Where is the value unlocked in a system of connected devices?
In the last while I've seen a few things which got me thinking about how value is created or unlocked from connected data. Multiple components are required to create, send, store and manage the data created by edge devices, doing these things enables value to be unlocked, but what does it take to unlock the value?
It was this article which first got me interested in considering this question. In particular it was a section near the bottom of the article where the author describes a number of creative business use cases for car manufacturers which could be enabled by connected data. If this author could come up with several creative and potentially valuable use case examples for one industry I started to wonder what other sorts of use cases could exist in other industries? Could there be a series of use of use cases which a little variation be applied to different industries?
The second article which further sparked my interest in where the value originates from, is this one on using a cryptocurrency with IOT. While the idea of using a blockchain like technology with IOT is intriguing, it was the second image in the article (below) which resonated with me on value. This image is a graphical representation of the connection between the key components of a connected system and it makes it clear that each component has a critical role to play and the whole system and missing anyone of the parts and the system doesn't function. This image make it clear that it's the "Analyze" phase which drives the action to do something, and it's taking an action which is the reason the systems reason for existing.
Which brings me to the third and final article describing Industry 4.0. Like the other two articles, it wasn't the main point of the article I found most interesting, rather it was the image below, and in particular the side bar 'Value Creation through' which brought me back to the question of where value comes from. The idea that in a manufacturing setting, value can be created through product or process innovations as well as through new business models is intriguing. I think a fourth idea missing from this list, is one were network effects from getting more and more proprietary data creating a compounding effect, like with Facebook or LinkedIn. If there are at least four modes of value creation, maybe there others?
While these articles caused me to ask some questions, none of them really answered the question of where the value is unlocked. To answer the question I decided to restate the question to be "how is value unlocked from data" making the assumption the value is derived from the data. This question is a little easier to address. The best visual representation of the answer I've seen is the data value road map (below) from the Creating a Data-Driven Organization book which was released a couple of years ago. While I think the author is probably missing at least two boxes above 'optimization' ("new business models" and "data driven network effects") I think the graphic does a good job communicating that as the value created from data increases, the complexity of the analytic task also increases; suggesting the value is unlocked by the analytics.
For me, the value from a system of connected devices is unlocked from the "analysis" phase as seen in the first image. But in order to perform the "analysis" I think requires two things. First asking the right high value questions of the data (product managers/beginning with the end in mind/use cases) and then using the right set of technologies to address those questions which in many instances means Artificial Intelligence of some sort. Interestingly although artificial intelligence is required for many high value use cases, both parts of the analysis require distinctly human skills (the right use cases & controlling the technology) to create externalized intelligence and generate value.