Book review: The Outcome Economy
This is a review of a timely publication sub-titled “How the Industrial Internet of Things is Transforming Every Business”, written by Joe Barkai, a consultant, speaker, author and blogger. It’s timely because while the business case for the IIoT is compelling, all too often it is overlaid with noise, buzzwords and tired clichés.
Therefore, says Bob Emmerson, freelance writer and telecoms industry observer, it has become difficult to convey the actual business value and to move on from “the mere concept of device connectivity” and start conveying the ways in which value is going to be created in future.
Forget blue-sky thinking. This pocket-sized, 140-page publication starts with a real-world use case, the Spanish national railway company Renfe. They offer a money-back guarantee that reimburses passengers for the full ticket price if a train is late by more than 15 minutes.
After going into operation, only one train in 2,300 didn’t meet the guaranteed uptime. What Renfe created was a business model in which the value paid and the value received was directly related to the outcome that was the most meaningful to the passengers. This case illustrates the fact that in the outcome economy, physical products don’t count as much as the business outcome they deliver.
This is an easy-to-read book that is divided into ten sections. The author covers a lot of ground, including a historical overview that goes back to the 1930s; a modified Coca-Cola vending machine from 1982; and the origin of the phrase ‘Internet of Things’, which probably started at Procter & Gamble in 1999. Moving forward we come to cyber-physical systems and digital twins; the factory of the future and mass customisation.
There are various sharp but pertinent statements, e.g. connectivity itself does not inherently create value, it only enables value; the number of connected devices hardly matters to the market; and new business models should not focus on the plumbing, but rather on the content. And while recognising the importance of standards, the author also indicates the need to know why they are needed. This indicates the need for standards that operate at the semantic level.
When it comes to the creation of meaningful IIoT solutions, he underlines the need for them to be built on open, scalable systems that allow them to harness the power of diverse, connected partnership ecosystems. Together with open market exchanges, they create an agile environment that is used to identify opportunities, to gain and service customers, to respond to market changes and competitive threats.
However, while there is a significant economic upside, the cost and impact of the changes in the organisation cannot be overstated and certainly should not be ignored.
A glimpse into the future
The key takeaways: the impact of smart connected products is still in its nascent stage; connectivity is being commoditised; growth in the IIoT is hinged upon organisational transformation; and future business excellence and competitive strength will be based on a high degree of customer intimacy, delivering customer value, and battling over customer loyalty.
In a nutshell, this book provides a clear, concise, wide-ranging, objective, realistic view on the Outcome Economy. I bought it from Amazon: price £13.95
The author of this blog is Bob Emmerson, freelance writer and telecoms industry observer