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How Smart, Connected Products Are Transforming Competition
How Smart, Connected Products Are Transforming Competition
How Smart, Connected Products Are Transforming Competition
PRODUCTS ARE
TRANSFORMING COMPETITION
BY
GROUP - 8
BACKGROUND
• Smart, connected products have many of the same physical components that
products have always had but also have new features that make them more
intelligent Sensors and Software
• Many products are connected to the Internet and the “product cloud” which runs
remote software connected to the products named “Technology Stack”
THE NEW TECHNOLOGY STACK
• Substitutes.
– Optimize and tailor offerings. So low substitution threat for their existence
but themselves are threat for other industries.
• Suppliers.
– The new technology make some supplies obsolete and hence their power
decreases.
– On the other hand, other suppliers needed e.g. for sensors.
NEW INDUSTRY BOUNDARIES
- The function of one product is optimized with other related products. Firm is just one
actor.
- e.g. tillers + tractors… from product to systems to system of systems (e.g. smart city)
COMPETITIVE ADVANTAGE
• CA superior value
• But unique value not only through products but through value chain. And
smart, connected products reshape the value chain.
PROCESSES
• Design. E.g. enable the remote service or the updates etc. New set of design
principles.
• After sales services. You need to be predictive in maintenance and productive
in service. Leverage the potential of data for current or potential errors.
• Marketing. Enable new kind of relationships because of data and of course how
these data are turned into insights and actions.
• HR. new skills set
• Security. For data flow, products for unauthorized use, access between product
technology stack and other business systems.
CHALLENGES
• Need for new skills (firm to employees).
• Need for new capabilities (firm to firm’s capabilities). Otherwise threaten from
new competitors. Do you want to see your product being commoditized?
• If the rival offers a broad product, why the customers to select you?
• Customers potential support : Do they value (want) the adding functionality?
Clear value proposition?
• Privacy and security : Do not underestimate the risks.
• New competitive threats : New competitors emerge, the boundaries can
easily be reshaped.
• Wait too long : Do not move slow. Data is everything.
• Internal capabilities : Do not overestimate and seek for capabilities that you
really need!
CONCLUSION
• The article is an example how innovation can reshape the existing things… How
a new business model – “way of doing business” is being born. How value is
created for customers, how value is captured (competition) and the boundaries
of competition.