Welcome back to our series on industrial IoT enablement and practical business transformation. This series helps product owners, influencers, and key stakeholders to plan, build, and commercialize their connected product systems and digital transformation initiatives.
In Part 1, we divided our audience into two groups. The first were looking for basic performance monitoring options. The second sought a different path. How could they move past the current predicament of commoditization, labor shortages, and more nimble competitors? How could they better serve their customers and supply chains and increase their market share?
Then we touched on recent technology advancements from public cloud vendors like Microsoft Azure and AWS. Today, there’s a lot more ready “on the shelf” for building your industrial IoT platform. Yet big gaps remain, along with opportunities for innovation. We’ll dive deeper there with future posts in this series. In this article, we will discuss how to begin the process of sustainable organizational change, and align teams and incentives for digital business success.
Truths and patterns
So what does it mean to become an industrial digital enterprise? Perhaps your company has been making great engines or pumps or heavy equipment for decades. In contrast, you might be a newcomer with breakthrough additive manufacturing equipment. Or a chemical company providing water and fluid treatment solutions to facilities around the globe. Maybe a cold chain storage and distribution company. What do all of these have in common?
Having worked with these different enterprises and more for several years, we’ve seen a few distinct patterns. There’s no one-size-fits-all answer. Nor a rigid step-by-step program. Unique constraints, goals, and long-term visions result in different approaches and results. However, certain key truths and actions exist that vastly improve the odds and levels of success – but only when understood by those responsible for bringing change to their organizations.
Why starting small is a mistake
The most misinterpreted bit of advice when it comes to industrial IoT and digital transformation is “Think big, start small.” Before you cry heresy, let’s dig a bit deeper here.
For industrial IoT, thinking big should refer to the different kind of company you want to become – to the magnitude of change you are prepared to make to secure your future. It doesn’t mean a dramatic product launch, or specific new service offerings. It may mean changing from a hardware company to an information company. Or a sales organization to a service provider. We’ve seen cases where a storage facilities company became a full service supply chain logistics and distribution leader.
“Thinking big” means the organization, from the top on down, is committed to the digital transformation journey itself rather than simply shipping the AssemblyTron3000.
In fact, organizations who plan too many details upfront are often the ones who declare their digital strategy a failure several years later. And it won’t be for lack of investment, that’s for sure. Instead it will be their insistence on following an unwavering path instead of adjusting to new realities on the way. Specific goals that made sense yesterday may be irrelevant just 6 months from now. Sometimes 6 weeks… Today, new technologies and business models are moving faster than the typical “big idea” development cycle. Tomorrow’s leaders ride these waves. They’re committed to incremental progress in the service of the overall vision, not rigidly specific deliverables.
Getting in to win
So how do you commit to big, multi-year change without a big, multi-year plan? How can you measure progress toward your vision without a full list of feature-laden milestones? Critically, how do you properly fund such an endeavor? Here is where it’s important to choose the right platform and development approach from the beginning. This is where your corporate stage gate process must be reshaped for evaluating digital initiatives. Agile development is not a license to just make it up as you go. Iteration is not speculation. However, the same steps your company has used successfully for decades to greenlight and manage hardware projects can be downright toxic to digital transformation initiatives.
A hard truth about industrial IoT adoption is that many of the hardest challenges occur when the value is lowest – in the beginning. That’s why requiring an IoT pilot project to set a specific monetary ROI as a condition for initial funding – and then writing off the effort as a failure when it doesn’t produce the “expected” result, is an unfortunate and common misstep.
The goal of the pilot should be learning, to prove or disprove a specific value proposition. We’ve seen companies discover their hypothesis was completely wrong, but uncover far greater benefits as the pilot runs. Sadly, we’ve seen a few of these projects shut down at the next stage gate for not delivering on the metrics that were agreed upon to win approval of the previous stage.
Methodologies designed for sustaining innovation – creating new equipment models for example – simply cannot be used to drive disruptive innovation.
Born to scale
So how does this apply to actually building something? Exactly the same way. Is your long-term plan to leverage data from both brownfield and greenfield devices, and even competitors’ equipment? Then a snappy “off the shelf” service supporting only OPC UA isn’t going to get you where you want to go. Does your vision entail bringing together workflows across your enterprise, such as aftermarket service and consumables sales? Then your platform must provide secure data management, and enable integration with whatever ERP and CRM systems exist inside your organization. Maybe with the systems in your customers’ organizations as well. You don’t need to enable all of this right away, but your architecture must absolutely account for it upfront.
As noted in the Harvard Business Review, digital initiatives that start with the end in mind are twice as likely to reach production scale. How does this work? Structuring your project correctly – at both the business and architecture levels – lets you quickly incorporate what you learn along the way. As a result, you spend less money and commercialize sooner.
To see what this looks like in action, I encourage you to explore our series on Zero Waste Engineering, or contact us for an evaluation or exploratory workshop. We’ll continue to look at other essential activities for delivering successful digital transformation in future posts of this series.