Is there a company left which has not developed smart products and services which leverage software, sensors and satellites?
I asked myself that question as I read two consecutive BusinessWeek issues with such smart products and services. Phillip Morris has been rolling out its IQOS e-cigarette for the last couple of years. It heats, not burns, tobacco so there is no hazardous smoke and tar, just tobacco-flavored vapor. The device looks like it might have been designed by Apple. Domino’s has been trying out a delivery car with special side doors and warming ovens. An independent franchisee in New Zealand is testing delivery by drone and robot. In Japan, they have tried an augmented reality app. In 2015, for the first time, more than half of Domino’s orders were placed online, and half of those came via mobile.
“(My growing book) research actually led me to a detour. I tried to find industries that were NOT thinking about smart products and services. An executive suggested I look at the portfolio of the legendary investor, Warren Buffett. He has made a fortune avoiding companies that are susceptible to technology turmoil. So, I looked at some of his investments. They include Coke, Burlington Northern, and Procter & Gamble, and found an Internet-linked vending machine, satellite-based railcar tracking, and social media innovations. They’re actually very savvy technology innovators.”
For years now, pundits have said technology budgets are being taken over by the CMO. Actually, they have been taken over as much by the product side of the house. It is not unusual to find in auto makers there are more software engineers who report to product engineering/R&D than do to the CIO. It is not uncommon to see the spend with contract manufacturers like Flextronics and product design firms like IDEO exceed the spend with IT outsourcers and strategy firms. Companies are finding their spend on Build versus Buy technology has swung as they invest in proprietary code in their products. IP conversations with vendors have been overshadowed by patent and security discussions with their own customers.
More importantly the smart product/service technology is generating revenues for companies. You look at a company like GE with smart locomotives, turbines, aircraft engines and the data they are generating to allow it to talk about the Industrial Internet. And generate a new stream of digital revenues. It’s happening in every industry. When was the last time a CIO could claim that with an internal IT ERP or infrastructure project?
The path for the CIO is clear. Get more involved in the development and evolution of smart products and services. Get closer to revenue generating technology projects.
It’s not too late.
As I wrote in the book,
“So, you meet the proverbial Genie and he grants you your wish. Your product is smart now. But as the story goes—are you sure you want that wish granted? Are you ready for your new world? You are now a Technology Vendor, and that means:
_ Getting used to technology product half-lives.
_ Adjusting to Moore’s Law.
_ Rethinking product documentation.
_ Understanding technology law.
_ Getting used to competition from left field.
I issued this challenge:
“If Siemens, a company founded in 1847, Toro, founded in 1914, and Moen, founded in 1937, can do it, so can anybody else. They are not startups by a long shot. Of course there is the nightmare scenario. If our products are not viewed as smart, what about the risk from standing still? Will our customers increasingly view them as dumb?”
The CIO’s main competition is himself/herself – the old, inwardly focused, buy versus build CIO.
Product and revenue focus beckon. It’s much more exciting world.
(Cross-posted @ Deal Architect)