Ctrl + Alt + Delete = Success

The short version: People who help customers shift thinking, will be more effective at solving problems activating empowered business outcomes, and ultimately selling more products and services.

Albert Einstein once said, “We cannot solve our problems with the same thinking we used when we created them.”

Yes, INNOVATING the business model is like Ctrl, Alt, Delete and it will stick that easy like the ones that already succeeded, like UBER, AIRBNB and the Amazone way on IoT, who are able to leap and change paradigm of how business was done for ages. But how?

[CONTROL] the killer <APP>

Let us together define what A "killer app” is. Merriam-Webster defines “killer app” as “a computer application of such great value or popularity that it assures the success of the technology with which it is associated.” PC Magazine calls it “the first of a new breed.” To a layman, a killer app is a computer application that saves money, time, energy, makes the user safer, or enhances the experiences of the user to the degree that it must be acquired and used.

a “killer app” would be - A product or service at the early stage of a new breed and delivers business outcomes with exceptional profitable returns on the initial investment -

If that makes sense, I’m assuming that you also have acknowledged that we are living today in the 4th Industrial revolution, where the jargon of (Industrial) Internet of Things is defined by objects (Things) that are connected through a TCP IP EDGE connection (Internet) delivering data to an interface like an Application (API). These IoT technology layers do not necessarily deliver business outcomes other than to "ease" the path for data collection, transportation and integration and the core reason why only 26% of IoT (technology) Proof of Concepts are considered successful. 

[ALT] key Elements

At the end of the day, through architecting the business solution, it will become more clear how to monetise the solution. In its most simplified format a solution model would focus on three key elements:

1. Do I(o)T Together: Starting the journey with engagement of stakeholders and partner through a trusted ecosystem
2. Business Outcomes: Focuses on processes by capturing use cases and delivering the value. 
3. Embedded Technology: Leverages the unique characteristic of (data) technology that are connected / integrated into your customer’s environment to produce differentiated value

[DETELE] Sales

Back in the ‘90 the transformation from selling features of products towards customer benefits is the kind of transition we where going through and it is kind of similar evolution in the case of targeting the next (killer) app. The current sales narrative is around pain points and solving customer problems. Generally speaking, individual products solve point problems and are capable of providing the full solution. Unless your sales force does master Psychology of Problem-Solving it is fine but what customers are really interested in is achieving business outcomes.?

Products are simply a means to an end, to achieve an outcome multiple products & services need to be enabled or better described as - architected together -.

A sales person for IoT has become more like a Business Solution Architect who does not sell technology, they build business outcomes.

Not selling technology of course does not mean that the person does not require the a stack of technology to deliver business outcomes. The point however is that the business solution architect does know that customers are not so interested in technology, but are more interested in how it enables their desired business outcomes. They also know that customers can successfully solve their technical problems and still not achieve their business outcomes – Architects at successful IoT companies are on a mission to help customers do both to become a trusted strategic partner and ensuring continued business outcomes for both themselves and their customers -

What is a business outcome? at Dictionary.com they define - business outcome - as an end result or final product. In more directives:

• Achieved end state. The end state includes realistic (versus aspirational) activities the customer will do in the future to achieve its business objectives.
• Verified through measurable results. Results do not have to be financial, but must be both measurable and observable to ensure that they have been achieved.
• Coloured with the interests of related stakeholders. Achieving a business outcome requires coordination and support across functional areas of the company or organisation.
• Reached over time through a problem-solving lifecycle. Realising the end state requires more than selecting a product or service (it begins by defining the business problem and often extends past adoption).

Instead of focusing on bits and bytes, speeds and feeds, we all need to focus on the customer’s desired business outcomes. They connect the problems they are working to deliver the insights with business outcomes, especially when their products or services are technology-based. 

For example, analysing THINGS data at the EDGE, is the element connected to solutions for security, eliminating unplanned production downtime and ultimately providing insights for improving the plant OEE (overall equipment effectiveness) and the customer business outcome for greater profits. Engagement is making you and the customer successful, not selling technology. When we only focus on technology, we have our “outcome blinders” on. When customers see Business Solution Architects working to help them achieve their desired business outcomes, not just positioning how their technology products or services solving existing problems, they are more likely to make investments and partner at a higher tactical and strategic level.

[RESET] a Quick reality check

A commodity product with the original price of $ 15 becomes 10x its value by embedding a $10 camera and $5 WiFi connectivity through focusing on the outcome of “safer neighbourhoods”. Amazon pays over $1 Billion to acquire Ring positioning its Echo smart speaker, with the embedded Alexa voice assistant as a home technology hub as a truly connected / integrated environment. 

“The pace of change is not slowing down, nor is the market getting more forgiving: Customers challenge companies to deliver value to their lives. The pace and diversity of technology — from the promise of AI to the reality of technical debt — challenges prioritisation and budgets. And cyberthreats can destroy a brand’s value in days. These continue to be consequential times for leaders seeking to retool their companies to compete in a dynamic, hostile market.” FORRESTER PREDICTIONS 2019 - 

Over the last ten years, Salesforce.com has grown from an upstart to a market leader in enterprise software. From the beginning, Salesforce.com has focused on shifting the paradigm of computing as much as shifting customers over to its product.

For years, the company’s marketing strategy has focused on the idea of “No Software,” reflecting the shift from packaged, installed software to cloud computing and software-as-a-service. Salesforce.com recognised that only after buyers understood the mental model of cloud computing could they understand the power of embedding Salesforce.com to drive business outcomes like efficiency and improving revenue growth.

Mental model checkpoints

To put the power of mental models to work and architect the business solution you could use the basic ABC checkpoints to start with.

A. Identify the shift The first step is identifying the underlying shift in thinking. This is different than your value proposition. It’s an assumption (usually unconscious) about how the world works. Try to frame it as a From-To model. This is not about bad to good, just better for the current context. As an example, consider companies selling software and services related to “big data.” The shift is not about “simple to intelligent” or “smaller to bigger.” In the area of data, the “aha” might relate to a shift in thinking about decision-making (from intuition to analytics), in data models (from spreadsheets to algorithms), or how the data is used (from target to empower)

B. Find the sticking point Next, determine how mental models are getting in the way of your success. The sticking points are usually in one of three areas. You can tell which one by the associated symptoms.

C. Build the program Shifts in thinking don’t happen overnight, any more than going to a weekend yoga workshop makes you flexible. Think of it like learning a second language or building a new habit – in this case a mental habit. People need to see how the new way of thinking plays out in different contexts and situations.

Monetise the OUTCOME

Now that we have a definition, let’s look at some of the top IoT business models (in no particular order) that could be applied together with specifically addressing Outcomes and Embedding data into the business models;

#1: The popular subscription Model

In case your data products have connection to your customer, you can leverage that "connectivity" to develop a recurring-revenue business model. Now instead of having a one-time sale, you can offer a subscription model in which your customer pays a fee in return for continuous value. A subscription model enables your data solution to implement many of the benefits available to software-only products. Basically, you are introducing an “as a Service” business model for a system that includes software and if needed also the hardware.

By using SaaS models as a reference for your business solution model, you can explore creative ways to monetise your product, not only with a monthly subscription, but also by providing paid upgrades or even implementing a “freemium” model, if your strategy supports it. Another benefit of this business model is that it empowers your team to foster an active relationship with your customer. In the past, hardware manufacturers used to “throw their products over a wall”, meaning that once they completed the sale, they rarely interacted with their customer again. Or when it breaks (bad luck) or needs to be replaced at the end of its life cycle (if you are lucky).

Some common data applications using the subscription model include “monitoring as a service” and “predictive maintenance as a service” and it recommend to turn those “as a service” into Improved OEE, Optimised Workflow or Reduced Energy outcomes “as a business”.

#2: Outcome-Based Model

The outcome-based business model is an example of an innovative approach enabled by data products. The concept is for customers to pay for the outcome (or benefit) the product provides, as opposed to the product itself. 

Remember the saying, “People don’t buy drills, they buy holes?” Well, the outcome-based model works in the same way. Customers pay for the “holes,” as opposed to paying for the drill.

Any company is able to innovate on their businessmodel en enable disruption stead of waiting for the "New Kodak moment" to happen with the focus on implementing an outcome-based IoT business model. For example, you (the manufacturer) can decide whether you’ll lease or sell the assets. If the customer is interested in the outcome (purpose sourced), then they might not want to depreciate asset on their balance sheet. Therefore, having them pay for the outcome change the customer’s views on buying value instead of commodities.

#3: The “Razor & Blade” Model (Like Apple)

In short, In this case, the iPhone is the blade. What is the razor then? That is the iTunes or the set of digital products Apple made available through its store. In fact, when Apple launched iTunes, a CD would cost anywhere between $16 or $18. Today you can get an album for $9.99 or 99 cents per song.

Steve Jobs “said to us, ‘There’re two things you have to accept: 99 cents for every single song, and every song has to be sold as a single.’ And we went home and swallowed hard because that was tough for us to accept for us as a music industry…. If certain songs were really popular we should be able to set the price at whatever we thought was the right price as opposed to the $1 price. Steve said, ‘You know, you’ve got to keep it simple, you’ve got to keep it clean.’”

Your IoT outcome based product can be designed for selling in combination with other products or adding new value to your existing portfolio. In this model, you might position the technology stack at cost or even at a loss since the goal is to get the service experience in the customer’s hands, so you can start (up)selling your "connected" and other products. This business model is sometimes called the “Razor Blade” model, where the goal is to sell more and more disposable razors, and therefore, the razor handle is usually sold at cost or even given away for free.

What is next

Any businesses can start by re-evaluating their customers’ intended outcomes. They should establish feedback loops wherever their customers create value, and then record the resulting insights into their business processes and product management systems. In many cases, new hardware solutions, or the integration of sensors into existing hardware, will push the edge of the company’s network closer to the customer.

The outcome economy challenges long-held notions of how superior products and services are defined. Hardware “at the edge” is absolutely critical to success in this economy. From now on, no matter the industry, hardware will no longer be an afterthought, but part of the DNA of every business.

Of course, one company cannot do it all; the new leaders will be those that can consistently collaborate with others to deliver excellence across a spectrum of capabilities that include a technology stack (Hard & Software). The companies that make those kinds of connections — literally and figuratively — will outrun their rivals today and thrive for a long time to come.