Editorial: Master or servant? Deloitte Review Issue 17

Making the most of IoT-enabled capabilities, while avoiding the temptations of change for its own sake, requires understanding what is likely to change, and what isn’t. Organizations must still think carefully about value capture, for which proven constructs such as competitive position and competitive advantage remain indispensable.

Mark Cotteleer and Michael E. Raynor

As business is shaped more and more by new technologies such as additive manufacturing (aka 3D printing), analytics, and cloud-based computing, it can be tempting to conclude that technology doesn’t just shape strategy, it fundamentally defines it. The science moves so fast, and the possible commercial applications multiply so rapidly, that one can’t help but feel at risk of being left behind. The urge to experiment collides with a reluctance to leap without looking. Result? A fork that lets your smartphone know if you are eating too fast.

The Internet of Things (IoT) is a particularly salient example of the interaction between technology and strategy. The IoT has been simmering for a while, but now seems ready to boil over as a suite of technologies have collectively improved to the point that widespread transformation seems likely. By embedding sensors and connectivity throughout our physical space, the IoT creates an opportunity to transform inanimate objects into a connected web of ambient computing power—seeing, understanding, and reacting to the world. It rewrites the traditional view of data collection and computing, and gives leaders an ability to deploy sensing capabilities and take actions based on real-time information that may come from well beyond their own walls. The IoT has implications for consumer-facing offerings, but it can also reveal profound insights into business-to-business flows across the supply chain, providing far deeper and more nuanced insight into how capital is being deployed.

Deloitte Review, issue 17
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Key to making the most of IoT-enabled capabilities, while avoiding the temptations of change for its own sake, is a clear understanding of what is likely to change, and what isn’t. Our work in this area suggests that, at the highest level, the IoT can fundamentally transform how organizations create value: In addition to an often linear supply chain, they must now manage an information value loop, a loop that gives rise to increasingly complex business ecosystems.

At the same time, within these ecosystems, organizations must still think carefully about questions of value capture: how to share value with customers and ecosystem partners in ways that respect both economic imperatives and social norms of fairness. Here, proven constructs such as competitive position and competitive advantage demonstrate their worth.

Evergreen topics, such as security and risk management, and more recent additions to the C-suite agenda, like big data analytics, take on additional levels of complexity and heightened importance in an IoT world. Navigating these challenges demands a careful synthesis of what is truly new with timeless truths.

The five IoT articles in this issue of Deloitte Review are designed to help you tackle this at-times daunting challenge, to give substance to an otherwise abstract set of concepts. Our guiding principle in developing these articles has been that, for all its importance and impact, technology enables, rather than determines, an organization’s strategy. In other words, to add to the long list of substitutions made to Sir Francis Bacon’s famous aphorism about money: Technology is a wonderful servant but a terrible master.