The Internet of Things: the challenge for the C-suite
The Internet of Things (IoT) is starting to transform the way we live, but is it changing the way we do business as much as it could?
Over the last decade, the introduction of connected technologies has changed our lives. Across all manner of physical objects, sensors are being embedded that can track and share information, self-optimize and learn how to perform better — with or without human intervention. Welcome to the connected world of the Internet of Things (IoT).
Edwina Fitzmaurice, EY Global Advisory Business Development Leader, says connected devices and the IoT will increasingly have a major impact on the way the world works.
“IoT connected sensors enable the monitoring of the physical world of machines, ‘things’ and even people, and with some intelligence attached, the devices can communicate and transact with each other,” she says. For example, sensors in a self-driving car connected to a passenger’s health monitor could detect if the passenger was having a heart attack, identify and divert to the nearest hospital, alert the emergency room, advise the family and let the health insurance company know what was happening.
In a world where IoT devices are pervasive and connected, many more scenarios like the example above will be created. So much so that our many aspects of our lifestyles will be transformed.
And with each new lifestyle or behavioral change, new, as yet unimagined, consumer needs will arise, opening new doors for businesses to meet those needs.
The challenge for the C-suite
“The opportunities exist, but for hard-pressed C-suite executives it can be difficult to imagine the future possibilities created by IoT. The C-suite comprehends the need to innovate and set the tone inside their organizations around the importance of embracing new technologies. But then they have to rely on and enable their people to bring forth new ideas to create the breakthrough results” she says.
With that call to action, we see a shift in how organizations respond. Millennials entering the workforce can be an important resource for companies because this group quickly grasps digital concepts and can reimagine how work could be done. Increasingly we see younger managers leading “innovation challenges” inside their organizations to rapidly tap into the art of the possible around the emerging technologies.
It could be argued that middle management has the most difficult position while this challenge is going on; they understand the strategic shift toward disruption for growth but are busy running the current business and have often spent a great deal of their career working on cost reduction or efficiency programs.
“A new type of leadership is required where disruption, creativity, innovation and a growth mindset are demanded, and this can be a challenge for middle managers who have been rewarded for efficiency over many years. Middle management sets the day-to-day pace of an organization and so it is an essential part of any strategic imperative within an organization. Strong change management is important to enable this critical group to lead the change,” says Fitzmaurice.
Making the business case for IoT
Of all the reasons why the IoT has yet to really be fully enacted by the boardroom, the inability to clearly define the breakthrough value it can bring to business is perhaps the biggest.
“Many organizations are still struggling to understand how to apply technologies like IoT to disrupt business and create meaningful and sustainable new business models,” says Fitzmaurice.
The consumer IoT space is gaining increasing exposure, allowing people to understand what is possible now and in the future. We can already see the new normal that comes with IoT-enabled platforms such as driverless cars, personal fitness monitors and connected homes. Consumer IoT is driving the growth agenda, opening up new markets for connected products and services, changing how we live in ways that would have been unimaginable even five years ago in most societies.
What is less obvious, but creates great financial opportunity for business, is industrial IoT — where connecting machinery involved in behind-the-scenes processes can create tangible and substantial business benefits. Industrial IoT is already dramatically improving manufacturing efficiency through supply chain asset tracking, real-time energy use and predictive maintenance, which monitors equipment parts to determine which are starting to falter so they can be fixed long before they fail.
“IoT delivers on both the growth and efficiency agenda in different parts of the business,” says Fitzmaurice. “It’s about grasping the opportunities to create new businesses and reimagining existing ways of working where connected devices, data and people work seamlessly.”
The need for imagination
The key, Fitzmaurice suggests, is a willingness to try things out. “Probably the biggest signal a CEO can give is to start using words like ‘experimentation,’” she says. “The C-suite can lead by setting the tone and creating an environment where experimentation in new technologies is encouraged, where trying and failing fast is allowed and even rewarded.”
The potential is emerging for the IoT to change the way that businesses operates and the technology is advancing at a pace. Taking advantage of this opportunity requires bold ideas and companies willing to pursue them. Business leaders need to understand what IoT is and what it can do. Experimenting with it is a fast and effective way that many companies are already employing in order to gauge what impact the IoT could have on their existing processes and business models.
But the real opportunity with IoT is unlikely to lie solely in answering the question about what IoT is. The opportunity for business leaders lies in coming up with better questions to imagine what their business could be in a world where people, things, data, intelligence and places are connected. The answers for IoT are out there, the breakthrough for business is seeing the better question to meet a new and unimagined need.