Ilkka Lipasti, Senior Partner, Talent Vectia, discussed the impacts of Industrial Internet at Ixonos' morning event on 11 September 2014.

1. Internet
of
Things,
Nothing
or
Everything?
Ilkka
Lipas*
11.9.2014

2. Internet
of
things,
nothing
or
everything?-­‐
Impact
on
Business
models
The
storyline
today
1. Internet
of
Things
background
–
Behind
the
hype
2. Our
choices
under
uncertainty
–
Business
models
and
roadmaps
3. Cases
of
early
adopters
and
likely
winners
©
Talent
Vec*a
2

3. Internet
of
Things
–
Background
Global
• Previous
terminology
used:
automa*on,
telemetry,
telema*cs,
remote
automa*on.
Rising
interest
/
hype
globally
now.
• Huge
investments
in
China,
in
Wuxi
as
SEZ
• Japan
inves*ng
especially
to
observa*on
of
natural
environment
• USA
focusing
especially
to
military
technology,
environmental
monitoring,
intelligent
transporta*on,
industry
applica*ons
(GE,
Cisco,
IBM,
HP,
…)
• Germany
inves*ng
in
Industrie
4.0
project
(industry
compe**veness)
©
Talent
Vec*a
3
Emerging
new
capabiliBes
Wave
1
Industrial
revoluBon
AcBve
companies
• In
Wave
2
Internet
revoluBon
Wave
3
Internet
of
Things
(IoT)
Finland:
ac*vely
involved
telecom
operators,
SME
companies
and
users
(such
as
facility
management,
industry,
transporta*on,
healthcare,
consumers)
• Telecom
operators
driving
B2C
applica*ons
• SME
companies
focus
on
individual
solu*ons
(e.g.
remote
control/monitoring)
• Large
companies
(such
as
Schneider,
Siemens,
ABB,
…)
focusing
on
new
product/service
development
Finland
• Internet
of
Things
–
VTT’s
one
of
four
research
focus
(15
MEUR
budget);
machinery/equipment
manufacturers
and
smart
ligh*ng
solu*ons.
Key
expert
prof.
Heikki
Ailisto,
VTT
Technical
Research
Centre
of
Finland
• Digile
Oy
(21.8.2013)
–
ICT
capability
based,
46
companies
and
en**es
as
owners
(SHOK),
former
Tieto-­‐
ja
vies*ntäteollisuuden
tutkimus
TIVIT
Oy
hhp://www.internetoihings.fi/
• Other
key
persons:
Dr.
Hannu
Kauppinen,
Head
of
NRC,
Nokia
and
Heikki
Huomo,
Reac*ve
Technologies
Time
InnovaBon
Source:
Adapted
from
GE
Industrial
Internet
report

4. Internet
of
Things
–
Background
on
potenBal
applicaBons
Current
challenge
are
lack
of
standardizaCon
and
lack
of
connecCvity
penetraCon
“ConnecBvity
within
a
business”
• Smart
street
ligh*ng
• Military
technology
• Mobile
Educa*on
• Mobile
Health
• Mobile
U*li*es
“Local
business
opportuniBes”
• Household
automa*on
(ligh*ng,
security,
energy,
air
condi*oning,
…)
• Remote
electricity
consump*on
measurement
• Asset
management
• Proac*ve
maintenance
services
• Remote
security
solu*ons
“Global
business
with
global
benefits”
• Environmental
monitoring
• Smart
energy
usage
• Smart
Ci*es
• Smart
Grids
Global
Business
opportunity
Local
Low
“Global/regional
business
with
local
benefits”
• Smart
car
solu*ons
• Opera*ons
over
distance
• Logis*cs
transparency,
tracking
of
things
(RFID
etc.)
Scale
of
connecBvity
penetraBon
©
Talent
Vec*a
4
High

5. Impacts
to
business
operaBons
©
Talent
Vec*a
5
Service
market
=
market
enabled
by
machine-­‐to-­‐machine
technology
Short/mid
term
impacts:
• This
is
a
must
to
understand
for
strategy
work,
opera*ons,
processes,
plamorms,
business
models,
service
product
development,
IT
architecture,
….
• Beher
use
of
exis*ng
technologies
(wider
adop*on
of
B2B
solu*ons)
• Business
planning
and
opportunity
analysis
for
M2M
solu*ons
• Proac*ve
capability
building
for
M2M
solu*ons
• Business
view
point
and
revenue
logic
renewal
• New
service
solu*ons
• Management
of
networks
Long
term
impacts:
• New
service
product
crea*on
for
future
• Building
ecosystems
–
networking
within
businesses
• Calcula*on
capacity
–
huge
amount
of
data
• Analy*cs
capability,
business
intelligence
• People
capabili*es,
new
competences
Source:
GE
Industrial
Internet
report

6. IoT
has
implicaBons
to
most
industries
Case
examples
Benefits
Focus
areas
Retail
HoReCa
TransportaBon
Industries
• ”Op*mized
shelf
replenishments”
• Sensors
measure
online
product
availability
• Improved
product
availability
• Beher
product
traceability
• Sensors
in
public
premises
measure
customer
flows
and
provide
quidance
to
the
personnel
• Enhanced
resource
u*liza*on
• Improved
customer
experience
©
Talent
Vec*a
6
• Vehicles
communicate
with
each
others
and
with
infrastructure
• In
near
future:
”internet-­‐of-­‐vechicles”
• Diminished
rush
hours
• Improved
security
• Enhanced
environmental
footprint
• Sensors
measure
equipment
or
process
opera*ons
and
op*mize
ac*vi*es
(e.g.
proac*ve
maintenance)
• Improved
produc*on
processes
• Enabling
new
pricing
logic
based
on
usage
and
customer
benefits

7. Case
Study:
Bosch
SoQware
for
Services
4.0
©
Talent
Vec*a
7

8. Internet
of
things,
nothing
or
everything?-­‐
Impact
on
Business
models
The
storyline
today
1. Internet
of
Things
background
–
Behind
the
hype
2. Our
choices
under
uncertainty
–
Business
models
and
roadmaps
3. Cases
of
early
adopters
and
likely
winners
©
Talent
Vec*a
8

9. The
hype
and
reality
–
Should
we
just
wait
and
see?
©
Talent
Vec*a
9

10. Typically
we
can
see
four
types
of
decision
making
situaBons
based
on
level
of
uncertainty
—Four Levels of Environmental Uncertainty—
A Clear-Enough Future Alternate Futures
Source: Courtney, Kirkland and Viguerie,
“Strategy Under Uncertainty
1
2
3
True Ambiguity
A Range of Futures
10
?
Firms will have the
opportunity to explore a
range of futures, in an
uncertain environment
that is just beginning to
take shape. Scenario-work
and business
options are best tools.
Firms already experience the
impacts of a change in
technology/business
platforms, market
requirements or regulation ,
and more strategically
oriented companies have
begun to map outcomes and
possible end games
Firms have no clue where the
business is going; extreme
short termism prevails, some
players take strategic bets
based on scenario views
Firms have clea view where
the business is going;
execution is key differentiator

11. In
digitalizaBon
defensive
strategies
have
not
played-­‐out
favorably,
nor
have
unadapBve
high
bets
—Strategy Under Uncertainty—
11
Shape the future
Play a leadership
role in establishing
how the industry
operates for
example:
- setting standards
- creating demand
Adapt to the future
Win through speed,
agility, and
flexibility in
recognizing and
capturing
opportunities in
existing markets.
Source: Adapted from Courtney, Kirkland and Viguerie,
“Strategy Under Uncertainty”
Reserve the right to
play
Invest sufficiently
to stay in the game
but avoid
premature
commitments.
Wait and See
Observe the
changing
environment and
assign someone to
research the
options.
1.
2.
3.

12. What
could
be
the
future
with
IoT?
-­‐
four
scenarios
Economic
and
poli*cal
issues
resolved,
moderate
growth
restored
”Global
game”
Global
players
with
strong
IT
&
service
capability
dominate
”CalifornicaCon”
Room
for
many
types
of
players
”Malnutrion
everywhere”
Few
regional/
global
giants
with
limited
advantage
of
IoT,
”Regional
Monopolies”
Regional/Global
early
adopters
dominate
Con*nuous
polariza*on
of
wealth
within
and
between
countries,
restlessness
surging,
wars
,
Economic
slump
12
IoT
plamorms
exist:
MW,
bandwith
and
cybersecurity
issues
resolved
Con*nuous
issues
with
cybersecurity
and
lack
of
unified
middleware,
congested
bandwiths

13. CalifornicaBon:
New
Industrial
RevoluBon
Servitazion
of
everything
John
Deere
fits
sensors
to
its
tractors
and
agricultural
machinery
and
makes
the
readings
available
on
its
myjohndeere.com
and
Farmsight
services.
These
help
growers
establish
op*mum
condi*ons
for
their
crops,
and
also
lets
John
Deere
forecast
demand
for
spare
parts.
©
Talent
Vec*a
13
”CalifornicaCon”
Room
for
many
types
of
players
On
Demand
making
of
everything
Lean
value
chains
for
everything:
ConsumeraBon
of
businesses
Raw
material
produc*on
Consumer
customer
Sub
produc*on
Tier
1
Final
assembly
Pre
&
aier
sales
service
Sub
Retail
produc*on
Tier
2
Distribu*on
centers
X
X
X
X
X
X
X
X

14. What
could
be
the
future
with
IoT?
-­‐
four
scenarios
Economic
and
poli*cal
issues
resolved,
moderate
growth
restored
”Global
game”
Global
players
with
strong
IT
&
service
capability
dominate
”CalifornicaCon”
Room
for
many
types
of
players
”Malnutrion
everywhere”
Few
regional/
global
giants
with
limited
advantage
of
IoT,
”Regional
Monopolies”
Regional/Global
early
adopters
dominate
Con*nuous
polariza*on
of
wealth
within
and
between
countries,
restlessness
surging,
wars
,
Economic
slump
14
Statemanship
appears,
Realiism
takes
over
Opportuni*es
for
innovators
and
global
solu*ons
”Silicon
Valley”
IoT
plamorms
exist:
MW,
bandwith
and
cybersecurity
issues
resolved
Statemanship
appears,
Realism
takes
over
Opportuni*es
for
secure
closed
solu*ons
”West
pre
2010”
Con*nuous
issues
with
cybersecurity
and
lack
of
unified
middleware,
congested
bandwiths
New
global
open
plamorm
providers
a
la
Google
create
a
safe
business
arena
for
solu*on
innovators
Na*onal
pride
and
short
term
greed
take
over
,
states
as
cybercriminals
Na*onalis*c
leadership
gain
power,
behind
the
scene
tradewars
Everyone
for
my
country,
Regional
solu*ons,
”China,
Japan”
Na*nalis*c
par*es/
dictators
gain
power,
trade-­‐
&
other
wars
Everyone
for
himself,
Local/regional
solu*ons,
”La*n
America”

15. Scenarios
and
your
strategies
for
a
roadmap?
1. Must
Do’s
–
What
we
need
to
do
which
ever
scenario
unfolds
1. Service
mindset
and
business
models
2. Value
chain
&
end-­‐user
customer
focus
3. Social
Media/Digitalisa?on
investments
with
immediate
customer
value
2. Strategic
choices
–
Decions
that
play
out
in
most
likely
scenarios
1. Globalisa?on
&
specializa?on
vs
jack
of
all
trades
2. Focus
on
spearhead
IoT
solu?ons
(vs
cashing
on
exis?ng
brand
value)
3. Focus
in
the
ecosystem
(vs
value
chain
integra?on)
3. Gambling–
strategies
that
play
out
only
in
some
unlikely
scenarios
1. Best
friend
of
the
local
poli*cians
&
civil
servants
–
forget
customer
value
15

16. Internet
of
things,
nothing
or
everything?-­‐
Impact
on
Business
models
The
storyline
today
1. Internet
of
Things
background
–
Behind
the
hype
2. Our
choices
under
uncertainty
–
Business
models
and
roadmaps
3. Cases
of
early
adopters
and
likely
winners
©
Talent
Vec*a
16

17. Three
Areas
where
to
Reinvent
Business
Models
with
IoT
17
Shape
the
future
1.
Value
CreaBon
System
3.
Targeted
Customers
2.
Customer
Value
Delivered
DramaCc
re-­‐engineering
of
the
value
creaCon
system:
”Amazonize”
your
services
DramaCc
re-­‐conceptualizaCon
of
customer
value:
”AppleCze”
your
soluCons
DramaCc
re-­‐definiCon
of
the
targeted
customer:
Source:
Modified
from
original
model
by
Professor
Anil
Gupta
”Xiameterize”
you
Offering

18. Case
Mohawk:
Redefining
Value
CreaBon
System
11/09/1
4
18
1.
Value
CreaBon
System
Source:
Mohawk
website

19. Case
Mohawk:
Selling
paper
from
mill
to
the
door
–
and
gaining
customer
insight
19
1.
Value
CreaBon
System
Source:
Mohawk
website

20. Case
Caterpillar:
Making
mining
more
efficient
with
informaBon
©
Talent
Vec*a
20
2.
Customer
Value
Delivered
The
real
cake:
Instant
learning
from
the
installed
base
to
improve
produc*vity
of
mining
opera*ons
Informa*on
is
more
valuable
than
just
automa*on
Not
selling
mining
equipment
or
automa?on
BUT
constantly
improved
produc?vity!
Source:
FT
&
Caterpillar
website

21. Caterpillar
ProducBon
system
is
the
heart
of
quality
and
customer
saBsfacBon
Visual,
real-­‐*me
process
monitoring
Quality
gates
before
products
are
moved
21
to
delivery/next
stage
Dealer
network
as
a
learning
vehicle
2.
Customer
Value
Delivered
Source:
Caterpillar
public
presenta*on

22. Case
Xiameter:
Redefining
Customers
©
Talent
Vec*a
22
3.
Targeted
Customers
Source:
IMD
Case
Study

23. Case
Xiameter:
Redefining
Customers
23
3.
Targeted
Customers
Source:
IMD
Case
Study

24. Case
Xiameter:
Building
A
Web-­‐enabled
Business
Model
©
Talent
Vec*a
24
3.
Targeted
Customers
Source:
IMD
Case
Study

25. Conclusions?
-­‐
Get
Connected!
1. If
your
business
s*ll
determined
by
OEM/Agent
customer
requirements
–learn
the
needs
of
the
user-­‐customers
2. If
you
s*ll
design,
sell
and
deliver
only
physical
products
–develop
services
and
service
culture
(and
not
just
spareparts
business)
3. If
you
are
not
yet
in
solu*ons
business
–
get
there
1. If
you
are
not
con*nuosly
developing
and
monitoring
your
processes
–start
doing
that
2. If
you
are
not
connected
to
your
partners
and
society
through
web
&
social
media
–
get
it
going
©
Talent
Vec*a
25

26. End
Summary:
Only
the
bold
(and
adapBve)
win!
26
”N
e
v
e
r
tell
me
the
odds”
• Han
Solo,
Star
Wars

27. www.talentvec*a.com
©
Talent
Vec*a