"IoT is about a journey, and you should have a notion of what the long journey is," Rossman says. "But you need to proceed in small, agile, low-risk bets as you seek to prove out what works and what doesn't. Understand what the small bets are that you're making relative to IoT and other innovations, de-scale the risk of those bets and they're no longer a bet anymore."
IoT principle 6: Use IoT to become a platform company
A platform business model, which allows other businesses to leverage your capabilities to build and grow their own businesses, creates a strong, sustainable competitive advantage for your business, Rossman says.
Seek ways to allow other businesses to leverage your connected devices. "A platform business is a type of business that enables others," Rossman says. "IoT, for some companies, provides the opportunity to think about how your products and services could be a platform for other companies to offer insights and services to their customers."
IoT principle 7: Facilitate outcome-based business models
Selling products is well and good, but IoT-connected devices allow you to go a step further and sell outcomes. Under an outcome-based business model, customers pay for the results a product or service provides, rather than the product or service itself.
That, Rossman says, shifts ownership, effectiveness and maintenance responsibilities from the customer to the provider; it also aligns customer and provider interests. "This is about the opportunity for companies to get real-time insights into how their products are operating with customers," Rossman says. "You transition to being a product with maintenance to providing the outcome that your customers want."
These models encompass a number of variations, from self-monitoring services that replenish themselves automatically, to subscription services with a regular fee, to 'as-a-service' businesses with services tailored to individual needs. Rossman acknowledges that outcome-based business models are not the right fit for every business, but if they are, he says, they can increase your profits, improve your relationships with customers and increase customer loyalty.
IoT principle 8: Find a path between monetizing data and protecting privacy
Data just may be the new "black gold." While Rossman says it's as yet difficult to find examples of IoT-based companies that have successfully packaged and sold their IoT data, the time is coming. The confluence of sensors, cloud computing, third-party data sources and APIs will all feed into the market for IoT data brokerages.
"The data is the business model," Rossman says. "If data is the new black gold out there, then IoT creates a lot of data. Some companies will have the opportunity to create value and monetize the data they're creating from sensors. It's a business model that you'll see more and more of going forward."
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