Business of Smart Connected Products/Internet of Things (IOT) - Harvard Business School MBA Program

Business of Smart Connected Products/Internet of Things (IOT)

Course Number 1944

Professor Rajiv Lal
Spring; Q3Q4; 3 credits
25 sessions
Paper

This full course replaces the following two courses previously offered: The Business of Smart Connected Products (1945) and Field Course: The Business of Smart Connected Products (6194).

Course Overview

As discussed by Mike Porter and Jim Heppelmann in their Harvard Business Review articles, Smart Connected Products are transforming both competition and companies. They think of Smart Connected Products as the Third Wave of IT-Driven Competition that is likely to have a far bigger impact on our economies than any thing like this until now. By McKinsey estimates, Smart Connected Products could create 3.7 trillion dollars of value in our economy. Superimposing smart connected products are new applications of Augmented Reality and Virtual reality.

The attempt in this course is to not only understand what are smart connected products, what technologies are needed for smart connected products, how these products create value for end users, but also what ecosystems need to be created and supported to realize the full value of this technology.


The design of the course will rely heavily on the ideas expressed by Porter and Heppelmann in their two HBR articles. The course will start with giving students an understanding of what Smart Connected Products Can Do and what technologies are needed to enable the environment of Smart Connected Products. We are likely to seek help from companies like PTC and Sensata to give students a live demonstration of both products and the technology stack. Students will be see how this technology allows for monitoring, control, optimization and autonomy of such products. This introduction will be followed by a discussion of what and how smart connected products create value. A practical understanding of Machine Learning and Artificial Intelligence would be key to this effort. We will introduce the notion of settings as the unit of analysis and analyze systems like Smart Connected Cities, Farming Systems, Autonomous Vehicles, to develop an understanding of the scope of the impact of Smart Connected Products.


With this as the background we will then turn our attention to how smart connected products are transforming companies and focus on the strategic choices they have to make in offering a value proposition. For example, companies building smart connected products need to decide which product capabilities and features to build and how much functionality should be embedded in the product versus the cloud. Another set of questions relate to choice of open and closed systems and which capabilities should be developed internally versus being outsourced.

We will explore how IOT creates value in engineering, manufacturing, healthcare and services. We will also explore how IOT can help drive efficiency, change new product development, and create opportunities for new business models and demand responsive value chain.

With this understanding, we will turn our attention to Competition. The effort here would be to both understand how companies will compete in these systems and who is likely to capture the value created by smart connected products. For example, it is already known that companies providing cloud storage are unlikely to make a lot of money even though cloud storage is critical to the functioning of smart connected products. We will explore how to compete to establish a platform as well as owning a part of an ecosystem.

The next set of questions relate to data. Clearly much of value in smart connected products is created by the availability of data. Hence companies need to decide what data should they capture, secure and analyze and manage access rights to this data. Privacy, Security and Governance issues are right and center in IOT companies.

As many Smart Connected Products rely on a combination of hardware and soft ware, companies need to think through their go to market strategies and reconsider their business models and the scope of their business as there are many opportunities to monetize the data. The cases developed to explore these issues will attempt to capture both an incumbent’s point of view as well as that of a start up.

Many companies that are offering Smart Connected Products have had to go through major changes to the internal organization. We will therefore spend time understanding how marketing, sales, customer support, IT and manufacturing might change due to Smart Connected Products. Some companies have introduced the new role of Customer Success Officers and Product IT.

Finally, we will explore new technologies like Augmented Reality, Virtual Reality and Blockchain and how they are transforming the business world.

We will end the course with an in-class project where every student will work in a group in the I-Lab to create a Smart Connected Product.