*This episode of the Industrial IoT Spotlight Podcast is sponsored by the Industrial Internet Consortium

How can the IIC business strategy and solutions lifecycle task group help to de-risk the adoption of IoT in enterprises? What is the framework for understanding IoT in the context of business transformation? What is the real impact of IoT that forecasts are unable to capture? What is the impact of the IoT platforms market on the acceleration of IoT adoption? 

The adoption of IoT is not a step into the unknown; it has been diagnosed and has an envelope around it. Putting together 10 years of software, 10 years of hardware, and 10 years of communications experience, the IIC business strategy & innovation framework allows project managers and executives to understand and manage the scope of the challenges that come with implementing IoT in traditional organisations. 

Jim also discusses the real impact of IoT in the economy beyond predictions of devices and market value, and how to develop internal capabilities to harness the power of IoT in an organisation. We also look into the IoT platform market as an accelerator for adoption and scale, and discuss the future of this highly dynamic market. 

Links Mentioned: IIC Business Strategy & Innovation Framework 

Erik: Welcome back to the Industrial IoT Spotlight. I'm joined today by Jim Morris. Jim is the head of strategy and partnerships at Nokia WING. And Jim is also the co-chair of business strategy and solutions Lifecycle Working Group at the Industrial Internet consortium, as well as the chair of the business strategy task group. Jim, thanks so much for taking the time to talk with us today.

Jim: Thank you. It's great to be here.

Erik: So today, we're going to be discussing the business strategy and innovation framework. But before we get into the details of the framework, let's just cover a bit of your background, Jim. So maybe starting with Nokia, what does this mean? So strategy and partnerships, this is a broad scope. What's actually the scope of your business with Nokia WING?

Jim: First, I'm within the Nokia WING division. So WING is a connectivity platform, we enable connectivity of all types, so cellular connectivity, low power, wide area, connectivity, including licensed exempt satellite in all countries around the world. So it's a connectivity platform delivered as a managed homogenous service. And for that group, I'm head of strategy and partnerships with other outside organizations. I also look after go-to market support and consulting support for that division.

Erik: Partnerships, can you just explain briefly the importance of partnerships for Nokia WING because I think really in the industrial IOT space, they are more important than maybe they have been with previous technology waves.

Jim: Absolutely, they are. Partnerships are crucial for Nokia WING as they are for really any company engaging in industrial IoT. Industrial IoT represents a new way of doing things. There are business models, which pull on different elements of organizations and force companies to work together in new ways, sharing data, and collaborating to bring new propositions to market. This is a new way of doing business. It's a new way of the economy working in many ways. And frankly, what we're seeing at the moment is a transition from old pre-IoT industries figuring out how to adopt IoT and that process of transformation. When there's a big shakeout in the industry and in the economy, we may we may reconfigure new titans of the IoT era may emerge. But it hasn't happened yet.

Erik: Even some of the companies that previously were to an extent one-stop shops in industrial automation, for example, now seem to be opening up a little bit as new technology domains that they don't have a world class competence and are becoming relevant. Jim, you are co-chair of the business strategy and solutions Lifecycle Working Group. Obviously, this document came out of this working group. But a higher purview, what are you guys trying to accomplish?

Jim: Really, what business strategy and solution lifecycle is about is trying to take the learnings and the technical development and the thinking of the industrial Internet Consortium and provide a window onto that which is aimed at a project manager. So effectively, it's about derisking the adoption of IoT technologies. There's obviously a huge demand to adopt instead of things, technology. Technologies, a lot of companies are working on it. And basically, we realized that to effectively be a project manager in an Internet of Things projects, you need 10 years of communications experience, 10 years of hardware experience, and 10 years of software experience. So it's quite a challenging thing to do. And I think what we're trying to do is, is to educate project managers and senior managers, and CXOs of companies who are looking to engage in IoT. We're helping them to understand what it is they have to do. And that's in terms of the scope and all the things they need to address and sensible ways to address some of the challenges that they will come across. And basically, that comes down to derisking the adoption of IoT technologies.

Erik: And then today, the discussion at hand is the business strategy and innovation framework. What are the origins of this? What was the original question, the original challenge because this was certainly a significant amount of effort that resulted in this document? So, what was the primary cause here for you guys to sit down and it was several companies involved.

Jim: Effectively, this business strategy innovation framework embodies the first level delivery of kind of what I was just describing around business strategy and solution lifecycle, so this is the derisking of the commercial aspects and the idea generation through to handing over to solution deployments. And the idea really was to get our arms around the whole problem. Certainly, when we sat down to develop the BSIF, one of the things that really motivated us was that we felt that many project managers didn't really know where to start when looking to adopt IoT technologies. And so they might pick out five or six top things that they need to focus on but then miss three or four others; and of course, missing those three or four others new causes problems in terms of execution and delivery of projects and so on.

And what we want to do as a group of people effectively with a stamp of the industrial Internet Consortium certifying that this is effectively an independent thing and an industry best practice thing was set out to list all the things that a project manager or a CXO engaging in IoT would need to think about and consider right through to the point where they hand over projects for deployment.

Erik: So this is intended both for a project manager who's responsible for the product and then also for the decision makers that are maybe responsible more generally for the business but want to make sure that they have all of the bases covered from the technology through the business model?

Jim: Exactly. Really we're trying to make sure that the adoption of IoT is not a step into the unknown, it's a step into something which has been dimensioned in scope, and it's a known envelope to address.

Erik: So we're starting first with the market context outlining the opportunity. I think this is something that at a high level, people understand these numbers have been kind of thrown around by different corporates for a long time. But how do you view this from a product manager perspective, maybe somewhat of a bottom-up perspective, as opposed to the 50 billion devices?

Jim: This is the problem with the big forecast numbers. They both overestimate and overemphasize the opportunity, but underestimate and don't adequately communicate the impact that IoT is going to have. So the reality is that IoT is going to transform business models, it's going to transform the economy and the way that we work. And that's a much more fundamental concept than just connecting in 50 million devices. And I think that we try to pull that out in our analysis of some of the business and market drivers and societal drivers; recognize that yes, there are big numbers, but actually, let's move on to the significance of this. And actually, it is significant to every company and every enterprise.

Erik: When I talked to a lot of companies, it's actually the business element or the strategy element that's often more interesting, and to an extent more perplexing than the technology. So if I feel like a lot of companies feel like the technology is okay; in some cases, it's still under development, but generally speaking it's something where they feel comfortable evaluating what are the options out there. But then when it comes to the business model, there's a higher level of uncertainty regarding will my customers adopt a new process and opt to do pricing model? Is this kind of what you're getting at with the strategy element is looking at innovation in how IoT technology allows you to alter the way businesses run?

Jim: Yes. There are different groups of companies which are looking to adopt IoT technologies are two broad categories. And some are really just seeking to automate and make more efficient the things that they already do. The others are taking a view on what their customers actually want and trying to find a way to better deliver those solutions and to enter restructure their businesses to better deliver to those needs. And it's the second approach which really is the right approach to take with this.

Erik: I think, intuitively, the second approach is the right approach. It's certainly not the approach that many companies take. I think many companies kind of okay, this is what R&D is produced, now how do we sell this? How do you talk to companies about how to shift? Because this is a it's a mentality shift, it's a shift in terms of how their business is structured, their innovation is structured. So it's not a simple kind of Eureka moment. There's actually some work that needs to get done in terms of changing how you bring a new product to market.

Jim: Yes, there is. And it's hard to do, because in many ways, it's impossible to point to the future, doesn't exist yet. It's so it's hard to underline really how things are going to change. But often there are comparables. So no matter what industry a company might be participating in, you can look at other comparable industries, things that are happening, for instance, in the aerospace industry and the power by the hour there and the way that some smart cities applications work.

And you can look at the transformation and the transformation in fleets and some of these things and apply those across industries effectively and underline that business models will be changing. And then I think the thing to do is it wants that concept has been accepted is to get the right group of people in a room and just workshop the situation say, well, really what do our customers want? Are we are we selling? Are we selling drills? Or are we selling hoes? What do people actually want? They want a hole in the wall, but they feel like they have to buy a drill. Or is it actually a drill they want? And it's about establishing that customer need and trying to better deliver it.

Erik: And I was talking with Stan Schneider about around the connectivity earlier this week, he had a great point, which is people traditionally, but really still today primarily look to other companies in their own vertical for inspiration. And it's really more productive to say we're trying to build a particular type of value creation model, now which other companies have done this. And very likely, they're going to be companies that are in completely different verticals that might be two or three years ahead of us in terms of adopting technology. In the document, you then outline the process of ideation and so forth. There's the lean startup methodology, are you kind of leaning on that for inspiration, or do you feel like there's a different methodology for how to have a more effective ideation model for the industrial Internet?

Jim: So the business model innovation segment that was very much drawn on the experience of Bosch software innovation, and Veronica Brandt, who spent a lot of time workshopping with clients specifically around what's different about the instead of things. And the first element, in terms of her approach is more traditionally aligned in terms of just looking at production optimization. So that's doing the same things, but better and more efficiently effectively.

And then the IoT piece is very much looking at the new business models, and that's the very open ended and blue sky brainstorming. That's the piece that's different from more traditional systems integration which focused more on efficiencies within an organization and within the delivery of a service or a solution rather than really transforming what it was that was done and generating new value networks of partners. That's what's new about IoT.

Erik: And then high level, we could divide this into two categories of solutions. So one would be a product that is being sold to a third party and then you could have new ways of creating value or monetizing process data. And then on the other side, you would have our internal operations and new ways of creating value for internal stakeholders. Do you take different routes For teams that are tackling these different issues, or is it the same fundamental approach but then just kind of different groups of stakeholders?

Jim: No, it's quite different actually. So, in terms of production optimization and making products more efficient, it's classical reengineering approaches. So you’ll get people from the business, you get to get stakeholders from the business and identify where the pressure points are, where the pain points are, where the faults are on the production lines, etc, and just go back through root cause analysis and fix things. That's a fairly standard reengineering approach.

The new IoT concepts very much are more blue sky in nature and you need to start reaching out to customers, you need focus groups, you need detailed user groups and just facilitated conversations to try and understand really what it is they need, because obviously, they'll be in the mode of being used to consuming what it is that the market offers them. You need to somehow get behind that and to understand what they need and better match those needs.

Erik: And then I guess, you have a class of solutions that are amalgam of both. So if I'm thinking about, I believe Adidas has some new facilities where it's mass customer issues, so, you go online somewhere, you select from tens of thousands of different options and then it's automatically sent to the supply chain to the factory, very small workforce in the factory, so highly automated, and the shoe would then be delivered. And so you have kind of very few human touch points. You have mass customization. You have an ecommerce solution. So you're changing the path to market of the product. You're to an extent cutting out the distributors.

From the customer standpoint, it's a new way to buy shoes. You have much more ability to customize the product. From a supply chain standpoint, it's radically different from a path to market in terms of the distribution network, It's also different in terms of some of the traditional retailers and distributors might not be there. And then from a manufacturing standpoint, you also have new technology. So you have a lot of different ways that the system is changing. In that case, you could say it is an operational solution, but it's certainly not an optimization. It's a radically new solution. How do you approach more complex situations like this where there's many, many different stakeholders from your end customer through internal divisions and also, partner organizations or suppliers who are all going to be impacted by this solution?

Jim: All concepts like that start off with an idea, and that's why ideation is key. So it's an iterative process. It's not just about sitting down with one group of people saying what can we do to make our business more efficient but it’s not really changing what we deliver? And then another group of people in saying, what can we better do for clients? Once you've come out with either those workshops or those initiatives with a list of ideas, you need to start feeding that to project teams and asking them, assuming use new capabilities, so if you have a new production capability, what might you ultimately be able to do with that that changes the customer proposition?

One of the things that we suggested within the document was implementing an industrial IoT Center of Excellence. And this is a group of folks within an organization which really is an internal consultancy capability. And they focus on identifying and applying industrial IoT best practices, enabling change management and rethinking business models and figuring out how human resources need to change and the profile of human resource needs to change to adequately support the business in the IoT era.

But you do need to bring in some expertise and as you were mentioning earlier, and you're commenting from that standpoint, bring in some learning from other industries. One of my personal favorites references is to look what happens in the aerospace industry. The assets in the aerospace industry are very expensive and it makes business cases quite easy to cost in. And it means they tend to be really quite advanced in the way that they have adopted IoT. And many of the concepts that are present their rollout across other industries. So to some extent, the future is already here, it's just not particularly well distributed.

Erik: In this concept of IoT Center of Excellence, I don’t think I've seen many centers of excellence, what I've seen is more individuals that have this role. Maybe based on your experience, either at Nokia or with other companies, how would you suggest that a company take the first steps towards setting this up and then where would this sit in an organization?

Jim: Frankly, it's almost what I'm responsible for. And the place as I sit within Nokia WING is supporting the sales channels effectively. As and when Nokia WING identifies opportunities, I might help those end users understand really what it is that can be done with these other things. It grows organically. It grows from having people in the organization identifying people who effectively will begin to be that center of excellence, and who will build assets and PowerPoint slides and guides and information and use cases and benchmarks and reference cases and all sorts of things and just own that and push that out to the other parts of the organization as they need it, and also supply some consulting supports when questions come up and people focus on the other. Other parts of the organization are trying to figure out how to adopt IoT, just making sure they come back to the center of excellence. So I think it very much is organic process.

Erik: And let me make a quick shout out to the Industrial Internet Consortium. Because if you are starting quite fresh on this, really the IIC is a center of excellence that's available to all members, and also to an extent to nonmembers; of course, members have access to much deeper information. But I think what you're talking about here, Jim, in terms of developing documents and processes and being able to help advise and answer questions, these are things that members of the IIC have from each other which is an incredible resource to be able to ask somebody from Bosch or Siemens or Nokia. How would you address this and then bring that knowledge into your organization?

Jim: Yes, exactly. In the specific case of the business strategy innovation framework, we had people contributing from an industry analyst, making research. We had Veronica Brandt from Bosch Software Innovation, there’s Ken Figurado for Interdigital, and Steve Haldeman from Hewlett Packard Enterprise  and reviewed by many others within the IIC. So this was a product of many people's thinking. And that makes it a better thing than any one individual or individual company could have done. But it makes it independent and it becomes a reference source in a way that no individual company could create something that is a reference source. Because this has been reviewed by the IIC community.

And so if I my Nokia life step forward in front of a client and say, look, we did this piece of work, these are probably the things that you need to think about if you're adopting IoT technologies, I can say that and I can reference the Industrial Internet consortium and I can say that it's industry best practice. And that is much more compelling story than if I'd come up with the same list of things myself.

Erik: And also much more efficient to do, right?

Jim: Yes.

Erik: Jim, the last section on the document quite interestingly is the industrial IoT platform. And this is a set of technologies that I think is particularly interesting because it is so challenging to define. So there's a lot of companies out there that are talking about their IoT platform and they often do radically different things. They can be around connectivity. They can be around building apps. Certainly very central to the business, and also very interesting from a business model perspective because they all to some extent have some of the Apple Store feel of a platform that other companies can use to create value. And so there's some scalability to them. How do you view the industrial IoT platform as a category of technology?

Jim: Well, it is a crucial category of technologies without doubt. Platforms are basically the place where scale hits the Internet of Things. And, frankly, scale and exchange of data really are the secret sauce of the Internet of Things. So they're a very crucial concept, both in terms of efficiency of deployment of solutions, but also in terms of the secret sauce that is the Internet of Things and combining multiple data sources across from multiple players.

We've come from a history where there's been a lot talked about platforms, and many companies have put themselves forward as platforms. And it does look now like we're getting to a situation where platforms are more focused than they were in the early years of the IoT. I think in the very early years, a platform company would have a focus, but would try and do as much as possible of specific solution. I think now we're getting more specialization and companies playing more niches and to differentiating in those niches. So the platform environment is maturing quite quickly, I think.

Erik: The market, of course, for platforms as it's very natural for a new technology domain is very crowded. In your previous role, you were an analyst. I’m sure you spent a lot of time studying this market. Do you expect there to be some significant degree of consolidation in the coming two to three years? Or do you think that it's going to continue to be a very vibrant blue ocean environment for some amount of time?

Jim: I do think it's going to be vibrant and diverse group of platforms. What you have got happening, though, in the background is the gradual emergence of standards. Now, I don't think that standards, again, to keep up with the creativity of IoT business models. So I don't think that we're going to get to this completely standardized environment for a very long time or significantly long time. But you do have that creeping standardization and what that does is drive an element of consolidation and it underpins, in many ways, scale advantages and competing on elements propositions such as the diversity of geographic locations of a platform, rather than the actual functionality of an AEP, for example. So, yes, I think it is going to consolidate down, but not quickly. And it'll be very vibrant and very diverse for quite a long time to come, I think.

Erik: You certainly have niches across the different verticals. You're seeing platforms focus more on healthcare, other large significant verticals, and then also, you have here on age 41 a very nice overview of the different types of work that a platform can do, from device management, disaster recovery, security management, resource discovery, location services and so forth. On this side, in terms of the service functions, do you also see platforms really focusing on one or a small set of service functions, or do most typically try to do everything but maybe say we really are world class and security management, but we can also manage your devices and identity and do some analytics and so forth?

Jim: Do you mind if I skip that question? I shouldn't answer that with a Nokia hat on. If I was an analyst, I'd be happy to.

Erik: Nokia's platform, what does this offering from Nokia look like today? If we use Nokia to an extent as an example of what they have built and put out into the marketplace, how would you define that? And if you can share a little bit of the insight into the process of figuring out what the right solution is, and bringing that to market and you could say this, maybe it would be a little bit of an application case from the BSIF?

Jim: So, Nokia plays across many areas in this space, starting from the bottom level in the stack effectively or the bottom level in the stack as viewed from a communications person's perspective, is WING, that's my division. So that's a multi-country, multi-technology agnostic connectivity platform, delivers connectivity in a modular way anywhere effectively.

Sitting on top of that we have Nokia software, which is much more around device management and application enablement. We have applications city on top of that. We have an applications place specific niche applications in areas such as supply chain or smart cities. And we've got some of the more horizontal components that are quite relevant in the IoT space, such as artificial intelligence, machine learning, and remote monitoring and maintenance, etc. So we have quite a broad set of capabilities in the IoT space.

Erik: Is there anything on the horizon that you'd be able to point out that we could maybe expect in 12-24 months, or if it's not a particular product, maybe just to a trend or in terms of adoption or your use case adoption that you think would be interesting for people to be paying attention to?

Jim: I think we're getting to the point where many areas of IoT are getting traction. The term IoT has been commonplace, probably for five or six years. When I first put IoT on my business cards in 2011, I meant interoperability testing. So there's been a lot of talk about the potential. I think there are a number of areas where it's really getting to be real now. So, fleet management, supply chain, intelligent factories, smart cities and some health care applications; those are the things that really, really come to mind as parts of IoT that are really getting traction and coming mainstream, I think, becoming commonplace. So I expected to see more of that in the next 12 months. Just we're getting to that inflection in the curve where we're not looking at the future so much, but quite widespread adoption for many of these solutions, I think.

Erik: We had a workshop last night, and as an activity, we had people from many different industries. So, we had about 20 people covering probably 10 different industries and we had a discussion around digitalization how it's impacting your business. And at the beginning, these guys are not coming from technology, they're coming from the business side. They're saying, well, I don't really know what digitalization is and so forth. But then we went through an activity of listing some set of technologies and then imagining how your business might look like.

And from a bottom-up perspective, they actually had a lot of very coherent ideas in terms of either what their business was doing today or what could be done. And I think we're certainly getting to the point where even if people are still a little bit fuzzy, which is natural because it's a very large ephemeral concept, digitalization or IoT, so maybe that that high level concept is still a bit fuzzy.

But from a bottom-up perspective, people are starting to identify specific use cases that make sense that they've seen in the world. And I think that's a very healthy thing. Because end of the day, that's what we're talking about. We're talking about just finding solutions to problems.

Jim: Yes, that's where it gets real. When IoT moves out of the domain of the technologists and the vendors and is adopted by people who run art galleries, or coffee shops, begin to wonder what it is that can be done with these digital transformation and IoT technologies, that's when it really takes off.

Erik: Jim, thank you for the hard work and helping to provide some clarity in terms of how we might better create that future. And thanks for taking the time today. I really enjoyed the discussion.

Jim: And thanks for inviting me into this dialogue. It's been an interesting conversation.

Erik: Jim, the best way for somebody to get involved with BSIF or to reach out, is it typically that they should get in touch with Kathy or what's your preferred if somebody just wants to learn more about the work that you guys are doing over in the working group?

Jim: Well, the BSIF is published. So anybody can surf over to the IIC’s website, which is iiconsortium.org. And then there's a list of resources and technical papers. And there, you'll find that the BSIF and many other publications from the IIC. So that's one level. You read the document, take it away, use it as you can. We are continuing work in the same space within the business strategy task group within the IIC and also within business strategy and solution lifecycle. And if you actually want to get engaged in that work, and involved in that work, and in the discussions and contribute to the next wave of deliverables and contribute and influence to thinking, we'd love you to be involved. But you'd have to be a member of the IIC. First thing to do would be to join the IIC, or if you are already members, then just join the group calls and working sessions and feel free to contribute.

Erik: Alright, perfect. And we'll put all that in the show notes. Jim, thanks so much for the time.

Jim: Thank you very much.