Guideline: 5 steps to a successful IoT business model

The Internet of Things can offer companies numerous advantages and business potentials: more efficient processes, but also new service offerings, including completely new IoT business models, through which markets and target groups can be developed. But how do you get from an idea to a successful business model? Our new guideline “IoT Business Model Innovation” accompanies companies step by step from setup to validation and implementation, and offers insights into real IoT use cases.
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Guideline "IoT Business Model Innovation"
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IoT Business Model Innovation

IoT business models: Huge potential, numerous hurdles

In 2020, German companies are finally seeing the arrival of the Internet of Things. According to the current study “Internet of Things 2020” by IDG Research Services, 51% of the companies surveyed in the DACH region have now implemented IoT projects. Another 18% plan to implement IoT projects in the short or medium term, and 21% are currently developing their own IoT strategy.

This commitment is well founded. The potential of the Internet of Things is enormous. On the way to a successful IoT business model, however, companies must also overcome numerous hurdles. These do not just include a lack of IT specialists or challenges such as data security and outdated IT systems. Promising IoT projects often fail before they are even implemented. Or even worse – they are implemented even though they have no prospect of success.

Innovation in 5 steps: Setup, Discover, Design, Validate, Decide

These mistakes can be avoided, however, if you follow a clear red thread in the development of your business model and observe central criteria for success – above all: the focus on the customer. The credo of user or customer centricity is allegedly no longer a novelty, but it is nevertheless repeatedly neglected in everyday corporate life. Even today, companies sometimes continue to develop behind closed doors for years, invest enormous sums of money, make decisions based on recommendations from the market research department instead of user tests, only to find that their perfectly-developed product or service cannot find a market.

Business Design - IoT business model
Step by step to your IoT business model – with customer focus, short learning cycles and testing based on hypotheses

The guideline “IoT Business Model Innovation” provides this thread and divides the development of an IoT business model into five different phases – Setup, Discover, Design, Validate and Decide. Companies learn what organizational basis needs to be created in the Setup phase to enable successful project work and how they can define their innovation focus in the Discover phase. The subsequent Design phase concentrates on the development of concrete ideas, which are then concretized step by step and developed into business models based on established tools such as the Business Model Canvas. In the Validate phase, the IoT business model must then be evaluated using tests and hypotheses before the Decide phase focuses on preparing the roll-out.

Insights into real IoT use cases

How the path to a successful IoT business model can look like in practice is illustrated using the example of numerous concrete IoT use cases: These include the smart, IoT-based maintenance of the Swiss Feintool International Holding AG, as well as modern building cleaning with “Kärcher Fleet” or the “Pay per Cup” business model of an international company in the system catering industry.

In this way, the guideline combines proven innovation methods with concrete examples from IoT practice and provides companies from a wide range of sectors with guidance for their own IoT innovation work.

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Get 40 pages of knowledge on IoT business model development in our free guideline.

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