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How to create value with internet of things

IoT has been a hot topic for many years now. There are dozens of research papers and blog posts that preach about the endless possibilities of the IoT. Even though there are a few success stories most of the promised value still remains unlocked.

According to the Gartner Hype Cycle for Internet of Things (below), the IoT itself is on the highest peak of inflated expectations for the third year in a row. I think that there are three reasons why it hasn’t moved anywhere from there.


Three reasons why IoT hasn’t realized its potential yet

The first reason is that of course, we are still waiting for the technology to become even cheaper than it already is. When building large scale solutions there is a big difference between 5 euro sensor and 20 cents sensor. There isn’t a quick fix for this one. The other reason is that we are too afraid to build the ecosystems that the huge potential of the IoT requires. Many of the biggest opportunities would require an open culture and ability to co-create but there are too many questions about the business models and opening our business to others is harder than it sounds. The third reason is that we are still too focused on the technology of the IoT and not that much of the user - the human - that needs the solution. That’s why we struggle to find real value in the IoT solutions. In many cases, the question of the IoT solution is can we and not should we. Most of the time the answer to the first one is yes but the second one is much trickier.

The reason we struggle with the value is that we forget that the IoT is merely an enabler for great solutions and services. It’s easy and fun to focus on the new technology but the technology-first is a much harder approach to create huge value than starting from the human with needs. I would guess that the Facebook wasn’t created just because Mark Zuckerberg had a computer and access to the internet but because he saw that humans need an easier way to interact.

Three ways to create value with IoT

Inspired by the book The Amazon Way on IoT I’ve grouped ways to create value with IoT into three categories. Sometimes you can do all these with a single solution and that will most likely be a huge success.

1. Reinventing the customer experience

We can make the customer experience smoother with IoT by automating and thus eliminating unnecessary interactions. We can also use new ways to interact with our services from simple physical buttons to augmented reality and different kinds of movement detectors. Such interactions can make our service work based on the actions the user does anyway (such as walk) and not based on the actions the user needs to do separately (click the button “I’m walking”). By measuring where, how and why our products are used, R&D department can develop better features to our existing products. With IoT and all the data collected, we can customize our services to be more personal for the user. For example, Finnair and Finavia are experimenting with facial recognition when entering the airport. This way we can travel without showing the boarding pass to anyone.

2. Improving the operational efficiency

If you are an industrial player this is most likely where you’d like to start. It’s easy to see the benefits through savings. But this is not that different from the previous point. It’s still automating and reducing interactions but the customer here is an employee. We might even call it the intranet of things since only people inside our company is using it. To figure out where to start we can use the Lean principles. The operational efficiency will increase when we eliminate the 7 wastes (transport, inventory, motion, waiting, overprocessing, overproduction, defects). The most famous example of improving supply chain efficiency with IoT is probably Amazon with its robotic warehouses.

The other way to make operations more efficient is to break the silos inside our organization. Making information more transparent and faster through IoT, we reduce the bottlenecks and people can make better decisions. Even though the main benefit from increased operational efficiency is for the company and the employees itself, it usually benefits also customer by reducing delivery times, improving quality and lowering costs.

3. Developing new business models

Creating something new is always harder than improving something that already exists. New business models in IoT means for example ecosystems, platforms and selling and buying data. Also, a lot of smaller scale solutions can be new business models to your company but the large scale solutions will bring more payback and are obviously tempting. To do these we need to overcome our fears and to open up and co-create with other companies. An example of new thinking and a new business model with IoT is the Nokian Tyres SnapSkan tire scanner.

How to start creating value with IoT

To decide where to start depends obviously where you are currently with exploiting the IoT. If you are not in the game at all start with simple tracking and visualizations. Use the dashboards to improve your operational efficiency and to give better information for decision making. Don’t be too intimidated by the internet of everything but start with the internet of something and scale up.

If you already have some solutions, try using data science and the collected data to get better insights on your products, operations or customers and improve based on those insights. With those insights, you might be able to even adjust processes automatically. If this is already business as usual to you, start doing explorations to new business models. What could you or your customers do with the data collected? Or what data is still missing? Your customers probably already combine your products/services with something else. Could you make that easier or add those features to your products/services? Be open and do a lot of small experiments and prepare to scale to ones that work.

When doing explorations always start with the human user and focus first on finding a problem worth solving. Only after founding that, start thinking about the solution. If the problem is somehow in the physical world you can use tools like IoT Service Kit ( to come up with the solutions. Sometimes you might also notice that you don’t need IoT to solve the biggest problem the user has. In these cases, you should forget the IoT since pursuing the technology there where it is not needed you end up with a solution that does not solve the problem.

IoT will influence all businesses sooner or later. The new business models will change the way we do things and how we behave. Those who will develop successful IoT solutions have started with the customer value and human needs in mind. They have started small, explored a lot and scaled what has worked.

See also: 7 design principles for Internet of Things

The best way to create value with an IoT solution is to start with the human needs. The best way to not create value with an IoT solution is to not start at all.

If you’d like to discuss more of the IoT, check out our IoT offering in and don’t be afraid to contact me/us.


  • Portrait of Antti Partanen
    Antti Partanen
    Business Development Manager