McKinsey Identifies Nine Practices of IoT Leaders
For all the excitement that has built up around the Internet of Things (IoT)—the network of digitally connected devices whose economic value could amount to trillions of dollars per year—the IoT’s impact varies greatly from one company to next. Many enterprises have launched pilot projects to develop IoT-enabled products and services or use the IoT to achieve operational improvements. Of these, less than 30 percent have taken their IoT programs beyond the pilot phase, according to our research.
Yet even among companies with large-scale IoT efforts, a significant gap separates the top tier of performers from the bottom tier. In a survey of IoT practitioners at 300 businesses with mature IoT programs (those that have expanded beyond pilot projects), about one-sixth said their companies had seen a significant payoff from IoT, an aggregate cost and revenue impact of at least 15 percent.1 We call these companies IoT leaders. At the other end of the spectrum, about one-sixth of respondents—the IoT laggards—said their IoT efforts had yielded an aggregate revenue and cost improvement of less than 5 percent
What separates the leaders from the laggards? The superior performance of the leading companies appears to be a function of much more than luck. Our survey results indicate that their approaches to the IoT exhibit the following distinctive practices. These companies are aggressive: by pursuing a large number of IoT applications, they quickly climb the IoT learning curve and pass the point at which new applications consistently generate a great deal of value. They develop a clear idea about the commercial opportunities associated with IoT, and they align everyone in the organization, from the executive suite to the front lines, toward a common set of goals. And they’re pragmatic about how they implement their IoT plans, building their IoT offerings around existing products and services and relying on outside partners to furnish them with sophisticated technologies. In this article, we’ll offer a closer look at the nine practices that are closely associated with IoT leadership.