become knowledgeable, it requires leaders within that organization to champion the opportunity to change, bring others along in the journey, and seek outside counsel to fill in the gaps. In large organizations it also requires strategic vision from the top that is clear, compelling, and actionable. For an organization to become experienced, it must launch not one, but numerous IoT projects that achieve success in the marketplace. In today’s market, very few companies are far along on this part of their journey. Initial IoT applications are becoming available, but business models are not yet proven, standards are still emerging, and organizations are wondering when the right time is to jump in. For an organization to become masterful (AKA “digitally transformed”), they must turn successful IoT initiatives into a set of institutional behaviors that cover process, people skills, business models, support, manufacturing, and tooling. They must also turn user experiences into a cyclical feedback loop that enables the company to become known as a connected brand. Based on experience seeing organizations work through this journey of IoT competency, I want to share four case studies with you...
- Company A, a decades-old industrial air-handling equipment company, is beginning their IoT journey by asking, “Why IoT?” and “Who cares?” Through an organizational IoT skills assessment, as well as a series of collaborative learning seminars to identify competency gaps, market opportunities and competitive dynamics, this company is taking the task of learning about the impact of IoT on their business seriously. Company B, a multinational electromechanical gas and filtration company, is planning for IoT success by getting organized and asking, “What should be done?” and “How best can we proceed?” This company has identified IoT as a key strategy for growth over the coming decade and is driving a top-down initiative consisting of processes, business models, security standards, user interface guidelines, partnership strategies and a scalable enterprise technology platform for the rest of the organization to adopt. Company C, a market-leading consumer and commercial products company, is building momentum through repeated success . This company is using a bottom-up, technology-driven approach to digital transformation and is encouraging leading divisions to pioneer new offerings that make sense for their part of the business. Corporate leadership is then highlighting divisions that have demonstrated market success and is using those examples as archetypes for future IoT deployments. Company D, a multidivisional materials science and medical products company, already has numerous IoT products in the market and is now optimizing organizational efficiency with learnings from IoT deployments. This company is leveraging their historically strong innovation practice to add connectivity across their diverse portfolio of products. Because this company has already demonstrated IoT success, they are now incorporating data from commercial IoT products to derive additional interconnected product experiences and services. These companies all have one thing in common…
- Each of these companies has a strong IoT leader that champions personal and organizational change from the outside in. Fundamentally, leading an organization outside its comfort zone, through an IoT change initiative, is very similar to assembling a complex puzzle.
- Similar to puzzles, IoT programs require people, have lots of disconnected pieces, and don’t include directions. When solving a puzzle you have two typical strategies…
- The first strategy is to solve the puzzle from the inside out, focusing on familiar colors and shapes, and building outwards from there. I have three little kids at home, and we do puzzles often. Sometimes puzzle fever leads us to open multiple puzzles at the same time and start intermixing the pieces. As a more experienced puzzle builder, I help my kids see that if we are working on different puzzles, then we won’t be satisfied with the results. As I’m sure you’ve experienced, a more advanced puzzle solving technique is to work from the outside in by defining the edges, and then dividing and conquering sections of the puzzle together. Along the way, the size, shape, orientation, and color of the puzzle pieces all makes a difference. Also, you might be surprised along the way that you are missing some necessary pieces to complete the work which is particularly frustrating if don't know that ahead of time. IoT projects often fail because they invite misalignment from the start…
- Most organizations believe that IoT will have a critical impact on their business, but far fewer actually know what to do, or how they will monetize the results. This results in early technology experimentation without an understanding of market viability. In some cases, it results in early analysis of marketing requirements without understanding the technical feasibility of delivering the solution. This becomes acutely problematic with multi-divisional organizations that need to create not one IoT product, but many of them across multiple business lines. Without a clear vision or plan for corporate success, divisions may create IoT solutions that work for their perceived immediate needs, but will be misaligned with IoT solutions from adjacent divisions. The result of this type of misalignment is duplicated effort, wasted time, and an increase in technology debt that together threaten to forestall your organization’s competitive edge. In fact, we have a name for this type of organizational misalignment and it was first coined by a computer programmer in 1967 and cited in the classic book “Mythical Man Month” by Fred Brooks…
- Melvin Conway said, “Any organization that designs a system will produce a design whose structure is a copy of the organization’s communication structure.” What Conway is saying is that if you have a 4-person software team creating a compiler, you’ll get a 4-pass compiler as a result. For multi-divisional organizations creating IoT solutions, what Conway is saying is that if you have 4 separate divisions within the company, if you aren’t careful, you will inadvertently create 4 disjoint IoT architectures. IoT architectures mimic the organizations that produce them…
- Some organizations are hierarchical with clear reporting lines and a logical structure. Some organizations are more militaristic in the sense that they have a general surrounded by lieutenants that work together to run the rest of the organization. Others have an informal structure that has evolved over time into a networked organism with numerous interdependencies and colloquial traditions for how groups work together. Some others, you might call “cult-following” where all eyes are on a central leader. These organizations can be powerfully unified as long as the leader has a clear vision, but can suffer from myopic points of view that don’t consider the unique needs of individual business lines, customers, or industries. Some organizations may not be accustomed to technology-driven innovation at all, and are at risk of producing technology architectures that serve the needs of, for example, the legal team instead of the needs of customers. And no matter what your organization looks like structurally, territorial battles can emerge. This can be especially nefarious when divisions are measured and incentivized based on near-term market gains as as opposed to long-term investments that leverage or use technology from adjacent divisions to solve problems. What these examples tell us is that the way in which organizations are structured and led plays a central role in what the set of IoT solutions that result will look like. Successful organizations flip these problems on their head and treat IoT as a strategic decision instead of just letting it happen.
- If IoT is truly a strategic decision for a company, then it should be treated that way. Instead of letting IoT happen haphazardly and organically, successful organizations set a clear IoT strategy at the corporate level, and a mandate for cross-departmental collaboration. That strategic vision then provides healthy constraints for the organization that can focus efforts and ultimately increase the velocity of progress.
- The result is a cohesive digital strategy that ensures everyone is working towards the same outcome. My name for this outside-in puzzle building approach for IoT projects is the "Inverted Conway Maneuver"...
- The Inverted Conway Maneuver is something I’ve been pondering since I was 16. But only now through the lens of the IoT macro-economic movement has it come into focus. The Inverted Conway Maneuver is this: “Any organization that establishes a clear, compelling, and actionable vision will produce a set of software architectures that will be highly aligned with that vision.” In all seriousness, it’s similar to Emmett in the Lego Movie. Who here has seen the Lego Movie? In the movie, Emit (the main character) is seemingly average, but doesn’t realize that he is really “the special” that has a unique ability to unify his friends. In one scene, there are numerous “master builders” that are all building out their own creations, and it’s a complete fragmented disaster. Emmet then tells them that if they all work together instead of individually, that they can achieve their goals more effectively. And so it is with IoT inside organizations. If we are intentional about the fact that IoT is a matter of strategic importance, and place it at the center of our focus, then what will follow is an organization that works together to make that vision happen. The constraints that come with focus will, in turn, yield IoT programs that execute more efficiently, are more aligned, and are delivered to market at a faster pace.
- I’d like to end by leaving you with five best practices based on real-world experience for how organizations can reverse the story on failed IoT initiatives and outpace their competition with a clear and pragmatic focus.
- Have a baseline for current IoT competence in the areas of digital innovation, technology maturity, business model clarity and market readiness. Develop and communicate a clear, compelling, actionable IoT strategy across the organization that includes executive support, funding from the top and a mandate for cross-departmental collaboration. Start small with early wins targeted at reducing business risk while addressing pressing questions early. Look for opportunities to standardize and reuse common components across divisions and projects. Close the knowledge gap by building the organization from the outside in. Start with external help and, simultaneously, develop and grow internal core IoT competencies over time. Although the digital transformation and change process can be difficult for both organizations and people, it can succeed. I’ve seen it succeed in the case studies I’ve presented here today. And I firmly believe…
- Smart connected products will redefine entire markets and the very nature of competition over the coming decade. The way that organizations respond to the IoT trend will define their success over the coming decade.