B o u l d e r Z u r i c h
Relationships
Skills Technology
Data & Content
Experience Behaviors
Developing New Growth Opportunities at the Intersectionof Smart Systems, Services andthe Internet of Things
smartsystems
design
what are smart systems andthe internet of things?Why Is It So Important?
Global expansion; re-engineering; lean practices; mergers and acquisitions. For most companies these strategies for growth and value creation have reached the point of diminishing returns. As networks continue to integrate the physical and virtual worlds, what worked in the past to drive growth is less likely to work now or in the future...
How Should We Think About Framing Opportunities?
The assumption that the role of new business design and development is only about making existing products or services more attractive no longer works. We believe smart systems design needs to transcend discreet product or service innovation. Business developers need to creatively imagine fully developed systems and whole marketplaces.
To discover, design and develop innovative smart systems, organizations will need new and uniquely facilitated processes...
where are the biggest growth opportunities?
What Are The Success Factors?
Diverse collaborative networks will be self-organized by people who are motivated to explore and develop ideas they care deeply about. Business innovation will extend beyond ideas about new products and services to the very manner in which business is conducted.
Building new ventures for the Internet of Things requires new and very different modes of design and development – organizations will need to push the boundaries of collaboration to include many new and unfamiliar participants...
how should our organization respond?
What unrealized technology, system and market leadership opportunities are available in the smart systems and IoT arena?
Which combination of customer value elements will differentiate us? How can we make, partner of acquire those elements?
What business design, revenue model and management priorities will help build long term success?
Smart SystemsGrowth
Opportunities
01 What Are Smart Systems, Services and the Internet of Things Page 04
02 Framing Smart Systems Growth Opportunities Page 14
03 Smart Systems Growth Models and Strategies Page 24
04 Smart Systems Design and Development Process Page 50
CONTENTS
smartsystems
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3
01
What exactly are smart systems and the
INTERNETof THINGS?
sensors & actuators01 connectivity02 people
& processes & data03
5smart
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What Are Smart
Systems and Services
smartsystemsand servicesinnovation
smartsystems
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WhatAre SmartSystems andServices
smartsystems
and servicesinnovation
7smart
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What Are Smart
Systems and Services
smartsystemsand servicesinnovation
HOMECONSUMER BODY
INFRASTRUCTURE
INDUSTRY
MOBILITYTRANSPORT
HEALTH CITIES
BUILDINGS
Light bulbsSecurityPet FeedingIrrigation ControllerSmoke AlarmRefrigeratorInfotainmentWasher / DryerStoveEnergy Monitoring
Tra�c routingTelematicsPackage MonitoringSmart ParkingInsurance AdjustmentsSupply ChainShippingPublic TransportAirlinesTrains
Patient CareElderly MonitoringRemote DiagnosticEquipment MonitoringHospital HygieneBio WearablesFood sensors
HVACSecurityLightingElectricalTransitEmergency AlertsStructural IntegrityOccupancy Energy Credits
Electrical DistributionMaintenanceSurveillanceSignageUtilities / Smart GridEmergency ServicesWaste Management
And quickly advancing
TO DIVERSE APPLICATIONS
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WhatAre SmartSystems andServices
smartsystems
and servicesinnovation
SIMPLE:• Alerts & Alarms• Location Services• Monitoring & Diagnostics• Maintenance Dispatch
COMPOUND:• Asset Management• Multi-Vendor Equipment Support• Automation
COMPLEX:• Smart Cities• Smart Transportation Systems• Diverse Data Fusions
2000 2006 2012
10
20
30
40
50
60
0
NFC
Simple Applications:
Applications involving simple remote monitoring, location services and product support for maintenance or upgrades
Compound Applications:
Applications that involve multiple [peer-to-peer] devices and machines with significant interactions between sys-tems and equipment in multi-vendor environment such as factories, hospitals and related environments charac-terized by diverse vendors, users and stakeholders
Complex Applications:
Applications driven by diverse interactions involving sensors, actuators, machines, people and systems that enable extending/expanding values from collaboration and analytics supported by data fusion between and among disparate and diverse sources
things get really interesting when connected devices start creating
compound applications
9smart
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What Are Smart
Systems and Services
smartsystemsand servicesinnovation
compound applications enable unique new use casesfor example
for example
for example
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WhatAre SmartSystems andServices
smartsystems
and servicesinnovation
11smart
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What Are Smart
Systems and Services
smartsystemsand servicesinnovation
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WhatAre SmartSystems andServices
smartsystems
and servicesinnovation
connected machines and devices are rapidly proliferating
Home (Consumer)
In 2016 nearly 2.7 billion connected devices will be shipped
This number will grow to nearly 8 billion devices for the year 2020
3,745.71 (Devices millions)
Transport (Mobility) 392.72 (Devices millions)
Body (Health) 360.03 (Devices millions)
Buildings (Infrastructure) 1,726.59 (Devices millions)
Cities (Industry) 1,524.70
(Devices millions)
*Not including mobile phones
This number will grow to nearly 10 billion devices by 2022
In 2017 over 3 billion connected devices were shipped
4 billion
500 million
600 million
2.1 billion
2.8 billion
13smart
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What Are Smart
Systems and Services
smartsystemsand servicesinnovation
CONSUMER
$79.4B
$10.4B$6.2B
$25.0B
$180.3B
$29.4B
$18.5B
$77.0B
$129.8B
$397.8B
$76.1B
$48.7B
$210.2B
$270.0B
BODY
INFRASTRUCTURE
INDUSTRY
MOBILITY
HOMETRANSPORTHEALTHBUILDINGSCITIES
$59.2B
2017
2015
2020
>$1 TrillionBy 2020 this opportunity will grow to more thanBy 2022 this opportunity will grow to more than
Network Services
Managed Services$571,845.77
$43,782.24
$387,453.46
Enablement Hardware
(USD millions)
(USD millions)
(USD millions)
Internet of Things and Smart Systems
Opportunity 2022
smart systems and services opportunities are enormous in scale and scope .....
smart connected systems spending is likely to grow to a scale that is larger than all previous generations of IT and Network spending
3
02framing smart systems growth opportunities
Strategy &Business Model
Relationships & Interactions
15smart
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FramingSmart Systems
GrowthOpportunities
smartsystemsand servicesinnovation
framing smart systems growth opportunities
Overview
User Experience
Business
MarketRelationships
Technology
Smart Systems are quickly becoming a massive, global digital nervous system conecting billions of people, tens of billions of devices, and trillions and more data points through a network of unprecedented scale
Smart Systems and theInternet of Things Stack
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Framing Smart SystemsGrowthOpportunities
smartsystems
and servicesinnovation
As these intersections blend the physical with the digital, they are mediated by ongoing user interactions, business processes, technology architectures, and newly created market forces
Business
Relationships Tech
ContextIdentity // Location // Time
InteractionVisual // Audio // Tactile
User Experience
Market
Tech
User Experience
Rel
atio
nshi
ps
Business
Revenue TypeSubscription // Managed // Indirect
Market Delivery Direct // Channel // Value Adders
BusinessBusiness ModelSolo // Cooperative // Collaborative
MonetizationCost + // Value-Based // Disruptive
Market
Wireline
WPAN
WLANWWAN
LPWAN
Mobile & Collaboration
Analytics & Dashboards
Hardware
Software
Connectivity & Device Enablement
Network Services
System Applications
Value Added ApplicationsApp’l Enablement
Data Aggregation
Device Management
Customers Early Adopters // Co-Creation
SuppliersElectronics // Software // Modules
OperationsOutsourced Mfg // Logistics
Design Design Firms // Incubators
Investors VCs // PE // Corporate Funds
Value Added Partners Prof Services // Integrators
Channel Partners VARs // VADs // Retailers
ResearchUniv’s // Consortia
Ecosystem
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GrowthOpportunities
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Overview User ExperienceLayer
“User Experience” is the sum of our relationship with technology. It encompasses the practical—like which
senses, gestures, and inputs we use to interact with our devices and surrounding
environment—as well as the emotional: how the interaction makes us feel.
Context
Handheld / Mobile
Fixed
Embedded
Accessories
Interfaces
Internal
Device
Textile Adhere/Patches
FootwearClippedEarbuds
StrappedEyewear Headware
Identity
Location / Surroundings
TIme
Visual / Audio /
Tactile /
Gaze TrackingFacial Expression Tracking
Emotion RecognitionVoice Recognition
Haptic Sensors Pressure Sensors
Taste/Smell SensorsJoysticks / Mice
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Technology Layer
From the design of silicon to the end-user experience, the technologies of the IoT are driven by data.
Sensors, software, and networked infrastructure collect, analyze, transmit and present data for the users and devices who need it most.
Overview
Routers & Gateways- 2G, 3G, 4G Routers
- Ethernet Routers
- Gateways & Proxy Servers
- Data Aggregator
- Residential Gateways
- Set Top Box
- Voice Gateway
- WAP Gateway
Silicon / Embedded Intelligence- 64 bit Microcontrollers
- 32 bit Microcontrollers
- 16 bit Microcontrollers
- 8 bit Microcontrollers
- 4 bit Microcontrollers
- DSP Controllers
- Graphic Processors
- System on a Module
- Systems on a Chip
- Single Board Computers
Software
Device Management- FOTA (Firmware Over the Air)
- Distributed Version Control
- Configuration Management
- Software Versioning
- Device Drivers
Network Hardware
Security & Encryption- Security / Anti-Virus
- Encryption
- Patch Mgmt
- End Point Authentication
- Anti-Device Tampering
- Preboot Verification
- IP SEC
- Certificate Management
- Cryptography
- Data at Rest Encryption
Comms Stacks- Wireline
- WPAN
- WLAN
- LPWAN
- WWAN
Operating System- Virtualization S/W
- Desktop and Mobile GUI OS
- Embedded / GUI based RTOS
- Commercial RTOS
- Open RTOS
- Boot Loaders / Comm’s stacks
Connectivity & Device Enablement
Network Services
Wireline
WPAN
WLANWWAN
Cloud Services
Security / Data Policies & Governance
Protocols / Frameworks
System Applications
Application Enablement - API Services
- Application Enablement Tools
Data: Agg / Transformation / MGMT // Edge Processing- Storage
- Data Normalization
- Data Classification
- Data Governance
- Ad Hoc Queries
- Rules Engine
- Statistical Analysis
- Streaming Analysis
- Real-Time (time series) Analysis
- Presentation & Visualization
- Event Processing
Device Management & Connectivity- Upgrades and Versioning
- System Configuration
- Device Registry
- Identify, Security and Encryption
- Device Provisioning & Commissioning
- Firmware Management
- Gateway Management
Monitoring & State
Prognostics
Automation / Analytics
Location & Tracking
Diagnostics
Security Management
Energy Management
Supply Chain & Logistics
Customer Support
Asset Management
Mobile & Collaboration
Analytics & Dashboards
Value Added Applications
- Bluetooth
- 6LoWPAN
- NFC
- RFID
- Cellular (4G/LTE - 2G/GSM
3G GPRS)
- WiMax
- Ethernet
- Modbus
- Powerline
- WiFi
- DECT
- Thread
TCP / UDPIPv4 / IPv6
CoAPMQTTXMPPRESTful HTTPAMQPLWM2MThread
OneM2MDDSDTLSuIPTelehashUPnPAllJoyn
SMPP (Short Message Peer to Peer) Virtual IC SMSOMA Device Management CPE WAN Management Protocol (CWMP)Weave
REST APINode JSHTML 5Web SocketsJSON/JSONP
Physical- Power- Sensors - Actuators
LPWAN- Sigfox
- LoRA
SaaSPaaSIaaS
Core Messaging / Application
Technology Layer
From the design of silicon to the end-user experience, the technologies of the IoT are driven by data.
Sensors, software, and networked infrastructure collect, analyze, transmit and present data for the users and devices who need it most.
Overview
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Market Layer
Some markets adopt new technologies faster than others, but no sector of the economy is immune to the expanding influence of the IoT.
While there are similarities that apply across the board, each vertical has its own set of needs and challenges that shape the way networked technologies add value.
Overview
Transportation Infrastructure Aerospace
• Tra c Management• Toll Collection• Parking Systems
• Military Aircraft• Commercial Aircraft• Personal Aircraft
• Military Watercraft• Commercial Watercraft• Personal Watercraft
• Rolling Stock• Urban Transit• Locomotives• Infrastructure
Marine Rail
• Construction O• Military O• Personal On-road• Commercial On-road• Emergency On-road
Vehicles
Mobility
InformationTechnology &
Communications
Industrial
• Lighting• Power Distribution• Life Safety• Climate Control• Water & Gas• Security & Access Ctrl
ResidentialCommercial & Institutional
• Lighting• Power Distribution• Life Safety• People Moving• Climate Control• Water & Gas• Security & Access Control
• Climate Control• Appliances
• Security & Access Control• Power Distribution
• Water & Gas• Life Safety• Lighting
Facilities &Security
Borders & Ports
of Entry
Secu
rity
Campuses, Bases & Public Venues
• Access Control• Security & Detection• Surveillance
• Access Control• Security & Detection• Surveillance
Indu
stria
l
Hybrid/Converting
• Processing• Auxiliary Equipment• Controls &
Instrumentation
• Processing• Converting• Handling &
Packaging• Controls
Manufacturing Supply Chain
• Fabrication• Material Handling• Assembly/Test• Controls
• Handling• Warehouse /
Distribution Systems
Resources &Production
Reso
urce
s
Power Generation
Alternative PowerConventional Generation
Power Transmission & Distribution
Transmission & Distribution
Power Quality & Electrical
BackupEner
gy
Institutional & Commercial
Tran
spor
tRe
tail
/ C
omm
erci
al• Restaurants• Hotels
• Goods & Groceries
• Convenience/Gas
Hea
lthca
re
• Patient Care• Surgery• Labs
Hospitals & Health Facilities
Home / Personal Healthcare
• Home Care• Mobile Care• Lifestyle
• Entertainment• Public Venues
& Stadiums
• Advertising• Vending• Repair Services
• Cleaning Services
CommercialServicesPublic Venues HospitalityRetail
Enterprise
• Computing • Communication• O ce
• Mobile• Field
Prof
essio
nal
Con
sum
er
Home
• Communication• Infotainment• Home O ce
Water Utility
Oil & Gas
• Oil & Gas Extraction
• Oil & Gas Processing
• Oil & Gas Transport
Agriculture
• Farming• Cultivation• Livestock
Management
• Water Extraction• Water Processing
/ Treatment • Water Transport
Mining
• Extraction• Material
Handling• Material
Processing
Environment & Infrastructure
• Infrastructure Monitoring
• Environment Monitoring
Power Generation
Build
ings
••
•
•
Industrial
• Lighting• Power Systems• Life Safety• Climate Control• Water & Gas• Security & Access
ResidentialCommercial & Institutional
• Lighting• Power Distribution• Life Safety• People Moving• Climate Control• Water & Gas• Security & Access Control
• Climate Control• Appliances
• Security & Access • Power Distribution
• Water & Gas• Life Safety• Lighting
Facilities &Infrastructure of Entry
Campuses, Bases & Public Venues
• Air Monitoring• Water Monitoring • Floods• Trasnport Sys
RetailHealthcare &Commercial
Services Reta
il /
Com
mer
cial
• Restaurants• Hotels
• Goods & Groceries
• Convenience/Gas
Hea
lthca
re
• Patient Care• Surgery• Labs
Hospitals & Health Facilities
Home / Personal Healthcare
• Home Care• Mobile Care• Lifestyle
• Entertainment• Public Venues
& Stadiums
• Advertising• Vending• Repair Services
• Cleaning Services
CommercialServicesPublic Venues HospitalityRetail
Build
ings
Transportation Infrastructure Aerospace
• Tra�c Management• Toll Collection• Parking Systems
• Military Aircraft• Commercial Aircraft• Personal Aircraft
• Military Watercraft• Commercial Watercraft• Personal Watercraft
• Rolling Stock• Urban Transit• Locomotives• Infrastructure
Marine Rail
• Construction O�-road• Military O�-road• Personal On-road• Commercial On-road• Emergency On-road
Vehicles
Mobility
Tran
spor
t
Industrial Data Centers
• Network Equip• Storage Devices• Servers• Cooling Systems• Sensors• Security & Access
Borders & Ports
• Access Control• Security • Surveillance• Detection
• Access Control• Security • Surveillance• Detection
Environment Urban Systems
• Air Monitoring• Water Monitoring • Floods• Trasnport Sys
Infr
astr
uctu
re
• Waste Mgmt• Lighting• Parking• Pedestrian Sys
Resources &Production
Indu
stria
l
Hybrid/Converting
• Processing• Auxiliary Equipment• Controls &
Instrumentation
• Processing• Converting• Handling &
Packaging• Controls
Discrete Manufacturing Supply Chain
Reso
urce
sProcessing Industries
Water Utility
Oil & Gas
• Oil & Gas Extraction
• Oil & Gas Transport
• Oil & Gas
Agriculture
Mining
• Extraction• Material
Handling• Material
Processing
Electrical Power
• Power Generation • Transmission &
Distribution
Processing
• Alternative Power
Enterprise IT
• Computing • Communication• O�ce
• Mobile• Field
Prof
essio
nal
Cons
umer Home IT & Appliances
• Communication• Infotainment• Home O�ce
InformationTechnology &
Communications Cons
umer
• Warehouse /Distribution Systems
• Livestock Management
• Fabrication• Material Handling• Assembly/Test• Controls
• Mat’l Handling• Farming• Cultivation
• Water Extraction• Water Processing
/ Treatment • Water Transport
• Big Box Retail
Specialty Retail•
• Water Mgmt• Air Pollution• Floods• Chemicals• Weather • Transport Sys
• Appliances
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Framing Smart SystemsGrowthOpportunities
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BusinessLayer
OverviewIntegrating smart systems into business processes requires restructuring long-held assumptions about how products and services are brought to market.
Collaboration between and among users, customers, developers and partners will be a minimum requirement for success.
R evenue Model
License & Delivery
Market Delivery
Revenue Type
DeliveryOn Premise
Bundled / HybridHosted
Co-location
Cloud
LicenseProprietary - Commercial
Proprietary - Shareware
Open SourceApache / BSD / GPL / GNU / MIT Mozilla / Eclipse / Creative Commons/ Public / LGPL / AGPL Model
North America, Europe, S. & Central America, Asia, Africa, Oceania, Worldwide
RegionB2B / B2C / C2B / ETCTransaction Type
Indirect
One-time
Pay-per
Subscription
• Per seat• Per device
•• Per application
• Per site• Royalty
• Usage-based• Tiered / Freemium• Unit-based
• Transaction•Value-based• Timed
• Flexible - Capped• Open / One -time• P2P
LoyaltyInternal Use
••
Direct ServicesChannelDirect
Distributers & WholesalersProfessional / Tech ServicesOEM / ODM
VARsSystems Integrators
Maintenance / Service Monitoring
After-Market Support & Logistics
Training
System Selection / Integration
Type
Physical Product
Software
Data
Service
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Relationship Layer
Overview The solutions we are describing here will have no managerial hierarchy, command and control decisions or proprietary ownership of ideas.
These relationships will be self-organized by people who are motivated to explore and
Collaborative innovation will extend beyond ideas about new products
in which business is conducted.
and develop ideas they care deeply about.
and services to the very manner
Channels
Users & Customers
Value-Adders Tech
Research
Ops
Suppliers Investments
End Use
OEMs
customers
Facilities
Infrastructure
Power
OEMs
Machines
Venture I-Banks
Strategic Ventures
Private Equity
Public Funding
Healthcare
Industrial
Transportation
Buildings
Energy Developer Kits
venues
Investors
Managed Services
Appls
Systems
Products
Technology
sourcing
channel
Enablers
strategicalliances
Smart Devices
LANs
Gateways
Sensors
Wireless
marketing
vendors
technology Tools
Devices
The solutions we are describing here will have much less managerial hierarchy, command and control decisions or proprietary ownership of ideas.
These relationships will be self-organized by people who are motivated to explore and de-velop ideas they care deeply about.
Collaborative innovation will extend beyond ideas about new products and services to the very man-ner in which business is conducted
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Framing Smart SystemsGrowthOpportunities
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the interactions represent the convergence of users, devices, systems, data, and networks
Smart Systems and the Internet of Things will be built from complex interrelationships between the stack.
Integrating these layers together are myriadInteractions
A bi-directional link between digital user experiences and the physical world.
BusinessMarket
TechUser Experience
Overview
Interactions
Relationships
Smart Systems and the Internet of Things will be built from complex interrelationships between the stack.
Integrating these layers together are myriadInteractions
A bi-directional link between digital user experiences and the physical world.
BusinessMarket
TechUser Experience
Overview
Interactions
Relationships
success will increasingly go to those that effectively utilize the combined potential
Smart Systems and the Internet of Things will be built from complex interrelationships between the stack.
Integrating these layers together are myriadInteractions
A bi-directional link between digital user experiences and the physical world.
BusinessMarket
TechUser Experience
Overview
Interactions
Relationships
23smart
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GrowthOpportunities
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re-thinking things and products as systems
questions to frame your smart systems opportunity
USER EXPERIENCE
INTERACTIONS
TECH
BUSINESS
Your Product / Service
MARKET
RELATIONSHIPS
Value Added Applications
Security / Data Policies
Sector
Device Application
System Applications
Network Services
Connectivity & Device Enablement
Informal
Formal
Connections(People, Processes &External Systems)
Interaction
Context
Device
Revenue Model
License & Delivery
Market Delivery
Revenue Type
Who are our natural allies?
Who are we best poised with?
What is the context “in use” for device?
What is the device form factor?
What is the nature of interactions?
What is the native intelligence of device and communications mode?
How are comms services provided?
What platform, devie management and related functions provided?
What applications and functions are required?
How will identity mgmt, access and security work?
Which industry segments and applications provide best opportunities?
What specific use cases and apps will need to be addressed?
What is best path to monetization?
Where used; via what services model?
What channel partners are required?
License, transactions or what?
What is the nature of relation-ships, interactions, requirements and dependencies between and among systems elements?
Usage What are the expected usage needs?
3
03
smart systems growth models and strategies
25smart
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SmartSystems
Growth Models and Strategies
smartsystemsand servicesinnovation
IT Infrastructure &Software Providers
Machine andEquipment OEMs
End Users andEnd Customer Accounts
OEMs and Services ProvidersCore Enabling Technologies End Users
smart systems and IoT solutions are comprised of complex solutions development and delivery chainsoften, multiple parallel “upstream” technology enablers are adopted by ”mid’stream” OEMs and/or services providers who, in turn, deploy solutions into “downstream” vertical end use segments
while the business models for developing and delivering core technologies are relatively stable, the rapidly evolving business and revenue models for OEMs and services providers are anything but......
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Smart SystemsGrowth Models and Opportunities
smartsystems
and servicesinnovation
High-Performance
Networks & Infrastructure
Distributed Data and
Information Architecture
Real-time patient data and medical application updates
Medical staff and critical asset tracking &monitoring
Integrated mechanical and energy sensors for multi-use
Substation monitoring and process monitoring
Remote machine maintenance, health anddiagnostics
Fleet tracking and road condition monitoring
Information access and data set fusion for disease management
Power distribution, automation and control
Syncing global operations for collaboration and efficient management
Transport systems schedule and resources to fit demand cycles
Cross-leveraging data from various building and facility sources
Internal vehicle information access coordinated with urban systems
Artificial Intelligence
and Machine Learning
Fusing patient data sets and AI capable of diagnosing patients
Automation of driverless trucking fleets
Timeline to completion and sensing faults during production
Ability to balance grids, manage demand and provide services
Ability to optimize energy requirements and resource usage
Building owners & operators are able to share data across facility
Analytics on production and individual machines improve efficiencies
Analytics on processes and systems for equipment optimization
Application Development
and Developer Tools
Telehealth and wearables applications for wellness
Building systems that leverage data across lighting, HVAC, alarms, fire detection
Ticketing analytics for demand and asset tracking/ scheduling
Predictive maintenance and workflow applications
Renewable energy production trends and predictions
Sensors & Sensor Data
Fusion
Energy & Utilities
TransportationBuildings &
FacilitiesManufacturingHealthcare
core smart systems technologies will impact all end use segments
as users and customers have become more familiar with digital and IoT capabilities, they arerealizing these technology innovations will push the boundaries of how products, systemsand equipment are used and managed within their operations which, in turn, has increasedpressure on machine builders and equipment manufacturers to embrace these capabilities. End customers in factories, hospitals, buildings and more are coming to see how these technologies work together in new and novel ways to solve operational and business problems. As a result, specification and adoption of digital and IoT enabled equipment and systems is beginning to shift towards a “shared” set of roles between end customers and their OEMs.
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Growth Models and Strategies
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IT Infrastructure &Software Providers
Machine andEquipment OEMs
End Users andEnd Customer Accounts
OEMsCore Enabling Technologies End User Speci�cation and Buying In�uencersProvide horizontal technologies and tools that must be contextualized for speci�c industries and customers
End customers want to adopt smart services solutions, but are wary of working with tech suppliers who may not have industry expertise--OEMs can �ll this role
If enabled with the right tools, OEMs can help disseminate these solutions to end customers due to their application expertise and existing relationships
DiversifiedManufacturers
ElectricalPower Dist
AdvancedComponents
MobileEquipment
Automationand Controls
PowerEquipment
Test & Measurement
BuildingEquipment
IndustrialMachinery
MedicalMachines
Mobile construction, agriculture, mining and material handing machines
Healthcare imaging, diagnostic and patient monitoring and care equipment
Portfolio players with no LoBaccounting for more than 40% of revenues
Fixed machines and machinery systems primarily used in manufacturing
Sub-system equipment within buildings including HVAC, lighting, transport and safety
Equipment for electrical power generation, transmission, distribution and storage
Components, products and systems for control incl electrical, flow, regulatory and pneumatics
Sensors, instruments and measurement devices for testing, analyzing equip and systems
Low and medium voltage components utilized for power distribution and switching
Diverse precision or multi-function mechanical and/or electronic devices
DiversifiedManufacturers
ElectricalPower Dist
AdvancedComponents
MobileEquipment
Automationand Controls
PowerEquipment
Test & Measurement
BuildingEquipment
IndustrialMachinery
MedicalMachines
Mobile construction, agriculture, mining and material handing machines
Healthcare imaging, diagnostic and patient monitoring and care equipment
Portfolio players with no LoBaccounting for more than 40% of revenues
Fixed machines and machinery systems primarily used in manufacturing
Sub-system equipment within buildings including HVAC, lighting, transport and safety
Equipment for electrical power generation, transmission, distribution and storage
Components, products and systems for control incl electrical, flow, regulatory and pneumatics
Sensors, instruments and measurement devices for testing, analyzing equip and systems
Low and medium voltage components utilized for power distribution and switching
Diverse precision or multi-function mechanical and/or electronic devices
OEMs are uniquely positioned to capture smart systems values
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Smart SystemsGrowth Models and Opportunities
smartsystems
and servicesinnovation
• Managed, remote services and support expected to grow considerably
• Continued growth of ‘selective outsourcing’ of non-core or peripheral activities following intense period of downsizing
• Future trend toward “managed” services – SaaS, PaaS and IaaS
• Shift to open systems will continue to drive increasing demand for multivendor services & support
• Systems integration & support services are offered to satisfy customer need for “knitting” together systems
• Customers will emphasize service providers’ ability to manage their environments rather than just simply service products from different suppliers
• Rapid future growth of asset management services is expected: HW / SW inventory, SW licenses, contracts (lease & maintenance)
• Growth of higher value engineered / technical services will outpace growth of basic maintenance / repair and installation services
• Growth of professional technical services is driven by customer needs for planning, designing, building, and managing complex, systems
Training and Education
Project Management
Business ProcessRe-Engineering
Consulting / Requirements
Analysis
Design / Specification /
Planning
System Configuration &
Application Engineering
System Packaging & Staging
System Delivery / Installation
Start-Up & Testing / Commission-ing
Tech Phone / Remote Support
(Help Desk)
Traditional Equipment & S/W
Maintenance
Multivendor Services / Support
Managed Services
Technology Financing & Asset
Management
System Integration
Field Engineering / Enhancements
equipment, systems and support is a changing environmentindustrial services are increasingly complex and technology enabled to allow coordination and collaboration…
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SmartSystems
Growth Models and Strategies
smartsystemsand servicesinnovation
customers expect suppliers to improve business outcomesas automation and production systems become more complex, customers are looking to suppliers to provide broader services scope and are increasingly reducing the number of strategic suppliers they work with
Systems Design &
Development Services
Systems Management
& Optimization Services
Field Service&
Support
Best-In-Class Control Systems
Measurement & Verification
Program Management
AssetAnalysis
Asset Benchmarking
ReliabilityCentered
Maintenance
Predictive Maintenance
Safety & Compliance
Services
Field Maintenance& Repair Services
Parts & PartsManagement
Design / deploy unique motion and drive control solutions to achieve best-in-class optimization of process, support and non-process operational assets.
Monitoring & measurement of specific process, process support and non-process systems variables that improve system performance.
Global program / project management services designed to maximize effective implementation of systems, delivering a consistent, quality-based program.
Collect and analyze information to identify optimization opportunities for process and systems analyzed independently and together as interdependent systems.
Benchmark key performance data for systems performance. Key areas to assess include process, process-support, and process and equipment assets.
Optimize maintenance strategies for equipment criticality and failure -- preventive, predictive, pro-active approaches -- optimizing cost and uptime.
Provide predictive maintenance and condition-based monitoring for critical assets --current health, warning status, recommended maintenance actions.
Provide solutions that allow customers to manage safety, including integration of new regulations and ongoing testing, certification and verification support.
Optimize maintenance for repair, upgrades and support, including field engineer and technical support for trouble shooting and services enhancements.
Spare parts location, availability, rapid delivery and response time. Additional value added requirements include logistics services, repair & re-manufacturing.
• Control systems• Auxiliary equipment & systems• Support systems
• Equipment uptime• Resource management • Energy utilization
• Planning/project management• Contract/risk management• Quality/cost management
• Modeling / simulation of systems• Quality and throughput indices • Modular software development
• Cost per unit of production• Cost per square footage• Level of technology
• Right mix of advanced services• Maintenance master plan • Lowest cost reliability
• Predictive maintenance plans• Equipment health profiles • Benchmark to standards
• Safety and performance criteria• Validation assistance• Waste monitoring
• Field service• Warranty services• Maintenance planning
• Spare parts• Parts programs• Logistics
Perf
orm
ance
-Driv
en C
usto
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sSu
ppor
t-D
riven
Cus
tom
ers
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By it’s nature, maintenance is an ad-hoc event. It’s reliant on triggering events that by themselves are relatively straightforward. The complexity of the event and the nature of the work are primary determining factors when deciding how to adopt these technologies, and what business models to implement within them.
Corrective and Ad Hoc
Scenario: A major piece of machinery has broken
down so frontline workers notify the maintenance
tech so he can fix it
Repair
PreventativeMaintenance
PredictiveMaintenance
Failure Mitigation
Breakdown Assistance
Support
Fault Tracking
Preventative and Planned
Scenario: Data from sensors triggers a notification, alerting facilities manager to take a measurement
Scenario: Test and measurement is part of their ongoing job duties and regular business operations.
Scenario: While completing an unassociated task, the Tech decided to test a machine in the factory (“I was simply passing by”)
End CustomerFirst Line
Maintenance
Third Party Services
Providers
EquipmentOEMs
customers need better & more integrated maintenance solutionsthe value of digital transformation is gaining traction among manufacturers, but the complexity of this strategy is causing challenges across all industries
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value of embedding & integrating smart services into equipmentembedding intelligence and software into products and systems creates new values and services opportunities across the value chain, driving competitive differentiation for products and services
Product RequirementsApply rich new data on how products are used by customers in next generation product designs
Pre-Sales Insights
Understand installed device states – end of support; end of life, etc. to drive more personalized account management, outreach and sales tactics
Supply & Distribution Chain
Track products throughout supply and distribution chains to monitor detours, delivery, compliance, and more
Remote Support ServicesDesign for [remote] Servicing: diagnostics and preventive and predictive maintenance are conducted remotely to assist field technicians and support resources automatically
Asset TrackingEfficiently utilize & maintain expensive assets by monitoring status, health, configuration and location
Manufacturing Value Chain & Smart Services New Sources of Value
Design & Engineer
Build & Integrate Sell Operate Maintain
Simulate Build
Simulate Operate
Simulate Support
Connected Designs
Connected Sales
ConnectedSupply
ConnectedSupport
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and servicesinnovation
Equipment Services System Services Data Services
! Embedded machine control, information management, remote support, sensors, and analyzers
! Control systems linking all key plant equipment and embedded process engineering
! Process engineering capabilities
! Process design and optimization
! Re-engineering capabilities
! Process optimization tools! Online analyzers and sensors! Information management
(e.g. asset management)! Data analytics and downtime
optimization
Inspection & Maintenance Services Lifecycle Management Repair, Replacement,
Refurbishment
! Inspection! Re-engineering ! Service scheduling! Maintenance kits! New parts! Skilled workforce & training
! Spare parts and kits! Long-term service agreements! Performance upgrades! Lifetime extension
! Swap outs and replacements! Repair! Renewals
Mechanical Engineers Electrical Engineers
Power GenerationCentralized power generationIndustrial gas and steam turbinesDiesel and gas engineersRenewables
MachineryCompressorsPumpsValvesBlowersTurbo Expanders
Power ConversionMotors and GeneratorsDrivesInverters/ConvertorsMechanical power distribution
Electrical Distribution / ControlHigh/medium voltageLow voltageAutomation and instrumentationStandby power
Industrial Diversi�ed Players: Evolving Portfolio O�erings
Services Enabling Capability: After Market Parts/Support Services Enabling Capability: Infrastructure & Automation
smart systems is enabling a new range of strategic services for OEMs
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Traffic/bandwidth controlResponsiveness/latency Support hybrid networks
Data quality CleansingFilteringDe-duplicationSyntax transformationFormat normalizationData normalization
Descriptive AnalyticsAggregation viewTime seriesSimple correlationCPEPredictive analyticsMachine learningGraph analyticsPrescriptive analyticsMachine learningGraph analytics
Asset Management & Uptime AssuranceOperations Visibility & OptimizationSupply Chain & LogisticsCustomer Engagement & SatisfactionSafety & CompliancePeople Tracking & WayfindingResource Utilization ManagementEnvironmental Condition MonitoringUser Safety and Security
Data Transformed Information Analyzed Decisions-IntelligenceData From Sensors & Devices Data Transport
Sensing Connectivity Access & ControlAuthenticityConfidentialityIntegrity
Fast DataIngestion
Contextual Awareness
SituationalAwareness
Information Analyzed
Information Acted Upon
Ingest data atspeed and volume
approx. 1 million events/second
Correlate and enrich with contextual data
to enable better decisions
Correlate with real-time situational data
affecting mission-critical equipment
Predict threats and opportunities
using machine learning models
Trigger next best actions
using automated rules & adaptive processes
Rapid Decision Making: Less than 1 Second
Semantic transformationSemantics assignmentContext injectionGovernanceOwnership assignmentAnonymizationProtection
new core data services will be a core enabler of new strategic services
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and servicesinnovation
OEM current state is one of confusion and excitementmany OEMs provide basic customer support services, but OEMs face open questions in expanding smart systems and services to provide new business values for customers
What does service & support mean for me? How will definitions of service & support change in the future?
How should we frame the resistance towards data ownership and security?
What services should be prioritized in development for customers?
How will the future market for services evolve? What steps must we take to support customers?
How do we identify partners for scalable relationships in offering services?
How do we create valuable services that will incentivize customers to adopt these new solutions?
Challenges“Real-Time[Managed] Services”
Systems & ApplicationDeployment
Basic Smart Service Development & Integration
ProvideBusiness
Process Improvements
ImproveOperatingEfficiency
EnhanceTechnology
Infrastructure
High
LowCustomer Tech Support Today
Use proven KPIs to expand platform to entire customer base
Leverage Value Adding Partners To Extend Business Processes & Risk Services
Customer Experience
Provide Engineering & Technical Support
“Provide Collaborative Solutions”
“Basic Customer Support Services”
Evolution of Digital Manufacturing Services Maturity
Identify anchor end-customers and partners to develop connected solutions via platforms
Cus
tom
er B
enef
it
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diverse challenges hindering digital and IoT adoptionalthough challenges vary among OEMs, the issues fall into the general categories of technology, business and customers
Customer
TechnologyBusiness
Data Ownership & SecurityCustomers are increasingly aware of the value and importance of their data, and are concerned about the security of their IP
Aligning the Business to Support ServicesMoving from decades-old cultures resistant to change; becoming a service-driven organization, both structurally and culturally
Clear Strategy To Start With…Developing a clear strategy to engage internal support and quickly gain customer adoption by generating tangible value; knowing what to do and how to do it
Fragmented Customer RequirementsWhile equipment may be easy to customize or configure to specific customer scenarios, doing the same for software and services is difficult
Poor User ExperienceIndustrial suppliers typically do not consider or emphasize user experience in the development of smart systems and services, resulting in diminished value and use of these systems
Managing Complex DataCollecting, transforming and integrating data from complex machines and processes to enable new application values
Planning for the FutureUnderstanding and being flexible in technology and solution development today to be prepared for future technology developments
New work styles and processes
New modes of interaction
New business and revenue
models
Recruiting The Right TalentFinding and hiring leaders and evangelists that can help drive the development and diffusion of digital throughout the company
Finding your Place in the EcosystemFinding and engaging the right partners to help fill capability gaps and add value to smart solutions, while not creating tension with current partners, channels or customers
Lack of Consensus & Leadership SupportDeveloping a shared understanding of digital and gaining top level support
Determining Organization & Relationships Walling off digital initiatives and operating independently from the mothership to drive speed and freedom has advantages, but can also just deprive mew ventures of investment, capabilities and resources
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Smart SystemsGrowth Models and Opportunities
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and servicesinnovation
Embedded Innovator
System Professional Solutionist Collaborator
Value Chain Aggregator Community
Solo Driven Partner Driven Open Collaboration Driven
Largely focused on remote support automation & data value for speci�c product
Leverages services automation to feed diverse needs across product provider delivery chain
Builds broad support capabilities across the entire life cycle of target equipment or delivery chain
Collects, organizes data with aim to optimize interactions across single provider dominant delivery chain
Builds and extends value via collaboration with customers, channels and providers across collective delivery chains
Drives value via extensive multi-party systems and collaboration and by leveraging private, public, and partnered information sharing
Simple
Complex
Compound
OEMs will need to design and develop new business and operating models
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SoloDriven
PartnerDriven
OpenCollaboration
Largely focused on remote support automation & data value for speci�c product
Manage System/User Experience & Delivery Chain Relationships, Intelligence and Interactions
Foster Multi-Vendor, Multi-User Interactions & Cooperative Mgmt
Leverages services automation to feed diverse needs across product provider delivery chain
Builds broad support capabilities across the entire life cycle of equipment or service delivery chain
Simple Compound Complex
Application Complexity
Busi
ness
Mod
el P
rogr
essi
on
Adoption DrivenMainly by Machine and Device OEMs
Adoption Drivenby Mix of End Customers, OEMs and Services Providers
new business models are progressive; open collaboration drives innovation
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• End customer focus
• Influencing specifications
• Driving market awareness
• Demand creation
• Channel structure and partners
• Quality of salesforce, value adders and distributors
• Number of direct/reps and effective coverage
• Leveraging distribution partners
• Technical depth and vertical market and application knowledge
• Managing indirect resources vs. end customer selling and account development
• Enterprise selling focus and skills
• Channel skills for new digital solutions
• Developing explicit channel support coverage
• Augmenting channel technical support resources
• Decoupling diretsales resources from channel
• Focus on design, engineering and construction firms
• Vertical Industry/ application expertise
• Targeting and developing strategic partners and OEMs
• Marketing communications and awareness
• Industry trade shows and marketing communications
• Sales force and channel partner tools and support (demo kits, collateral, cases)
Key Sales, Marketing, & Distribution
Challenges
KeyIssue
Levers
Value-Added Go-To-Market
Structure
Channel Skills and Scale
Salesforce Skills and Capabilities
Omni/Channel Support
Specification Influence and
Business Development
MarketingResources
and Support
new business models require new selling skills and channel partners and new go-to-market designs ....
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Digital and IoT Monetization Models
Cost-Plus Value-Based
Col
labo
rativ
eTr
ansa
ctio
nal
Rel
atio
nal
Rel
atio
nshi
p w
ith C
usto
mer
Disruptive
Value-Based
Cost-Plus
Market-Based
Cost-Plus Pricing Market-Based Pricing
Without adding significant value that differentiates your offering from the competition, prevailing market conditions will dictate your pricing.
Cost-Plus pricing is exactly what you think it is: Figure out the cost to deliver your offering, multiply by an acceptable margin, and set a price. In a commodity market, this might work.
Value-based pricing allows you the flexibility to price your offering dependent on the value you deliver to your customer- whether it is dollars saved, dollars earned, any combination of the two, or any intangible savings or benefit.
Value-Based Pricing
Transformation of this type happens when your offering is so compelling and delivers so much unique value that it literally changes the way customers experience and purchase for the entire category.
Disruptive Pricing
Product-BasedOnly
Hardware-Centric w/ Subscription
Services
Often the easiest transition to a connected product, customer pays a one-time/up-front fee and receive connectivity at no incremental costs.
In this model, customers still incur a substantial percentage of the cost of hardware (if not the entire cost), but also pay an ongoing subscription fee.
BundledModel
Subscription-Centric w/ Hardware
This approach attempts to blend the best of both worlds – some investment up front with a modest recurring expense.
Subscription-based services with customers typically incurring some modest expense up front usually at or near cost.
Managed Services Focused
A more common model in the age of smartphones, customers receive the product at no cost and vendor provides a complete ”managed” experience
Collaborative Services Focused
Builds and extends value via collaboration with customers, channels and providers across collective delivery chains
Pricing Models
new business models also require new monetization and new revenue models
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Smart SystemsGrowth Models and Opportunities
smartsystems
and servicesinnovation
digital and IoT requires different modes of strategy development
Validated System & Solution
Opportunities
Frame New Growth Opportunities
Discover Trends,Forces &
Disruptions
Identify Apps, Use Cases &
Solution Concepts
Research, Analysis & Investigations
User, Customer, Partner Interactions
& Learnings
Design & Architect Platform & Services
Develop Strategy & Business Model
Develop & Deploy Solution
Which players, events and technologies should we care about?
Are there new combinations of technologies, products, services and partners that can drive sustained differentiation?
Does our go-to-market system design align well with the opportunity and market?
Which value elements should we develop, which obtain by partnering and which by sourcing?
What formal and informal relationships among allies might exist in the future?
How do we address systemic issues with our organizations ability to fully address the new opportunity?
Which trends, forces and disruptions likely will shape the future competitive environment?
What value elements will increase and extend the value to the customer of our core offerings?
Are our products, systems or services correctly spec’d and configured?
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1
Venture Development For Smart Systems and the Internet of Things
Early stage nurturing of new technology ventures is really a “no-man’s” land today
Today opportunities are not well addressed by either corporate venture programs or institutional investors
The “spread bet” mode of venture capitalists and
been increasingly trending towards more and more conservative investments
Corporations have become addicted to acquisitions and consolidation as a growth mechanism ........ companies are willing to overpay for established businesses to mitigate risk but need to understand that creating sustaining means taking risks
Manufacturers Need To Completely Re-Think How To Create New Growth Ventures...
Design and development of all system elements for new customer solution
Alliance network and/or ecosystem mapping and development
Coordination of common information sources and partner protocols
Development plan34
2Formulate business capitalization requirements
5
1
new growth and corporate venture development has been challenging for OEMs
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Smart SystemsGrowth Models and Opportunities
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and servicesinnovation
OEMs have dominantly relied on acquisitions to drive top line growth
Bubble size = Enterprise Value
1996 1998 2000 20022001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Honeywell/Measurex
Siebe/APV
Siebe/Eurotherm
AlliedSignal Honeywell
HoneywellPitway
Danaher/Cooper Industries
ABB/Entrelec
Schneider/Legrand GE/Interlogix
Siebe/ BTR
KKR/Legrand
Eaton/Delta Electronic
GE Power Systems/Jenbacher Werke
UTC/Chubb
IMS Meters/Invensys
Schneider/TAC Building Automation
Honeywell/Silent Wireless
Schneider/ MGE UPS
Eaton/Powerware
ABB/Eslag Bailey
UTC/Kidde
GE/Edwards
Schneider/BEI Technologies
Schneider/Andover Controls
Parker Hannifan/SSD Drives
Honeywell/Novar
Doughty Hanson/Moeller
Barclays PE/Alstom Power Conversion
Johnson Electric/SAIA Burgess
Baldor Electric/Reliance & Dodge
Eaton/Moeller
Chicago Bridge & Iron/LummusEaton/
MGE Small Systems UPS
Eaton/Phoenixtec
Emerson/Roxar
Emerson/ Artesyn
Tech
Bouygues/Alston
Schneider/APC
3i/ DuezPower Systems
Cooper Industries/MTL Instruments
Schneider/Xantrex
Emerson/Chlonde
Johnson Controls/
York
UTC/GE
Security
Alstom & Schneider/Areva T&D
Doosan/Skoda Power
Danaher/BeckmanCoulter
Cooper/ Laird
Regal Beloit/A.O Smith EPC
Caterpillar/Electro Motive Diesel
Siemens/Militronics GE/
Wellstream
Schneider/Leader Harvest
GE/John Wood
GroupCaterpillar/Bucyrus
ABB/Ventyx
Honeywell/ Sperian
Schneider/Telvant
Dresser Rand/ Grupo Guasco
GE/Dresser
3M/ Cogent
3M/ Winterthur
LBO France/Converteam
Honeywell/Norcross
Danaher/Keithley Instruments
Robbins & Meyers/ T-3
Catepillar/ MWM
ATI/Ladish GE/
Converteam
UTX/Goodrich
ABB/ Baldor ElectricTerex/
DemagSulzer/
Cardio Solutons
Pentair/Norit ProcesTechnolgies
March 2000 Nasdaqall time high
March 2001Stock Market Crash
March 2003Recovery
October 2007All time high for the S&P 500
March 2009Trough in the S&P 500
August 2011S&P downgrades US debt
2014 2015 2016 2017 2018
Portfolio Expansion / Extension New and/or Sign�cantly Di�erent LoB
June 2014U.S. economy and employment surpasses the number of jobs lost in the great recession (8.7M) �ve years later
SiemensInvensys
Rail
ABB /Los Alto Research
ABB / Dynamotive
ABB /APS Tech Group
ABB / Newron
Bosch / Bauer
Bosch /Astrim Energia
Alstom /GE Signaling
Caterpiller /Johan Walter Berg AB
Emerson /APM Automation
Danaher /Navman
Emerson /Adv Protetion Tech
GE /Lufkin Industries
Honeywell /RAE Systems
Bosch /Osgood Industries
Bosch /Hausgerate
Emerson/Enardo
Danaher/Teletrac
Bosch /ZF LenkSysteme
Honeywell /Intermec
Schneider Elec /Invensys
Emerson /EGS-Appleton
GE
Alstom Energy
GE /WurldTech
Honeywell/Elster Emerson/
IntelliSAW
Danaher/Laetus
ABB /Gomtec
Alstom /Signaling Solutions
Bosch /Seeo, Inc.
Bosch /Mastercook
Bosch Re’Flect
Johnson Controls /Footfall
Honeywell /Datmax-O’Neil
Honeywell /Aviaso
Johnson Controls /Industrial Safety Tech
Johnson Controls /Hitachi Home-Life
Johnson Controls /Commercial Wireless
Johnson Controls /Creative Systems
Panasonic /Creative Systems
Panasonic /RFNet Technology
Emerson /GeoFields
Panasonic /ITC Global
Panasonic /Tactel AB
Panasonic /Majikinc Interactive
Panasonic /Quick Service System
Johnson ControlsTyco
Siemens /Dresser Rand
Danaher /Pall Ind
Parker Hanni�n /Clarcor
Pansonic /Hussmann
UTC /Rockwell
Collins
GE /Backer
Hughes
ABB /B&R
ABB /GE
Industrial
ABB /GE
Industrial
Emercon /Pentair Valve
Emerson /Paradigm
Deere / Blue River Tech
JohnsonControls /
Air DistTech
Itron / Silver Spring
Net’works
Itron /Comverge
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Focused “Builder”of Digital Ventures
Cooperative Digital ”Enabler”
Distinctive Digital “Accelerator” Skills
Leadership enhances ability to stage and launch new digital business ventures, JVs and collaborative customer innovationD
escr
iptio
nLe
ader
ship
Rol
eC
omm
on
Pitf
alls
Leadership sets vision, actively supports and directly influences digital strategies and performance in BUs – could include new venture development, support for JVs and investments in infrastructure
Leadership is less familiar with each business than unit leaders and can press for wrong targets, misallocate resources, or adopt inappropriate strategies
Leadership enhances value of synergy between teams and/or units -- the whole is worth more than the some of its parts
Leadership creates value by developing a range of distinct digital skills, critical enablers, functions, programs, and services
Leadership fosters and encourages interactions through vision development, decision-making processes & structures, policies & guidelines, relationships, or teams/staff
Leadership provides investment and the means to drive expertise-based services and architectural enablers for BUs. The best companies align unique skills with BUs and needs
Synergistic efforts are often cumbersome, inappropriate, or ineffective (benefits of synergistic relationships are often overestimated)
Leadership provides resources but is not aggressive enough about setting vision, goals and criticality of initiatives
PassiveActive
OEMs need to be focused and deliberate in their choice of innovation modes...
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Smart SystemsGrowth Models and Opportunities
smartsystems
and servicesinnovation
Cor
e
M&A
INTERNAL R&D and INNOVATION
COLLABORATIVE VENTURES(Joint Ventures, Spin-Offs andMinority Equity Investments)
BUSINESS UNIT VENTURES
Joint ventures, collaborative developments, spin-offs, etc. that drive incremental revenues
INTERNAL R&D and INNOVATIONInternal core innovation and/ or product development
Lead Time To Maturity
CORPORATE VENTURES and DEVELOPMENTBUSINESS UNIT VENTURES
Sound business idea that surfaces in core where culture or ops mode limits potential
COLLBAORATIVE VENTURES
CORPORATE VENTURES & DEVELOPMENTSSupport of and cooperation with start-up companies in early stages
MERGERS and ACQUISITIONS (M&A)Acquisition of developed companies with existing business, innovations or assets
Expa
nsio
n/N
ewwe believe OEMs need to broaden their options for new growth and innovation
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Strategic Alliance To Drive Industrial Ethernet (technology from Cisco to Rockwell and market access via Rockwell channel for Cisco
Creation of GE Software to converge internal software developments to single platform – equity investment in Pivotal software to speed new platform to market
Reverse merger and acquisition to create new software business unit to drive the unique skills required in industrial software business
leading OEMs are beginning to shift to multi-modal growth strategies
Digital “Enabler”Act as an “enabler” of new digital and IoT technologies and tools
Develop new business and revenue models
De�ne reference architecture and development tools
Collaborate with BUs to drive new initiatives
Develop and drive new skills into BUs
TimeScal
e
“Builder” of New VenturesBecome central coordinator and vehicle for establishing and growing new Smart Systems growth ventures
Promising spin-o�s from BUs
External partnerships, JVs and ventures
External investors
Digital Growth “Accelerator”Take more direct control of projects and initiatives in emergent arenas not well addressed by operating BUs
Discover and develop new adjacent business opportunities to existing core businesses
Explore M&A and investment opportunities to accelerate re-positioning and transition to new growth opportunities
Coordinate and collaborate with diverse external organizations to drive new learning, JVs and related strategic business development
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OEM growth strategy models and rolesWe believe there is a new generation of OEM players that are addressing the need to create new growth modes and growth vehicles. The various approaches to creating new customer value can be grouped into a set of growth models and strategies.
Leadership takes an active role in charting the company’s future course fostering those opportunities that shift from the OEM’s existing business mix. These often occur in adjacencies or in unexplored apps or technologies. Often these players will create distinct new organization structures to grow new capability.
• ABB• Fortive **• GE **
Charts the company’s future course, fostering opportunities that mark a big shift from the company’s existing businesses (i.e. digital).
Operators aggressively manage operational efficiencies such as manufacturing, R&D, sales, M&A, or related business processes based on corporate skill sets. Often, corporate maximizes management expertise and impact by intentionally managing similar business models.
• GE **• Emerson• Danaher **• Honeywell **• Eaton
Aggressively and deliberately focus on the management of internal efficiencies and skills; digital focus is often on driving new efficiencies and services.
Some companies have skills and technology to develop new organic growth opportunities and make a special competence of evolving an organization that can nurture and accommodate the creation and resulting businesses without loss of focus. Special attention focused on developing unique organic growth capabilities.
• Rockwell Automation• 3M• National Instruments
Has competence to organically grow; deliberately nurtures new skills without losing focus or competitive edge; adept at ecosystem development.
Designs unique organizational structures, relationships, and tools to create extraordinary value with digital opportunities.
A company will typically adopt this mode when it sees a growth opportunity where existing structures or business models are not well aligned with the new opportunity –examples include clever structuring of combinations of acquisitions, creating internal ventures as separate businesses &/or “spinning-out” new companies to create an innovative culture.
• Acuity• Xylem• GE **• Bosch
Many companies acquire firms but often these moves are stop-gap measures; in certain cases, a company sees a growth opportunity that cannot be prosecuted by internal growth in the required time frame, or lack the skills. For these, buying becomes a specialization– typically building a new line of business (platform).
• Roper• Fortive-Fluke **• Schneider Electric • Danaher **
Acquires to attain new skills &/or businesses (e.g. software); builds new business “platforms” to address growth opportunities.
“Planner” “Operator”“Grower”“Designer” “Constructor”
Digital and Smart Systems Development Mode
Illustrative Examples
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2014 2015 2016 2017 2018
PTC Acquires Axeda(Device Mgmt. & Connectivity)7/23/2014
GE Acquires Bit Stew Systems(Data mgmt. & Analytics)11/15/2016
Cisco Acquires Jasper(Device Mgmt. & Connectivity)2/3/2016
Cisco Acquires ParStream(Automation & Analytics)10/26/2015
PTC Acquires Coldlight(Automation & Analytics)5/5/2015
PTC Acquires Kepware(Automation & Analytics)1/12/2016
Microsoft Acquires Solair(Device Mgmt. & Connectivity)5/3/2016
Amazon Acquires 2lemetry(Data Mgmt. & Analytics)3/12/2015
SAP Acquires Plat.One(Device Mgmt. & Connectivity)9/28/2016
PTC Acquires ThingWorx(Device Mgmt. & Connectivity)12/30/2013
Autodesk Acquires SeeControl(Data Mgmt. & Analytics)8/27/2015
Google Acquires Xively(Device Mgmt. & Connectivity)2/15/2018
Acuity Acquires Lucid(Automation & Analytics)2/12/2018
Sierra Acquires flowthings.io(Automation & Analytics)8/3/2017
Sierra Acquires Numerex(Device Mgmt. & Connectivity12/7/2017
Prodea Acquires Arrayent(Device Mgmt. & Connectivity)7/26/2017
relayr Acquires Proximetry(Device Mgmt. & Connectivity)12/23/2016
OSRAM acquires Digital Lumens(Lighting & IoT Platform)8/24/2017
Acuity Acquires DG Logik(Automation & Analytics)7/7/2017
SoftwareAG Acquires Cumulocity(Device Mgmt. & Connectivity)4/31/2017
Honeywell Acquires NextNine(Device Mgmt. & Security)6/12/2017
Altair Acquires(Device Mgmt. & Security)6/12/2017
Itron Acquires Silver Spring(Device Mgmt. & Connectivity)1/5/2018
Xylem Acquires Sensus(Meter Data Platform)8/15/2016
several OEMs are attempting to embrace smart systems and IoT platforms
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Smart SystemsGrowth Models and Opportunities
smartsystems
and servicesinnovation
Organizational Structure,
Relationships,Interactions
Planning and Control
Systems
Skills Development
and Human Resources
Management
Culture & Leadership
Innovation Modes and
Types
Business Mix and Organization
Structure
Corporate Functions
Flexible Cross-Unit Teams and Interactions
Management Forums
& Councils
Corporate Planning
Investments and Planning
Information Systems and
Collaboration Tools
Resource Allocation
Processesand Systems
People, Capabilities
and Skills
Rewards and Incentives Schemes
Leadership Modes, Roles
and Style
Corporate Culture
Developing and Fostering
Clear Growth Vision
Explicit Growth Mechanisms &
Vehicles
Critical Enabling Roles
PerformanceMeasurement
Evolving Functions and Roles To
Foster Innovation
Research, Development
And Engineering
Digital Smart Systems and IoT
Innovation
Integration Platforms and Information
Systems
Significant Growth LeverNew Growth Catalyst
LeadershipInvolvement in
InnovationPrograms
understanding new business and operating models as well as organizational development levers will be critical to driving new digital growth
Business Design and Model
Business Structure To Innovate and Deliver Value
How Money Is Made
Ecosystem
RevenueModel
Structure
Network of Value Adders and Contributors
Core Capabilities
Processes & Systems
CriticalEnabling
Skills
Technology& IP
Unique ProprietaryCapabilities & Processes
Core Skills & Knowledge
Technology Development & Intellectual Property
Function & Content
PlatformCapabilities
ServicesSupport
System and Solution Delivery
Enable Partners to Extend Value
Features &Capabilities
Services to SupportOfferings User
Experience
Sales & Channel
TargetCustomers
Customer Engagement
Marketing& Brand
How Offerings Are Delivered To Customers
Value and BenefitsPerceived By
Customers
Customer Segmentationand Targeting
User, Participant and Customer Experience
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SmartSystems
Growth Models and Strategies
smartsystemsand servicesinnovation
OEMs need new ways to interact to create new growth strategies
IoT and Digital Building Blocks
Strategic Assets
Customer Experience
Operational Process
Business Model
Customer Understanding
Customer Touch Points & Experiences
New Top Line Growth
Process & Manufacturing Digitization
Worker & Process Enablement
Performance Management
Digitally-Modif ied Business
New Digital Partnered Models
New Revenue and Value Realization
Transformative IoT and Digital Vision
Iterative Transformation Roadmap
Sales force
Sales & channels
Products & content
Product innovationPartnership network
Brand
Customer knowledge
Culture
Infrastructure InvestmentSkills Initiatives
IoT and D
igital Governance
IoT
and
Dig
ital
Eng
agem
ent
• Defining a digital and IoT vision and strategy based on understanding new and novel requirements for manufacturing and customers
• Development and acceleration for new smart systems, services and solutions
• Supported by new internal processes, skills and roles required to adopt new tech and capabilities
• Supported by building and sustaining partner and ecosystem values
Most knowledge comes from human experience and expertise. Today, however, knowledge and expertise largely resides in functional silos and systems dispersed across organizations. Acting singularly, functional organizations are constrained by the resources under their control. Legacy processes and habits inhibit any natural ability to communicate and work together to solve big problems or create new solutions.
04smart systems design and development process
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DevelopmentProcess
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smart systems design and development process
Smart systems design is a new discipline that lies between the fault lines of existing disciplines
Today, with the emergence of connected products and information-based services, even more complexity has arisen in the design of systems and services as well as in the core of the product.
Because networks add yet more complexity to the process and because just about everything will get connected, we strongly believe this environment requires combinations of several disciplines and methods in order to fully address the nature of smart connected business opportunities.
Convergence of design, strategy and innovation processes is creating a new smart systems design process
Business Strategy
Related Disciplines& Fields
Product & ServiceDesign
Innovation Processes
Graphic Design
Industrial Design
ServicesDesign
InteractionDesign
ComplexSystemsDesign
Product & ServiceStrategy
Line of BusinessStrategy
CorporateStrategy & Portfolio Mgmt
Innovation Processes& Mgmt
Design Thinking
Smart Systems Design
Design, as well as strategy, is concerned with creating values and making them visible, not to mention profitable. Business strategy and design today need to extend to the experience that customers will have with connected products, services, spaces or a mix of these and, therefore must integrate the processes and systems that are behind these experiences with decisions related to both design and strategy.
The convergence of design with strategy and related innovation processes will inevitably lead to a new integrated set of processes, methods and disciplines -- the advent of what we are calling Smart Systems Design.
recognizing the need for new methods and processes is a minimum requirement...
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Smart SystemsDesign andDevelopmentProcess
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and servicesinnovation
Skills
T
echnology
How can we drive empathy, participation and motivation? How can we put human sensibilities and behaviors at the center of the solution?
How can an organization turns its workers, partners, and customers into believers and contributors? How can we solve really big problems or create unique new offerings?
How can we move beyond a conventional view of technology where all tangible and intangible skills and assets including people, brands, technologies, relationships, and processes are fully leveraged?
How can we deliberately organize to anticipate technologies that are disruptive or sustaining in nature.....innovation that creates new (and unexpected) opportunities?
we need a radically new frame of reference...that leverages the convergence of design, strategy and innovation processes
Relationships
Skills Technology
Data & Content
Experience Behaviors
How can we better understand customer experience through the user’s eyes and through the creativity of multiple parallel participants?
How can we bettter understand the value of data and information coming from products, systems and people?
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DevelopmentProcess
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DISCOVER How to use customer experience and technology uncertainty to reveal new opportunities
DEFINE Specific development opportunities including formal and informal relationships
DEVELOP System and services delivery modes including go-to-market design
DEPLOY Align investments with strategy and model
Understand likely evolution of competitive environment
Business modeldesign and vali-dation
User experienceand understanding
SYSTEMS DESIGN
We believe design needs to transcend discrete product or service innovation. Assuming that the role of design is only about making existing products or services more attractive no longer works. Business designers need to creatively imagine fully developed systems and whole marketplaces. Companies need to envision the design role as one that can address product, service and business systems.
RELATIONSHIPS
Problem solving for new Smart Systems opportunities must address tough questions: how can an organization turns its workers, partners, and customers into believers and contributors? How can we make changes that can impact multiple functions and organizations and ultimately solve really big problems or create unique new offerings? We are firm believers in the human element - the community as a manifestation of the system and visa versa. Behaviors of users, customers, teams, functions, leadership, all need to considered. Understanding empathy, participation, motivations - putting human sensibilities and behaviors at the center of the solution is key.
SKILLS
Companies need to move beyond a conventional orientation to technology skills and knowledge. Organizations need a disciplined process focused on optimizing all tangible and intangible skills and assets including people and competencies, brands and positioning, technologies and intellectual property, alliances, relationships and business and operational processes.
to conceive and design smart systems, organizations need an integrated approach...
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Smart SystemsDesign andDevelopmentProcess
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business model design and development needs to be truly creative .........
Which trends, forces and disruptions likely will shape the future competitive environment?
What value elements (e.g. embedded logic, networked devices, software, analytics, wireless, etc.) will increase and extend the value to the customer of our core offerings?
Can we design a superior solution offering that dominates market share or earns a substantial premium?
How can we best make, partner or acquire those value elements; who are the allies we should cultivate?
Are there new combinations of technologies, products, services and partners that can drive sustained differentiation?
Which value elements should we develop, which obtain by partnering and which by sourcing?
What formal and informal relationships among allies might exist in the future?
What characteristics should we use to describe our user’s and customer’s needs; how should we segment our world?
Which actual or potential segments are most attractive; which opportunities should we focus on?
Are customers measurably pleased with our offerings; do customers speak directly about their interactions with our company; does our brand reflect unique attributes?
Are there robust partners and communities that enhance users’ experience?
BUSINESS ORGANIZATION and DESIGNConfiguring core skills and relationships within an OEM are the basis for new innovation models
SMART SYSTEMS and SERVICES OFFERINGSOrganizing customer and user innovations
Unique / Distinct Features, Functions and Capabilities
Augmenting Capabilitiesand Services/Support
CustomizationModularityManageabilityBest-in-Class PerformanceEnvironment/SustainabilityProductivity and EfficienciesResource UtilizationContent ElementsSafety
Integrated OfferingsDirect Add-onsThird Party ExtensionsBundled FunctionsGuaranteeFinancial Incentives (e.g. lease)Loyalty ProgramsPersonalizationSelf-ServiceService Supplements/RangeUser CommunitiesSupport Systems
Systems and Solutions
Function & Content
PlatformCapabilities
DeliveryServices
What Unrealized Technology and Innovation Opportunities Are Available To Our Company?
What creative and disruptive players are present in the arena; what new competitive structure might these trends forge?
What is the evolving competitive and value structure and how can we align but distinctly?
How open and interoperable are our solutions; can we integrate and connect with peers in unique ways?
Does the company offer modularproducts and services that can also be integrated or purchased as packages?
How Can We Best Use Technological & Market Uncertainty To Our Advantage?
USER and CUSTOMER EXPERIENCEStructuring the elements to enable unique user and customer interactions
Customer Engagement
User Experience
Sales & Channel
Target CustomerEngagement & Brand
UX/UI EffectivenessEase of UseFunctionalityLook, feel & StyleConfigurabilityPersonalization CurationAutomationEnablingSimplificationCuration
Behavioral SegmentationIndustry SegmentationUser Segmentation AffinityEmpathyCommunityValues AlignmentStatus and RecognitionBrand Leverage/ExtensionCo-BrandingModular BrandingPrivate Labeling
Context SpecificCross-SellingDiversificationExperience CenterFlagship StoreGo DirectIndirect DistributionMulti-Level MarketingNon-Traditional ChannelsOn DemandPop-Up Presence
How Offerings Are Delivered Users
Positioning,Empathy and Affinity
Uniquely Enabled Interactions
Which value elements in which segments will give us a sustainable advantage?
Leadership StyleCompany CultureDecentralized Incentive SystemsTeam StructuresStaff DevelopmentStaff EducationPlanning SystemsCorp Venture Dev DevelopmentIncubatorsCompetency Centers
Monetization andWays To Make Money
Value Creating Networks and Relationships
Alignment, Leverage and Development of Resources
Micros ServicesPremiumRisk-SharingScaled TransactionsSwitchboardAd-SupportedAuctionBundled pricingCost LeadershipDisaggregated Pricing
Technology SourcingCommercial AlliancesCustomer CollaborationPartner Collaboration FranchisingOpen InnovationCrowdsourcingMerger/AcquisitionsMinority Investments
Intellectual PropertyKnowledge MgmtOrganizational DesignIT Sys and IntegrationLean/Flex ProductionLogistics SystemsProcess AutomationProcess EfficiencyStandardizationAnalyticsStrategic DesignInnovation Modes
SubscriptionsFlexible PricingFreemiumInstalled BaseLicensingMembershipMetered TransactionsFinancing
Business Design and Core Capabilities
EcosystemRevenueModel
Structure Processes & Systems
EnablingSkills
Technology& IP
What Business Design and Architecture Will Build Long-Term Success For Our Company?
What configuration of business skills, partners, business model and systems drives uniqueness?
Can we monetize our offerings in ways that are different from competitors or industry norms; can we make money and better margins via multiple revenue streams from different constituencies?
What Business Design Should We Pursue; Which Combination Of Value Elements Will Give Us An Advantage?
What organizational levers will best operationalize these priorities? How should they be configured?
What are our most important capability gaps to fill?
How can we align investment resources with our chosen strategy?
What top management priorities will lead to the most effective fulfillment of our market role?
What Management Priorities Will Allow Us To Realize Our Strategy?
What Unrealized Market Leadership Opportunities Are Available To Our Company?
Do our systems and solutions possess unique features and functionality that captivate customers?
Does the company deliver its offerings to customers and users in ways that challenge industry norms?
Do diverse partners help sell or deliver the company’s offerings?
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DevelopmentProcess
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STRATEGY DESIGN
FORUMS, TOOLS& INTERACTIONSRESEARCH
DIS
COVE
R
Ex
plor
e
Ex
peri
ence
Map
Conceive
Participate Prototype ModelInnovate
Validate
DEFINE DEVELOP
ArchitectInvest
Build
Research, Analysis, Forecasts,Content & Reports
Player & Event Tracking Platform
Smart Systems Framework
Smart Systems Lab
Tech Discovery Forums
Domain Adoption Forums
Revenue &Business Models
Innovation Workshops
GrowthOpportunityAssessments
DEPLO
Y
We plan and build new businesses and growth opportunities by leveraging deep analysis, thoughtful interactions and unique systems and business model design and development tools
To discover, design and develop innovative smart systems, organizations must consider all the elements involved and the context they fit into. The benefits that will flow from the recognition that traditional strategy and product development protocols will not meet the needs of a connected business are nearly infinite.
Harbor Research Inc. has nearly 30 years of experience supporting new business creation and development. We continually strive to generate deep insight into what drives value creation and competitive advantage in our clients’ businesses and the economy as a whole. Harbor helps companies outperform their peers and rivals by instilling innovation into the core of their business development processes. We help client’s foster creative thinking, facilitate diverse perspectives and unconventional insight and, most importantly, we directly participate. The result is increased certainty around vital new business decisions.
We work collaboratively to help clients come to confident answers today while also building their capabilities for the future - we are passionate about creating lasting impact. We believe that innovation can be driven from systematic methods and that enduring capabilities and processes can be built to reduce the risks associated with new growth ventures. Every solution we propose is informed by a combination of real world experience and unique processes and methods that are tailored to the dynamics of your organization.
our approach is simple: help clients create and capture value by combining accurate data discovery and analysis with strategy development and creative systems-thinking