By Dusty Weis, Association of Equipment Manufacturers

An old saying asserts, “Failure is the best teacher.” But when millions of dollars in research and development are on the line, failure is still a lesson most manufacturers would prefer to do without.

So as more players in the heavy equipment manufacturing sector seek to incorporate Internet of Things (IoT) technology in their products, there is no shortage of cautionary tales to which they should pay heed.

Richard Kelly, a partner at the international consulting firm McKinsey & Co., has studied the success and failure of IoT initiatives across many different sectors. These are projects that use vast wireless networks of sensors to collect data, opening up new advances in machine intelligence, predictive maintenance, cost reduction, efficiency, safety and compliance.

Advances in this technology mean that it’s cheaper and easier than ever to produce “smart” devices, equipment and machinery that offer a greater return on investment to end users. Kelly says a failure to invest in IoT initiatives will leave manufacturers at a competitive disadvantage to their competitors.

“The magnitude of the impact here can be quite transformational,” Kelly says. “But I think one of the important things that we’ve learned over the last three or four years is that understanding where the value is, prioritizing rigorously and focusing on that is absolutely critical.”

The road to the IoT future, he says, is littered with the wrecks of projects that sputtered out along the way. Thankfully, there are lessons to be learned from these failures. At one of AEM's Thinking Forward summits on the topic of Industry 4.0, Kelly told participants that there are five main reasons why IoT projects fail.

1) Trying to do everything at once

The potential applications for IoT technology are literally without limit, and it shouldn’t take a team of innovators very long to brainstorm dozens of ideas for how it could be incorporated into your products.

But that’s not even half the battle. Selecting the right ideas, and then advancing them as your top priorities, presents an organizational challenge to even the most innovative companies, Kelly says.

“This sounds very obvious, but in some companies, the bridge between technology and business problem hasn’t always been made as strong as it needs to be,” Kelly says. “There needs to be a selection made where you’re not going to try and do everything, you’re going to try and do these three things, and you’re going to try and do them really well.”

Kelly suggests pursuing ideas that have the most direct application to solving your customers’ problems. While new technology can be exciting for project developers, heavy equipment users can turn up their noses at anything they perceive as “technology for technology’s sake,” and the practicality of the user experience is still the prime directive.

2) Adhering to a rigid development and deployment cycle

Before there were computers small enough to wear on your wrist, innovating was ironically a pretty conventional process: first you identified a problem, then you perfected solutions, then you mass produced your final product.

But, by its decentralized nature, IoT technology is agile enough to adapt on-the-fly—new features can be added simply by updating the software. Accordingly, Kelly says a company’s product development cycle needs to be just as agile and flexible in order to be on the cutting edge. If you wait to deploy your product until you’ve worked the bugs out of every single feature, you’ll be a generation behind your competition in no time.

There’s no room for cutting corners on basic functions, safety features and other operationally-critical items. But your innovators should have the freedom to insert other bells and whistles into a product at any point in its development cycle—or even after it’s gone to market.

“If you’re talking about operator productivity or digital performance management features, adding them one step at a time is a viable way of doing it,” Kelly says. “It’s a different way of thinking, but we’ve seen it be successful in quite a few different industries.”

3) Taking a “lone wolf” approach to technological development

A company’s pioneering IoT solutions may be closely-guarded intellectual property, but that doesn’t mean the people who work with those ideas should stay locked away in their engineering cubicles, never again to see the light of day.

Successful innovators, Kelly argues, immerse themselves in the wider world of Industry 4.0 solutions. Participation in organizations, alliances and events that connect you to technology providers, universities, think tanks and even competitors will expose innovators to fresh ideas and unexplored solutions.

“In this world, everyone is forming alliances with everyone else,” Kelly says. “They realize that value comes from interconnectivity.”

“It’s very hard to predict right now exactly where things will be in three to four years. Having an open architecture and an ability to, as new opportunities come up, plug those in, is very important, rather than betting the house on one thing right now,” Kelly says.

4) Treating an IoT initiative as a simple “technology project”

If the responsibility for your IoT initiative rests solely on some remote branch of the organizational tree, you’re absolutely doing it wrong.

Kelly says jumping into the IoT realm is nothing short of a corporate transformation that transcends organizational silos. It can create new sources of revenue, reshape human resources demands and redefine a company’s relationships with its dealers.

“We’ve certainly seen cases where business processes, whether it’s resource allocation or budgeting, need to be adjusted to match this attitude,” Kelly says. “We need a bit more of a venture capital type mindset for these investments.”

And if that investment doesn’t have some degree of buy-in from every corner of the C-Suite, it’s almost certainly doomed to fail.

In companies where there’s not already a confident, vocal champion for the IoT transformation in the board room, some experts recommend creating an executive-level position specifically to fill that niche.

5) Failing to adapt organizational capability, culture and processes

In some ways, the dawn of the Internet of Things heralds the end of the “technology company,” as it’s been traditionally understood. Every company that makes, sells or markets goods will have to become a technology company, in some sense, in order to remain competitive.

Accordingly, many traditional manufacturing organizations face a scarcity of the organizational expertise needed to compete in the technology sphere. Kelly says the worst growing pains will be felt by the boots-on-the-ground workforce.

“You’re asking them to, in some ways, deal with new levels of technology,” he says, “and so we have to help them on that journey.”

Internal training initiatives are necessary, Kelly says, in order to ensure that all team members are up to the challenge. Companies will also have to plan strategically around whether their best course is to hire new technology experts, or simply contract with an established technology provider for their programming and analysis needs.


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