Part II of two. Read Part I here.
When you have pressure to accelerate deployment and deliver results in an IIoT project, designing a pilot portfolio strategy is essential. That’s why in the eight-step data monetization framework I developed with Professor Wolfgang Ulaga in 2018, it’s Step 3. It is critical for anticipating the needs for pilots, selecting the right customer or prospects to conduct pilots with, and minimizing variability in your pilot portfolio to accelerate scaling.
I propose 10 specific recommendations for accelerating your exit out of pilot mode. With them, manufacturers can pick pilots better and accelerate their scaling process. They are articulated around three major themes: customer segmentation, pilot portfolio strategy, and partnership approach.
Start Your Scaling Plan with the Right Segmentation Process Based on Deep Customer Intimacy
1. Add relevant classification criteria related to piloting and scaling in your digital segmentation process: Speed of execution, digital maturity level, decision-making speed, risk aversion, and ability to mobilize funds are good examples of how you might characterize your customer base. Rerun or refresh your current segmentation process to find the optimal accounts to target.
2. Conduct a deep analysis of the buying center for each end use and type of customer segment: Understand who selects and approves pilots (besides IT and manufacturing), what pilot KPIs are critical for each stakeholder (e.g., finance and operations), what each stakeholder’s scaling-sequence preferences are, and the budget consideration at each stage of the scaling process. Manufacturers aiming at providing IoT focus too much on the usual suspects: IT, production, and procurement. Consider the need to talk to data teams, maintenance, facilities, and legal teams.
3. Design a customer pilot prioritization and section process: For each end-use application and customer segment (if available), defined a formal ranking process for prioritization based on pre-established criteria: speed, quick win, time of gestation, scalability, readiness to invest, strategic alignment, etc. This process can be formalized in a spreadsheet to score and rank the attractiveness of end-use applications and customer targets. The key is to select the right criteria, to use the right weighting mechanism, and to have candid scoring interactions.
Design an Intentional Pilot Portfolio Strategy to Prioritize to Scale Faster
1. Create a matrix crossing the most-attractive end-use applications and customer plants to map the degree of commonality: This exercise is a good test of your degree of focus as well as the level of commonality in your pilot portfolio. Use color codes to create a variability heat map (red: high degree; yellow: acceptable degree; green: low degree).
2. Validate your targeted customer pilots by designing a pilot and scaling-readiness assessment that can be discussed with customers and prospects: This assessment can be offered as a discovery exercise with your pilot account to identify gaps to address and accelerators to stimulate. This assessment can be adapted to the few end-use applications you are considering. This pilot readiness assessment can include the use of a value calculator for the pilot as well asduring the scaling process.
3. Map your data requirements to focus on pilots that can complete your “data puzzle”: Remember that, as a manufacturer yourself, you are learning as much as your targeted pilot customers. While I reinforce the need to focus on a few end-use applications and customer targets, you might have to include pilots in areas where you might learn from new types of data. Data connectedness might be a key criterion in the prioritization of your pilot targets. The goal is to reduce variability across pilots; completing the “data puzzle” might help you get there.
4. Design a pilot execution playbook: This playbook is shared with customers and prospects. It sets customer value propositions, the business case, the pilot methodology (Six Sigma, Lean SS), and expectations; defines implementation thresholds; defines pilot success KPIs, financial and resource commitments, and scaling plans once the pilot is in control mode. Train your best application and business developers on the pilot playbook. Professionalize the pilot management process. Do not leave anything hanging.
Complement Your Pilot Strategy with the Right Partnership Model
1. Think in terms of intelligent assets: Depending on where you stand in your digital transformation and in your industry maturity spectrum, you might be in a leadership position and convince customers and prospects to broaden their pilot scope and to think in term of systems and intelligent assets and not just hardware, assets, and components. The goal is to change the project scope to include connected intelligent customer assets, not just single connected products in the customer asset. This platform thinking approach might be valuable to your customers and save them time and money. No customer will to want to conduct 10 pilot projects, one for each key component of their manufacturing line. Large consulting companies and large software platform providers have understood this and have promoted intelligent assets instead of connected industrial components.
2. Form right partnerships with other system component manufacturers and tech partners: To accelerate the pilot process, you must form alliances and propose turnkey technological solutions that include hardware, software, telematics, reporting, etc. Thinking in terms of intelligent assets requires partnerships. Focus on successful and off-the-shelf tech providers that can quickly enable your connected solutions. Combine other manufacturers’ products with yours and share the efforts and investments. Going it alone does not work well in digital unless you are first to market and disrupting the end-use application you are targeting. This is a rare situation today.
3. Fight the not-invented-here syndrome and embrace the open world: According to CapGemini (3), more than 50% of organizations say that uncertain standards are a significant challenge to IoT implementation. Embracing commonly accepted standard helps translate various types of manufacturing data into common language (e.g., MT Connect). Large industrial companies tend to fight common standards and to fall into the not-invented-here trap. Competing platforms, standards, and languages confuse customers and force them to make a choice. This raises the level of uncertainty in pilot projects and reinforces the need for long pilots.
More things can be done to accelerate pilot projects and scaling plans. Without a clear, strategic, focused, and intentional pilot strategy, your organization will be stuck in pilot mode for a while. Design this strategy with the exit of the pilot or POC mode in mind. It does require great focus and decisiveness, two things that are not commonly found in digital transformations in industrial natives.
As you staff your digital teams, you may want to consider disrupting your approach by adding an expert in customer pilot management. That dedicated expert should have both customer application/end-use knowledge and strong execution focus, not necessarily a strong digital expertise. A great pilot portfolio strategy must be focused more on customer success and value delivery, and less on digital technology and technological purity. The combination of strategic intention, a pilot management process, customer success, and quick execution might help you accelerate your exit from the “pilot purgatory.” There is no guarantee of that, but it might help achieve your targets and managed internal expectations.
Stephan Liozu is chief value officer of Thales Group (www.thalesgroup.com) and an adjunct professor and research fellow at Case Western Reserve University’s Weatherhead School of Management. He co-authored Monetizing Data: A Practical Roadmap for Framing, Pricing, and Selling your B2B Digital Offers.