The Internet of Things may spawn a thousand new ideas, but this requires a thousand trials to see what works. Typically, the resources for testing and piloting have been precious and few. Digital experimentation may make this process cheap and fast.
The intelligent connectivity offered through the Internet of Things and edge computing opens up vast opportunities for businesses. Edge analytics, machine learning, computer vision, and other emerging trends will lead to new product development, enhanced relations with customers, and faster time to market.
However, conceptualizing these innovations and turning them a reality are separate things. New ideas or processes, as they have always been, need to be tested and validated as of value to the business. Most organizations cannot commit enough time and resources to experiment and test new approaches. Employees may generate 100 new ideas a day; but the organization may only have enough resources to pursue one of those ideas if it’s lucky.
With the Internet of Things and intelligence at the edge, the challenge becomes even more daunting. IoT and edge computing are based on complicated combinations of hardware, software and network stacks, many of which may be out of the reach and purview of the organization.
A study released by Cisco finds that despite the forward momentum for IoT, 60 percent of IoT initiatives stall at the proof of concept stage and only 26 percent of companies have had an IoT initiative that they considered a complete success.
Without experimentation, innovation grinds to a slow crawl – if not a complete halt. Innovation is critical to companies seeking to develop and bring their services, processes and platforms to customers, partners and employees. Until recently, testing and trying out new ideas and process used to incur more costs than it was worth. But digital technologies – such as online A/B testing, rapid prototyping, and computer simulation – enable experiments to be conducted rapidly and cost-effectively.
To succeed long term in the digital economy, companies need to “evolve their strategies by experimenting with small offerings and learning what their customers value,” writes Jeanne Ross in MIT Sloan Management Review. “Eventually, big companies will become successful digital companies because they know how to scale successful experiments.”
A comprehensive effort to conduct regular and frequent experiments should be part of any digitally driven company. “By combining the power of software with the scientific rigor of controlled experiments, your company can create a learning lab,” write Ron Kohavi of Microsoft and Stefan Thomke of Harvard University in Harvard Business Review. “The returns you reap – in cost savings, new revenue, and improved user experience – can be huge. If you want to gain a competitive advantage, your firm should build an experimentation capability and master the science of conducting online tests.”
There are many innovations that can be delivered via digital experimentation with IoT. They may be of high-level strategic value, such as introducing a value-added monitoring service for products installed at customer sites. Or, they may provide operational advantage, such as enabling enterprise administrators to link sensors measuring and monitoring temperatures, pressure and vibrations on production machinery to control systems.
As digital experimentation is so inexpensive, it is helping to clear out all the organization inertia that typically throws sludge into the innovation process – resulting in paralysis by analysis. Often, big organizations spend more time, energy and money debating an idea than it would take to actually try it out. Many companies, in fact, have spent years and millions of dollars in the process of innovation, mainly because experimentation was so expensive.
With digital experimentation, trying out new ideas or concepts becomes quick and easy. Enterprises can try many ideas. It’s important to remember that not every idea – even ones that sound good on the surface – is a money maker. Not every idea is going to improve your operation. Not every idea saves lives. But if you can lower the effort to cost, the investment, and you can do many of them, you’re more likely to discover some really great things that do great for your business.
Digital experiments provide the following advantages:
- They bring IT and operational technology together. Digital experiments align technology resources and apply them to business opportunities and problems.
- They strengthen management’s confidence for investing in IoT initiatives. The results of digital experiments help demonstrate the value delivered from various IoT efforts.
- Unsuccessful experiments are just as valuable. Potential waste of organizational resources is avoided.
- They bring together complicated scenarios. There are many moving parts to an IoT network, supporting multiple standards, multiple technologies, multiple data types, and multiple vendors. Most testing and experimentation environments are designed to support a single-vendor environment.
- They help companies get more value out of technology investments. Devices and online services may be sitting, underutilized.
“[Some] organizations have discovered that an ‘experiment with everything’ approach has surprisingly large payoffs,” said Kohavi and Thomke in Harvard Business Review. “At a time when the web is vital to almost all businesses, rigorous online experiments should be the standard operating procedure. If a company develops the software infrastructure and organizational skills to conduct them, it will be able to assess not only ideas for websites but also potential business models, strategies, products, services, and marketing campaigns – all relatively inexpensively. Controlled experiments can transform decision making into a scientific, evidence-driven process – rather than an intuitive reaction.”