Given the infinite array of use cases that can be pursued in the Internet of Things (IoT), many executives are uncertain where to focus their IoT strategy.  The simple answer is to start by determining if you’d like your company to concentrate on saving money, delivering better products and services, or finding new sources of revenue.

Of course, most organizations would ideally like to achieve all of these objectives. The good news is that it is possible to accomplish this ideal in the IoT. But, the reality is that most organizations will only be able to pursue these three objectives one at a time.

Most of the IoT pioneers have decided to focus on one of the three disciplines as a starting point

In 1997, management consultants Michael Treacy and Fred Wiersema co-authored a book entitled, “The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market”[1] which asserted that companies could only become industry leaders in one of the following differentiating characteristics:

  1. Product leadership
  2. Operational excellence
  3. Customer intimacy

Treacy and Wiersema believed the cost and effort involved in achieving superiority in each of these areas was so significant that no company could win in more than one of these corporate disciplines. They showed how companies like Wal-Mart, Dell, Southwest Airlines, Cott, Airborne Express, Atlantic Richfield, Home Depot, Intel and Sony became proficient in a particular discipline, but couldn’t achieve the same level of success in the other areas.

The exciting thing about IoT is that can enable organizations to become leaders in all of the disciplines Treacy and Wiersema have identified. But, the same principles of adopting a disciplined execution approach still holds true in today’s IoT marketplace.

Most of the IoT pioneers have decided to focus on one of the three disciplines as a starting point for their IoT initiatives. Many are concentrating on using IoT to improve their operating efficiency and reduce unnecessary costs. Others are seeking to better understand how their customers are using their products so they can better meet their needs and create a closer bond with their customers. And, some are embedding sensors into their products to significantly improve their quality and uncover new market opportunities.

The good news is that a successful IoT initiative focused on any of the three areas identified by Treacy and Wiersema can serve as a stepping stone to pursuing the business benefits associated with the other disciplines as well.

In fact, a growing number of Cloud companies are proving that these disciplines are no longer mutually exclusive.

Companies like Salesforce.com have achieved a product leadership position in the software industry by being a bold innovator of the Software-as-a-Service (SaaS) business model. The very nature of the multitenant SaaS architecture which powers Salesforce.com’s business has also enabled it to scale its business and become a market leader from an operational excellence standpoint. And, despite rapidly building a global installed base, Salesforce.com has also been able to attain an enviable level of customer intimacy that has produced very high customer satisfaction scores, renewal rates and add-on revenues.

Executives that adopt an IoT strategy which pursues the disciplines of market leaders in an orderly fashion and recognizes the multidimensional qualities of each path can gain significant business benefits in all three areas.

[1] http://www.amazon.com/The-Discipline-Market-Leaders-Customers/dp/0201407191