Things connected to the Internet are radically changing the very structure of consumption and competition, and companies have to rethink their strategy and relationships with consumers. This creates new opportunities at the intersections of different types of businesses.
As an example, I would like to take the automakers who unanimously talk about a change in approach to the introduction of new services. Today, the average period for introducing new features into a car is several years, and a big challenge for automakers is to learn how to do it much faster, so that no more than a few weeks pass from an idea to an MVP (Minimum Viable Product). After all, consumers are already accustomed to the fact that updates on their computer, smartphone or even car happen overnight and fly to them “over the air”. A striking example is Tesla, which sent out and set all its customers to autopilot overnight. This practically means, that while in the evening a man was driving himself, the next morning the car drove him to work in a self driving mode.
Similar technologies and solutions based on them require a significant revision of existing technologies used to create products. Cloud technology and agility are required for product development.
In fact, we are on the verge of a new technological evolution, which is changing everything on its way, from how business and competition are structured to user consumption patterns of services.
Harvard Business School professor Michael Porter identifies 3 major milestones. The first is the creation of a computer and the automation of processes - order processing, accounting, etc. This has led to a huge increase in productivity. The second stage in this process is the emergence of the Internet, which connected computers into a network, which allowed connecting suppliers with manufacturers, customers and sellers, this also led to huge changes in competition, what we see now is not about the value chain, now IT technologies are being incorporated into the product itself, and this is already changing way the value is created, which has a significant impact on competition in general. That means that now each product has a large software component, which is located in the "cloud".
Companies are introducing smart technology into their products almost in all industries Starting from Nest consumer products such as smart bracelets, smart refrigerators and washing machines, ending with General Electric, which implements hundreds of sensors in aircraft engines, which allows you to know the technical condition of the engine and to predict repair and maintenance accurate to days. This technological boom has certainly affected industries such as auto insurance. Companies that develop smart devices for connecting a car to the Internet collect data on the behavior of drivers behind the wheel, process them in cloud servers and help customers get new types of services and goods exclusively from the data that these devices collect.
Similar goods and services lie at the intersection of different types of business, creating relationships that did not exist before. For example, the Russian startup Smartdriving.io has developed the Element device, which connects any car by a flash drive. It simply plugs into the diagnostic port, and opens up incredible opportunities for both the driver and companies. The device itself is the key to a number of services and services, which can be conditionally divided into 3 types: “smart” insurance, control and management (the ability to remotely control a car via a smartphone) and anti-theft system. Individually, all these solutions have long existed and have been operating on the market, but by combining them with one device and turning them into services and additional services based on a single telematic platform, the Smart Driving Laboratory actually changes the structure of competition in the market.
When the companies such as Smart Driving Laboratory appeared, expensive services such as satellite alarms are simply becoming one of the options and competition moves from the hardware area to software. Such an approach creates a much closer relationship with the client, which, in turn, allows companies to earn money not by making a one-time purchase, but by selling additional services and services, and allowing them to conduct a subscriber business model more efficiently. Of course, such opportunities have a negative side, because creating and maintaining a large number of services and services for users costs a lot of money, and it is important to maintain focus on those functions that are really useful for consumers willing to pay for it.
I am sure that the future that we are speaking about as something remote has already arrived. Only those companies that can adapt their strategy and business model to new technological realities will stay competitive and will find its niche in the emerging market of “smart” things and technologies.