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Like many, I was amazed when Google recently bought Nest Labs, makers of connected thermostats and smoke alarms for $3.2Bn. While Nest products are certainly cool, they are also very expensive and it is not clear yet if they have mass market appeal. Google was clearly buying its way into the early stages of the connected home automation market so they must see a significant growth opportunity.

A recent Harvard Business Review blog by Gordon Hui summarised three major challenges facing companies looking to join Google in this rapidly expanding IoT space. Success comes from meeting a real consumer need, being able to create a great physical and software user experience and developing a business model that works both in the hardware and digital realms.

As a truly multidisciplinary product development company, Cambridge Design Partnership can help IoT businesses overcome all three challenges because they deliver both technology and design solutions from a truly user centred perspective. Consumer needs are identified through research and analysis, using systematic techniques to identify unmet needs and the most valuable innovation opportunities. They then creatively match these needs with realistic ‘connected’ technology based experiences. With any new technology like IoT it is all too easy to get over excited and end up with ‘technology push’. There are too many examples of new products that have unwittingly constrained their market to early adopters and connectivity geeks this way.

The second challenge is to create a great product design and compelling digital experience at the same time. The costs, timescales, project management and technical skills are very different between consumer electronics design and mobile or web based software development. Consumer electronics developments have relatively long timescales and increased technical risk resulting from the up-front investment needed to develop and launch a new volume manufactured product to a high standard. At Cambridge Design Partnership we have an experienced development team who have created many consumer electronics products, skills include product design, electronics hardware and embedded software engineering supported by a team specialising in design for manufacture, supply chain development and launch management. Unusually, we also have a strong user experience team who work hand-in-hand with our development engineers to deliver an outstanding product and digital experience. It is in the seamless integration of the physical and the digital where great IoT opportunities are born. Few companies have the breadth of capability and experience to do this really successfully.

The final challenge lies in developing the right business model. We understand this only too well because we have funded and spun out digital, product and IoT start ups. Our first IoT venture was nearly 10 years ago launching a connected device that recorded and collated consumer feedback for multi outlet service based businesses like restaurants and hotels. The second was Gmax, a connected device which delivers remote physiology monitoring for trainers in the elite equine sport market. You can see this system working on line at http://coralchampionsclub.co.uk/, (you have to sign up on this site to view the connected data but it’s free and you might be able to spot a winner!).

Developing a successful business plan in a ‘new product/new market’ category is always challenging, but for an innovative IoT business it’s even harder as you can generate profit from both hardware sales, where costs are highly volume dependant, and from services delivered online where marginal costs are low. You quickly end up with a triple challenge, new product, new market and new business model, where the aim is to balance revenues to maximise growth. The reaction of consumers to this proposition can be hard to predict. Our approach is to quickly and economically create a minimum viable product and launch on a small scale, experimenting and iterating to find out what really appeals to the market.

So for companies wishing to join the IoT, if Google style acquisition is out of the question, then working with an experienced and capable innovation partner like Cambridge Design Partnership can provide a fast and effective route to market.

By Mike Cane, Founder

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