Three insights on how to develop product strategies for IoT businesses

Everyone is looking for the next big thing, the 'IT' factor, the new blue ocean and IoT looks like it might be it. IoT seems to be checking off all the right boxes; it will change the way you do business; it will change the way you develop products; it can give you a Quantum Leap, exploding your business. In order to realize all the advances IoT can provide, businesses need to understand the strategy behind IoT.

Unfortunately, most companies have not learned from their mistakes or even from their success stories, they fail to understand that product strategy is critical. Investments need to be made to develop the capabilities needed to build product strategies. If you cannot formulate the direction for success you will have to rely on pure luck. Tolpagorni's 10+ year odyssey in enabling High Performing Product Management has been distilled into three insights that will enable you to develop the right product strategies you can use to leverage IoT and grow your business:

1) Usage is King - Many companies have focused on marketing and design strategies that encourage the consumer to purchase their products. Designers have been used to craft not only the products, but everything around it from the packaging to the labels, all in an effort to make the product more attractive to buy. Product managers have played their part in this as well, all too keen on adding features solely to promote the 'buying ability' of a product. And for a time, this made sense, but IoT is changing the game.

New business models appear in the world of connected products. Consumers will no longer pay when they acquire a product but rather when they use the product. This has a direct impact on how we design and develop products. The importance of UX needs to be emphasized. The importance of ease of use and even more the Desire to Use (DtU) will be critical to success.

In today's environment of software products, while the intention is probably much higher, the average user only benefits from 15% of the functionality. The new business models for IoT will alter this; your customer will only pay for the functions they use; they will not pay for the 85% they are not using. Product Managers must ensure that they develop the functions that are used not just the features solely to promote the 'buying ability' of a product. Product Managers also need to change the concept of “Buying Persona” and “User Personas”. The “User Persona” is now the buying persona.

In the connected IoT world Moment of Truth is not in the store but in the Usage.

2) User Life Cycle> Product Life Cycle - With IoT the product is no longer 'static', its connected and continuously updated with new features and services. Product Managers have always focused on the product life cycle; how do we launch the product, how do we grow it etc. While the product life cycle is still relevant it is the user life cycle that becomes more interesting; how will we grow the customer over the coming years? how do we design a user journey?

IoT concepts have been around, some as early as the late 90s; and while most have been great products adding value to the consumer its only been a handful that have been able to benefit from that value. We learned to develop from a customer point of view. That's good. But we haven't learned how to develop from a customer journey's point of view.

Consumer behavior is slow to change, it's certainly not at the same speed of change as your development; If you thought development is your bottleneck for the business think again. Consumer behavior will need to change and adjust to your IoT offering. We need to assist our customers in adapting to the world of connectivity. Your IoT product is not an end station it is a beginning for a new way of driving, locking, handling service etc.

The User Journey, and growing customer share, will be more important than Product Life Cycle and Market Share.

3) Cluster Strategy - The IoT business is defined by connections. The value of IoT is created through the communication between “things”. Cooperation between different companies is the foundation of the IoT industry. The network economy is part of the IoT. How we deal and develop cooperation will lay the foundation for your success. To do this we need to make a definition of cooperation. We need to establish two levels of communication:

• i.Ecosystem; An industry domain where standards for connections and communications are developed. Within an ecosystem multiple suppliers, partnerships and clusters exist and compete.
• ii.Cluster; A group of companies creating an offer to customer. Within a cluster Partnerships can exist.
• iii.Partners; Two companies with a point to point cooperation creating a common offering.

A customer will choose a Cluster to work with. The customer choice will depend on the trust of the cluster. How well will it work together and how will it develop over time. Someone has to take the lead in a cluster securing the short term and long term solution.

The difficult questions for all companies are: Shall we create our own cluster and own it. Or should we participate in multiple clusters in the ecosystem?

You must develop a cluster strategy. Shall you invest in one cluster brand and drive the success of the specific cluster. This means that you will have to secure the success of the cluster. You will run it as a Keystone strategy. Alternatively, you can participate in multiple clusters, spreading your risk. This is the Niche strategy where you are the best throughout the Ecosystem in a specific area.

The cluster strategy is the most important IoT decision you will need to make!

If you find these topics interesting, join our free webinars every Tuesday morning 08:27 - 08:57 (UTC + 2); sign up here for the details https://content.tolpagorni.com/sign-up-for-webinar-series-1 . And if you are interested in learning more about Product Management checkout our website https://www.tolpagorni.com/ .