Capturing Value From the Internet of Things

By CIndy Elliott

Everyone at KONE is in the “People” business and change management is 90% of the battle

– Larry Wash, Executive Vice President for KONE Americas

At the Field Service USA 2016 conference in Palm Springs, I had the opportunity to conduct a shortened version of the Advanced Services Group workshop “Business Model Design Workshop: Capturing The Value From IoT” to an audience of 60+ service leaders from manufacturing organizations. Specific takeaways included:

  • Every company stated that they are tapping into IoT with a service component, but mostly in an ad-hoc fashion, with the goal of operational improvement

  • All participants are endeavoring to capitalize on IoT through higher value service offerings, because they can’t win long-term on cost cutting only

  • A key barrier to success is still limited experience in understanding how customers realize the highest value from an advanced service offering

Growing appetite for learning how to capture value from IoT

The large participation in the workshop demonstrated that manufacturers are keen to understand how to expand their current service models and IoT-enabled offers to realize more value. And despite the fact that everyone participating is leveraging some sort of IoT-enabled service improvement, there is a consistent undercurrent that moving beyond early phases of service transformation, toward a more customer-value mindset, has proven difficult or impossible.

This workshop is designed to help manufacturers “picture” where could their customers can achieve the greatest gains in their business by what the manufacturer can deliver by tapping into new intelligence resulting from IoT-enabled solutions.

Service operations efficiency is only the beginning

The audience at Field Service, demonstrated that firms are ready and equipped with technology to apply IoT capabilities that lead to important operational improvements – reducing cost of services, better positioning of spares in the ecosystem and improved customer responsiveness, which of course do have an element of customer benefit. But these are essentially applied with an “internal mindedness” versus from the perspective the customer’s value proposition.

What’s more elusive is that next generation of IoT-enabled value which generally has a much higher bottom-line contributor, but one which starts with understanding how products and service can drive more value for the customer.

For the workshop, we leveraged business model design research from the Advanced Services Group at Aston Business School developed in collaboration with global manufacturers and focused specifically on establishing a new customer value proposition based on a critical pain or gain of the customer’s business imperatives. A value proposition that depends on knowing the customer’s business inside and out – and figuring out how to envision how the manufacturer’s product and services can better support customer goals.

Read Prof. Baines’ blog for more background on The Pains and Gains of Understanding Customers.

Then with this knowledge, we worked on constructing a new manufacturer offer that would align with the customer’s business initiative and that would leverage the intelligence uniquely provided by IoT in combination with technology and services.

Learning from the experts

During an earlier session at the conference, Larry Wash, Executive Vice President for KONE Americas delivered a keynote titled “Game Changing Services” where he featured KONE’s People Flow Experience strategy that’s completely shifted the company’s relationship and value proposition with their customers. Mr. Wash stressed that KONE is in the people business – and that in today’s market, you have to know your customers inside and out, understand their business challenges and opportunities. One of KONE’s customer success stories is with the Leadenhall Building in London, that supports a large volume, complex mixed-use population – residents, hotel guests, office workers, conference attendees, retailers, retail customers. This diversity creates a wide range of people flow patterns and challenges for the building management – and could potentially cause unnecessary poor resident and client experiences.

Through partnering with Leadenhall builders even before the blueprints were drawn – KONE help customers plan and implement the best possible People Flow® to provide the shortest transit times possible throughout the complex people flow network – any day of the week, at any time of day. Ensuring a satisfied population.

And it was with their unique Intelligence Control Systems that KONE could deliver on the promise. The system automatically prioritizes services in particular areas during peak times to balance people in transit and energy usage simultaneously.

Dr. Marja-Liisa Siikonen, Director – People Flow Planning at KONE, compares the differences between KONE’s intelligent people flow systems and standard elevator management to the differences between an Uber and a city bus experience. Overall, this allows Leadenhall business opportunities to expand and optimize to best servce their constituents – attracting residents, businesses, retailers, etc – ensuring a seamless people flow experience.

To read the full story, please visit: KONE’s article Intelligent Moves

What’s Next?

At the conclusion of the workshop, several participants shared their initial concepts of an IoT-enabled advanced service offering. Unfortunately, many examples were still oriented in the context of the manufacturer’s internal mindset – ie: guaranteed parts availability, better field service scheduling – which is still valuable, but doesn’t yet deliver on the opportunity of a strategic advanced service model.

This continues to demonstrate a common dilemma for many organizations still approaching the market from a product mindset. The dilemma was captured well with another statement from Larry Wash, “that everyone at KONE is in the “People” business and that change management is 90% of the battle” (when persuing new IoT-enabled customer-based services).

To learn more about the half-day workshop, “Advanced Services Business Model Workshop: Capturing Value from IoT” please contact me

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