How to Create the Next Billion Dollar Opportunity in Wearables, Internet of Things
If you’re reading this article, chances are that your company is about to embark on idea generation for wearables and IoT or you’re already knee deep in the process. This article provides a helpful framework to systematically develop the next billion dollar wearable and IoT opportunity that’s right for your firm.
Others have the same idea or a variation.
In finance, the Efficient Market Hypothesis asserts that financial markets are informationally efficient and therefore one cannot consistently achieve higher returns than the market average on a risk-adjusted basis. In other words, the great idea that you have is already known by others as everyone else has access to the same articles, research papers, pending patents and other secondary research. All research, including private R&D, is based on prior published work.
Case in point. Your team is convinced that ‘force illusion’ or ‘force display’ is a game changer. Haptic interfaces created by an asymmetrically vibrating actuator can give the sensation of being pushed or pulled. Your reporting line is convinced that this new technology will disrupt gaming, 4D simulators at amusement parks, and even communication with the added dimension of virtual touch. Overtime, you’re told that this technology can evolve to recreate g-force like sensation of a rollercoaster through thousands of actuators stitched into a vest or jumpsuit. Do you think that this is only known by your team? Then, how is it that I’m writing about it?
The question shouldn’t be which idea is most disruptive but rather is your firm best qualified to pursue that idea?
Your strategy and business development team identifies that cognitive computing is the next big frontier in wearable computing. Whether your firm chooses to pursue that opportunity will depend on your company’s core competencies and value chain to execute the strategy.
What are your company’s core competencies? What does your company excel better than any other firm in your vertical? Core competencies are the source of competitive advantage that enables a firm to introduce new products and services. For Pepsi, it’s product strategy. They made an early shift away from sugary soft drinks to healthy drinks and snacks. Soda accounts for just 25% of Pepsi’s U.S. sales compared to 60% for Coca Cola, positioning Pepsi to better navigate changing consumer preferences.
When determining your firm’s core competency, it should meet the following criteria: 1) contributes significantly to the product/service benefits, 2) provides access to wide variety of markets, and 3) creates a barrier for competitors to replicate.
In 2006, the news of Amazon entering cloud computing services with the launch of Amazon Web Services (AWS) had some people vexed. Why was the giant online retailer pursuing a non-core business? It turns out to run the #1 North America online retail site, they had built up a massive data center infrastructure, with servers sitting idle during non-peak hours. The surplus capacity meant that Amazon had an opportunity to leverage their physical assets to generate new cash flow from hosting and storage services. Similarly, innovations such as Amazon Prime, AmazonFresh grocery delivery, Amazon Dash, Amazon Prime Air, Fire TV, and Amazon Appstore leverage their core competencies in fulfillment, shipping, freight, logistics, supply chain management, and content distribution to extend their product offerings.
The intersection of market opportunities with core competencies form the basis of launching new products and services. Hence, idea generation is a constrained optimization problem. By combining a set of core competencies in different ways and matching them to market opportunities, your company can launch compelling new products and services. Unfortunately, the process isn’t so straightforward.
The problem is that most managers have difficulties seeing beyond the first degree of market opportunities. They’ve moved up the ranks specializing in a domain area and might not be comfortable going beyond their immediate area of expertise. For instance, your reporting manager is an expert in MEMS component technology but is uncomfortable exploring business opportunities outside of components into new areas such as touch and proprioception in textile haptic technology. So you bring in an outside expert, perhaps a researcher from academia or a consultant from a pure strategy firm. After months of deliberation, they identify business opportunities that are 4 to 6 degrees away, some of which are pie in the sky with no consideration for feasibility of implementation.
What you need is something in the middle that balances realism with new opportunities that can extend your product and service offerings. In the next steps, identify the wearable and Internet of Things opportunities that overlap with your core competencies.
- Smart Body – Body area network
- Smart Life – Personal area network (home, car, work)
- Smart World – Wireless sensor network (street, buildings, places)
There are three primary vectors to consider when generating business concepts for wearables. First is to understand the special characteristics of wearables, not superficially but with depth to help you spur idea creation. Next, identify the sector(s) that your company competes in and/or new sectors that your organization is evaluating. Then within a sector, find a specific use case or a business problem that you wish to solve. When these three dimensions are applied, it can help crystallize business opportunities.
- Hands-free, allowing the wearer to multi-task. What use cases would benefit greatly from being hands-free? Start building out an inventory of those possibilities. What are the types of activities that are they engaging? What information do they need?
- Continuous and consistent interaction with the body. What are all the possible things that could benefit from constant monitoring of your body?
- Immediate access to information. What are scenarios and types of information that a wearer would need urgently? For example, it may be inconvenient to search for information on your smartphone while rushing to catch a transfer flight, toting luggages and a laptop bag. Or perhaps a person seated next to you at dinner goes into an epileptic seizure. What should you do?
- Frictionless authentication. How can wearables remove friction in accessing logical, physical, health and other private information or in financial transactions?
- Wearer’s context. Where are you? What are you doing? What were you doing before this? What do you need now? Apps of the future will be predictive, proactive and present, always listening and making sense of your context in the background to deliver value-added information or recommendation, just at that perfect moment.
- Sensory integration. How could wearables be used to enhance one’s physical capabilities, such as improved hearing, optical character recognition to convert text into audible reading for the blind or perhaps magnifying the strength of a warehouse worker or soldier with an exoskeletonal suit?
- Augmented reality. How could AR or VR be applied in the office to handle productivity apps in the ambient air; to overlay the physical world digital content to provide value-add information; or to create an immersive experience that transports you into a virtual world?
- Communication and media. With Google Glass and GoPro, we are starting to see some of the possibilities from hands-free video recording, photo taking, videoconferencing to sharing. What are other opportunities that arise from the ability to record, share and communicate, hands-free?
- Wearables as a controller. What are possible things that we can control through a wearable device? How could wearables be used to control the TV, presentations, games or become a controller for IoT in homes and connected cars?
- Health and biometric data. Sensors such as heart beat, heart rate variability, blood oxygen level, blood pressure, blood glucose, electrodermal response, temperature, EEG and other sensors offer a wide range of health and biometric information. How could these sensors be used to profile your health, emotional and physical states?
- Movement. What are other possible ways that movement can be used to better understand the wearer’s context, activity and physical response?
- Geolocation data, events, and transactions. All of this act as almost like a cookie for the physical realm that remembers what you have done, where you have gone and what you have purchased. How could such historical and current information be used to deliver new value?
Coca Cola’s core competency is their ability to utilize culturally relevant campaigns and live events to promote the notion of ‘happiness’. When you overlap their core competency with Smart Body characteristics: 1) continuous and consistent interaction with the body, 2) wearer’s context, 3) health and biometric data, and 4) movement, it gives rise to real-time brand engagement feedback and optimization or what I call ‘Emotion Sensing Marketing’. Through the use of sensors, advertisers can measure and quantify consumer reaction to brands. Biometrics such as heartbeat, temperature, sweat, and breathing can give indication of their excitement and physical reaction to a brand or product. Similarly, using computer vision, facial gesture recognition will give great clues into how they feel and their response to brand engagement. That goes for eye movement, human tears, body movement and even listening for signs of emotion through the mic (without recording the actual spoken words), such as laughter, sighing, crying, and gasps. Through the use of wearables, Coca Cola can ascertain the improved state of happiness of viewers before watching a commercial and after. Such precision and quantification of Emotion Sensing Marketing is powerful and can be applied to campaigns, brand messaging, promotions, live events, experiences and content.
- Controller. How could wearable devices be used to control your car, home and office equipment, enterprise apps and systems?
- Optimization. How could wearable data be used to optimize worker productivity or optimize the temperature in your home?
- Automation. How can wearables be used to comprehend and interpret your needs and then automatically handle tasks on behalf of the wearer?
- Risk mitigation. How could wearable technology be used to save lives, deter crime, and reduce human error?
- Communication. How can wearables play a pivotal function in centralizing all your communication needs at home, in the car and at your office?
Consumers and privacy hawks have expressed grave concerns about IoT privacy and security issues, from wireless phishing, endpoint attacks, data interceptions, and numerous other Wi-Fi deficiencies to low-energy Bluetooth that is susceptible to denial-of-service attacks, eavesdropping, man-in-the-middle attacks, message modification, and resource misappropriation. For instance, RSA, a division of EMC, with its core competency in encryption and network security can extend their current product and service offerings to secure IoT communication, working in conjunction with chip makers and sensor manufacturers on firmware.
3.3. BAN and PAN interact with the broader Smart World or wearable sensor network (WSN), consisting of smart connected objects in homes, businesses and our surrounding that has the ability communicate over a multimodal network without human-to-human or human-to-computer involvement.
- Monitoring. Once these sensor nodes are placed on or integrated into an object, there is constant, continuous monitoring. Depending on the type of sensor, it can monitor a myriad of information such as usage, movement, temperature, smoke, vibration, pressure and so forth.
- Big data analytics. According Cisco, annual worldwide mobile data traffic will reach 130 exabytes by 2016, due, in part, to a projected surge in the number of Internet connected devices. How can this data be used to build statistical and data analyses that can help identify patterns, thresholds or be used to build models to help you predict so that you can turn data into actionable insights?
- Optimization. How can you, through data analyses, solve optimization problems, from household energy consumption to citywide optimization of traffic, energy and water usage?
- Communication. Objects that previous had no voice will be able to relay data between other IoT objects and wearables. How does this create new M2M communication use cases in your home, car and at work?
- Automation. Many connected sensors will be smart with the ability to execute tasks. With smart sensor technology, things like smart thermostats can automatically regulate the temperature of your home for maximum comfort when you’re home vs. when you’re away. On a large scale, what opportunities are there for automation?
- Workflow. Given the intelligence of these sensor nodes, self-regulating tasks and communication with each other, it creates an opportunity for orchestration of multiple systems and workflows based on business rules and logic. What are possible M2M workflow use cases?
Bechtel’s core competency is in civil engineering, ranging from civil infrastructure, power plants, communications and transmission infrastructure, to oil, gas and chemicals plants. Imagine the global impact if every Bechtel project incorporated IoT sensors? It could translate into billions in savings from better energy use and higher safety and risk mitigation. A new division can be created just to provide IoT monitoring and optimization service after the commissioning and handover of a project.
How ready is your organization to seize the opportunity? It requires an unbiased assessment of your company’s value chain. In some cases, using a third-party to benchmark against your competitive peers to pinpoint the gaps. It may mean shoring up gaps in specialized knowledge/ experience through new talent acquisition or M&A, new technologies, new/ enhanced processes, etc. We’ve seen with Apple the insourcing of new talent with specialized expertise in fashion and wearables. In the case of PwC, the acquisition of strategy firm Booz & Co. rounded out their high-end consulting capabilities. To be successful, it requires retooling and sharpening the saw.
In sum, great ideas alone don’t equal success. The right ideas that overlap with your company’s core competencies and the uniqueness of wearables and Internet of Things have the potential to create new-to-the-world products and services. The holy grail to the next billion dollar business is fraught with traps and snares, from market hype to internal stakeholders steering the ship in the wrong direction. The framework presented in this article can help you get closer to that breakthrough idea+execution.
Originally published on Wired on August 4, 2014. Author Scott Amyx.
Strategy | Innovation | Product Development | Data Analytics
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