Vinci Workshop: Designing Profitable Digital Business Models with the Internet of Things

Join our workshop on 2 Feb

The workshop will offer valuable new insights into business opportunities driven by the Internet of Things (IoT), the opportunity to discuss commercial IoT examples, and to connect to researchers and practitioners each with their own knowledge and experience of the IoT. We will also discuss a research proposal combining academic and business insights.

When: Thursday 2 February 2017, 14-17:30
Where: University of Groningen, Zernike campus

Organizers: Prof. Dr. Albert Boonstra, Dr. John Dong, University of Groningen, Dr. David Langley, TNO

Intended participants: Product developers, business strategists and managers from organizations interested in developing profitable business models with the internet of things

This is an open call for participants for the workshop “Designing Profitable Digital Business Models with the Internet of Things” at the University of Groningen on 2 Feb 2017. The workshop will offer valuable new insights into business opportunities driven by the Internet of Things (IoT), the opportunity to discuss commercial IoT examples, and to connect to researchers and practitioners each with their own knowledge and experience of the IoT.

Our aim is to bring together practitioners and firms interested in exploring IoT business models, in order to:

(a) share knowledge and experiences based on real-world IoT examples
(b) investigate opportunities for collaboration in a new research proposal. Collaboration can take the form of sharing case examples, providing financial support, taking part in the research, participating in the network of organizations involved, making use of the outcomes of the research project, or other forms of collaboration.

The agenda is as follows:

14:00 Welcome and introduction to the workshop by Professor Boonstra (UG)

14:30 Introductions of workshop participants

14:45 Why IoT requires new business models (David Langley, TNO)

15:00 How to prepare your new business model for IoT using simulation methods (John Dong, UG)

15:30 Break

15:45 Discussion of the research proposal, and the relevance of its proposed outcomes

16:30 Exploring collaboration opportunities

16:45 Networking

17:30 Close

Registration: In order to take part please register by sending an email to vinci@rug.nl, indicating your name, your job function and your reason for wanting to join the workshop. You will then receive notification of participation.

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Possible direction of Research Proposal

The Internet of Things (IoT) offers firms countless new opportunities. Although many firms are initiating IoT developments in a trial-and-error process, many are unsure where to focus in such developments. For a given product, what are the different business models that the IoT enables? And what are the likely effects of different choices on the end users, their partners and suppliers? In short: in order to design profitable business models the firms need to make a good assessment of the future scenarios.

To date, science offers very few business insights into how firms can develop profitable IoT solutions. Innovation Management principles, which govern development processes for traditional products and services, need to be updated in order for them to guide IoT developments. In particular, there is an urgent need for practically applicable methods for designing profitable digital business models in relation to the IoT.

Through addressing this lacuna, we will be able to help firms save time in IoT developments as they will quickly understand which choices make business sense, be able to enhance their market position and avoid unnecessary costs.

Research proposal approach and methods

Studies show that best-in-class firms are more likely to use simulation than their competitors, when developing new products and services. We build upon the theoretical foundation of complex adaptive systems and apply simulation methods to explore insights for digital business models that are suitable for IoT developments. The proposed approach is a combination of computer simulation, and practical, hands-on piloting. First, taking one implementation of IoT technologies, a range of business ideas is generated. Second, the latest techniques for modelling technological and market dynamics are applied to simulate a range of implementations of the ideas. Third, by repeating simulation experiments, the most promising ideas which offer both high performance and acceptable effects on the business ecosystem are selected. This helps us to narrow down the range of uncertainty and to select the most promising digital business model. Finally, through pilot testing in a controlled quasi-experimental setting, we are able to empirically evaluate and fine-tune the digital business model derived from simulation in the real world.

Example: the IoT boiler

Let us consider the remote monitoring and optimization of the energy conversion of an appliance, such as a central heating boiler (during the proposed research, different examples will be analyzed depending on the needs of participating organizations). With the traditional boiler, the firm producing it benefits from being able to advertise energy efficiency in relation to its products, but the actual performance is less important, particularly if it is rarely measured. Recent controversy surrounding the efficiency claims of some car manufacturers, including Mitsubishi highlights this inconsistency (see: http://www.nytimes.com/2016/04/27/business/international/mitsubishi-fuel-economy-tests.html). In an IoT offering, the actual, real-time energy conversion of a central heating boiler can be monitored, reported and adjusted, thus enabling wholly new commercial propositions. First, we specify a range of business ideas, such as (1) a boiler with built-in sensors and actuators such that the manufacturer remains responsible for optimizing energy conversion and offers warm water as a service, rather than the boiler as a product, (2) a service from the energy supplier, to monitor and optimize the energy use of appliances, such that the user can be assured of the best energy efficiency at all times, etc. Second, we apply advanced dynamic modelling techniques to simulate the final products by modelling the different IoT product/service offerings in terms of functionality as well as relationships in the business ecosystem. Third, we repeating simulation experiments to explore and identify the most promising ideas which offer both high performance and commercial viability under a range of conditions, including technological and market uncertainty. Finally, the performance of the most promising IoT business models are piloted in order to validate the findings and derive business recommendations.

Results

Participating firms are provided with two main results:

1. A verified insight into the market potential of a number of digital business models related to IoT.
2. Validation of the highest potential designs, including business recommendations for optimizing the implementation of IoT.

Scientific Implications

Academically, this research adds to the Innovation Management literature on digital business model design, specifically for technological solutions of IoT developments where the technological and market potential has a high level of uncertainty. In the academic discussion surrounding the dominant idea of the digital business strategy this research will help to develop a theory on how pervasive digitization enables novel digital business models.

Managerial Implications

Due to high levels of internet penetration, the IoT makes it possible for firms to reach highly targeted markets and markets of unprecedented scale, for those that are able to design strong digital business models. The global competition will result in many existing markets being transformed, so for the firms that are unable to adapt and compete, the future looks bleak. The results of this research offer participating firms the opportunity to understand how to develop a strategically strong position, such that they can benefit from what the IoT offers. They will be better able to make the right decisions, faster, to gain competitive advantage from IoT developments.

For Dutch speakers, see: https://fd.nl/morgen/1147476/god-spelen-en-leerzame-werelden-creeren