Looking for added value with smart connected

More and more smart connected products pop up around us and more technology is available on the market to make smart internet-of-things (IoT) solutions. Many companies that build physical products wonder whether and when to take which steps. They are faced with numerous challenges such as creating added value and devising an attractive value proposal.

Sirris identified the most important challenges for product builders who want to make the move to smart connected products. In a previous blog we cited challenges such as formulating a vision and making a business case; in this blog we will consider the focus on the added value of the solution and the development of the value proposition. 

Challenge 3: Focus on the added value of the solution

When innovations with smart connected technology fail, this is all too often because they do not provide sufficient answers to the concrete needs or problems of users, or because they ignore alternative solutions. If you don't pay enough attention to understanding the real problem and its impact, you also risk ignoring the potential added value of a solution. We will discuss this in more detail in the guide, on the basis of an example, a business that produces containers for goods transport and has ideas for making them smart and connected.

It pays off for product builders to first invest sufficient time in understanding the problem or need of the customer and the value of possible solutions for the customer, and then invest money in the development of the correct solution:

  • What needs, problems or costs do I solve and what benefits and which advantages or profits can I achieve for my customer?
  • Does my customer recognise the added value compared to alternative solutions?
  • How much is my customer willing to pay for my solution?

The questions your company needs to ask are no different for smart connected solutions than for other technological innovations. The difference lies in the wider range of value that can be created by smart connected solutions.  

 

Challenge 4: Invent a value proposition with a win-win

A smartly connected product must provide added value for the customer. But how can this added value be converted into sustainable income for your company?

This can be done by adding new functionalities to the product but also by expanding the product with digitally supported services to generate new revenues. It is therefore quite possible that your company's position in the value chain will change. This usually comes with new forms of cooperation and also new forms of competition.

First invest time in finding a value proposition that can achieve a win-win for your customer and for your company and then invest money in developing the right solution:

  • Does my solution add new functionalities to my product and/or do I also expand the product with new digitally supported services?
  • How does my company's position change in the value chain? Where are opportunities and where can I expect resistance or cooperation from other players? Is a win-win-win possible for my customer, my company and the value chain?
  • How do I see the step-by-step evolution of my solution over the years (a product roadmap)?
  • How will I check whether the value proposition meets the wishes of my intended customers?

The search for the product and business idea that delivers added value increases your chances of a successful innovation. In this process Sirris supports companies as innovation partners, with independent advice and guidance.
In the Wat Slim project, Sirris has helped more than 50 companies to explore the potential of smart connected products for their business. The insights built up in this project were joined in a guide. The guide provides an overview of the 10 most important challenges for product builders who want to make the move to smart connected products.

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This blog has been written with the support of VLAIO.