Digital Innovation & Entrepreneurship
T here are now twice as many connected devices as there are people on the planet. And the number is predicted to rise from 21 billion to more than 50 billion within the next decade. Yet the companies that design these products often fail to extract their full value. By failing to anticipate new uses for their devices, they are missing out on opportunities to exploit new revenue streams and extend the shelf life of their products. For example, consumers are repurposing old iPhones as baby monitors, using software designed by a third party. Had Apple foreseen this market, it could have created an app to cater for it. It could also have included a dedicated camera in a later model, designed accessories such as a wall mount for the phone, or worked with third parties to develop these ideas. Instead, other companies were left to cash in. Another example is the Alexa smart speaker. It was designed by Amazon for entertainment and household management, allowing users to control a range of appliances with voice commands. However, it has been adapted to serve as a care alarm for elderly people who live alone. Third parties such as LifePod recognised the potential and have capitalised on it, benefiting from value that could have been exploited by Amazon if it had only thought of the idea. Businesses need to be aware of – and, where possible, anticipate – how consumers use their products, often in ways the developers never intended. If they fail to do so, third parties (and in some cases direct competitors) will continue to capture the value from these
‘emergent uses’. Alternatively, that value will remain confined to a small number of users, with the benefits lost to the wider population. Based on our research, we have created a framework to help companies capture value from the connectable products they create, either directly or by partnering with other organisations. Here are five key steps they can take: 1 . Identify the product category. Connectable products – often known as ‘the internet of things’ – tend to fall into three categories: ■ Touchpoint items, which have direct contact with consumers. ■ Bridge products, which link digital devices and enable the exchange of data. ■ Source devices, which act By establishing which category a connectable product primarily sits in, you can identify the most likely route to obtain future value. It will help you to imagine possible use cases and potential partners that you can work with to develop them. It’s worth noting, though, that some items can perform different roles at different times. Peleton bikes, for instance, can be used as a touchpoint by consumers wanting a workout. However, they can also function as a bridge by connecting to third-party apps and content or a source that analyses workout data to provide consulting as repositories for data, service and knowledge. services for content creators and accessory manufactures. 2 . Establish opportunities to create value. Once you have established the product category, it’s easier to work out how potential future value could be derived.
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