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IoT for Buildings: A Source of Strategic Advantage

March 23, 2016
Enlighted Inc.

Porter’s Generic Strategies are a mainstay in almost every MBA textbook in America, and have provided the go-to framework for thinking about organizational strategy since they were first described by Michael Porter in 1980.

Porter has also written about the Internet of Things, or what he calls the rise of “Smart, Connected Products.” You can find his long read on the topic at Harvard Business Review. In it, he argues that technological change should not automatically change a company’s strategic focus, and that before adopting new technologies, organizations should ensure that the technology serves the organizational strategy, and not vice-versa.

With this in mind, here are some ways that the Internet of Things for buildings can support value creation in organizations pursuing a variety of generic strategies.

Cost Leadership

Organizations that are pursuing a broad cost leadership strategy are wise to invest in the Internet of Things (IoT). IoT platforms for buildings are typically paid for through operational cost savings with zero capital required up-front. The typical customer of Enlighted, for example, saves 50-75% on operational energy costs immediately upon installation of the system without needing to invest any capital. These savings can easily be passed on to the customer to increase organizational value creation.

Once a building IoT platform is installed other operating efficiencies become possible. In offices, intelligent space design and personalization using advanced motion tracking enhances worker productivity and comfort, and reducing sick days and stress leave. In hospitals, asset tracking software ensures that high-demand medical imaging equipment can be found and accessed as quickly as possible, thereby reducing costs and savings lives.

Cost Focus

Manufacturing, retail, and warehouse companies that are pursuing a narrower cost strategy that focuses on a single product, location, or warehouse, will find that sensor-based IoT solutions integrate well with existing information systems to provide new sources of actionable data and operational intelligence.

For example, connected motion tracking sensors can be installed in work cells, or across the shop floor in a manufacturing environment, gathering and sharing data back into a company’s MES and ERP systems in order to optimize work processes for greater efficiency. These sensors can detect and track motion in spaces as small as 10 feet, and optimize workflow for individual manufacturing work cells, or aggregated to optimize the the flow of work, people, and parts between cells.

Differentiation Strategies

Companies that are pursuing differentiation strategies typically seek to create unique and differentiated experiences for their customers. Building IoT, and the large quantities of data that advanced sensors gather, can generate deep insights into the customer experience. These insights can be used strategically to create brand differentiation.

For example, in retail environments, connected motion tracking sensors can be installed to anonymously measure foot traffic patterns of staff and customers over time, and optimize retail spaces across a real estate portfolio to ensure more consistent customer experiences. Likewise, in hospitals, connecting and integrating building IoT sensor data with patient care data from other systems can lead to integrated end to end customer experiences for patients, which create psychological benefits and improved health outcomes.

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