By IoT Analytics
Internet of Things (IoT) solutions are primed to revolutionize the way we do business. digitized processes, products and services create a new level of efficiency and enable completely new business opportunities. Companies need to follow these trends in order to stay competitive and thrive in their respective markets.
While large and multinational corporations generally have sufficient human, financial and development resources to create these new digital and IoT-based solutions, small and medium-sized businesses (SMEs) don’t possess the same options. Nevertheless, SMEs face a plethora of choices of external innovation from building corporate ventures to using company builders all the way to accelerators.
IoT Analytics published a new report called Guide to IoT Innovation, which helps SMEs find a suitable model for digitalization and navigate the options for innovation in the age of the Internet of Things. The report was sponsored by Berlin-based company builder NBT ( Next Big Thing AG).
This report sets out to guide SMEs to find not only a fitting model for digitalization but furthermore to help navigate the options for innovation in the even more complex age of the Internet of Things.
Included in the paper are the survey results of 50 professionals, who work at SMEs that either already offer IoT-based products and services or are currently in the process of developing these.
The results show that, unfortunately, many small and medium sized companies lack a comprehensive vision of where IoT will take them in their industry.
Very few firms seem to have a clear concept on how to tackle IoT innovation.
The biggest obstacles for SMEs today is the lack of internal talent (46%) and lack of technology expertise (40%). both would be a must-have for internal development.
SMEs looking to find talent and expertise in IoT immediately compete on a global scale – a competition they seem unlikely to win as many SMEs are located in lesser known areas with less attractive settings for a globalized workforce.
The companies that are not completely inactive, often test a variety of models for external innovation.
To avoid delayed innovation, many SMEs opt for external means of transformation and innovation.
There is a plethora of choices of external IoT innovation from building corporate ventures to using company builders all the way to accelerators. Out of the nine options analyzed in the IoT Innovation Guide, engaging with third party full service providers was highlighted as the most common model (44% of respondents), followed by corporate venturing (36%) and working with company builders (36%).
9 ways for external IoT Innovation ranked (by occurrence)
- Third Party Full Service Provider (44%) – The SME purchases services and products from a full service provider with ready-to-use solutions
- Corporate Ventures (36%) – The SME creates an own venture arm that strategically invests in numerous startups in relevant areas
- Company Builder/ Agency (36%) – The SME co-creates /co-develops with experts that facilitate the end-to-end innovation process
- Strategic Partnerships (32%) – The SME partners with other firms in certain strategic areas usually formalized in a business contract
- Incubators / Accelerators (30%) – The SME creates an own arm that strategically supports numerous startups in relevant areas
- Innovation Labs / Spin-off Programs (22%) – The SME creates an own separate legal entity that acts as an inhouse startup or as an interface with the startup ecosystem
- Direct Startup Engagement (20%) – The SME co-creates /co-develops directly with a start-up
- Ecosystem Innovation (16%) – The SME joins an ecosystem to co-create solutions within a framework for strategic cooperation and information sharing
- Open Innovation (10%) – The SME uses various tools of innovation across organizational boundaries (e.g., Hackathons)
Not all models are equally successful
But which of the 9 models appear to be the most successful?
The report provides an indication on the success rates of these 9 models and highlights pros and cons as well as real-life IoT innovation examples for each. It furthermore gives recommendations for SMEs that plan to innovate in IoT.