We've helped many connected product companies grow successfully... here's what we've learnt.
1. They hire the right people
A good team is so fundamental to success that we've written a whole blog piece about it.
2. They don't try to build it all themselves
The days of needing to do this are long gone. Architect a modular system, using off-the-shelf software and hardware modules where possible. These can then be individually replaced without wholesale redesign if they fail to perform or scale as you grow. Generally, at the start you should choose best-of-breed components, recognising that quality and value comes from scale, and initially optimise for speed and quality of development rather than lowest eventual cost.
3. They learn from other's mistakes
Even if your connected product proposition is completely new to the market, it's very likely that aspects of the proposition and the technology components it requires have been tried in the market before, so you can learn a huge amount from the experiences of "pioneers with arrows in their backs". This is why first-mover-advantage is rare and fast followers are often the ones who end up winning in the market just as it takes off. It's amazing how generous pioneers will often be with sharing their experiences for the price of a coffee or a pint of beer.
Hiring people with experience is clearly another way to gain this learning, as is buying components from partners who have already learned the lessons and embedded that experience in their product.
4. They partner and engage in co-opetition
Every IoT company sits within a "value chain" - buying components from suppliers, integrating them, and then selling them to customers. Because most IoT components are not yet truly commoditised, vendor relationships in IoT are often more like partnerships than arms-length customer-vendor relationships - there's a degree of interdependence between the parties and a willingness to go the extra mile to make the relationship work, in order to grow the market together.
This collaborative attitude can extend not just up and down the value chain, but also "beside" your business to the many other players in the market who can indirectly play a role in your success even if you have no direct financial relationship with them. This includes companies who - on the surface - are even somewhat competitive with you. In any early market, it's better to have a competitor actively helping you build the market than the tumbleweed of waiting for the market to arrive. For example, a competitor's advertising can warm up customers who then find your proposition, and reassures customers that they do have a choice, so that buying instead of building will not result in lock-in.
5. They "begin with the end in mind"
This is one of Stephen Covey's 7 Habits of Highly Effective People, and it's pretty self-evident that in any venture it's helpul to have a clear idea of where you're going before you start. The subtlety comes in understanding which of these end goals need to be addressed early on and which can safely be deferred until closer to the end:
Two IoT topics - security and upgrading - are still significantly painful to implement correctly in IoT. In simple applications, the majority of the code base exists solely to deal with them, quite apart from your application. So it's very tempting to defer them until later and focus on getting the application out there to start user-testing it.
Don't do that! It's absolutely essential to build in both these features from Day 1, otherwise you'll somehow never quite find time to do them and you're pretty much guaranteeing a catastrophe down the road. Once you've built in the capability from Day 1, you can start to build the processes necessary to support security and perform upgrades, and indeed in the early days the ability to rapidly, securely and robustly push out software upgrades will very quickly pay dividends by increasing your company's velocity.
As you go along
The "end" of your journey (or, at least, the beginning of the end) is presumably to operate a large and successfully growing connected product business. To achieve that end, you'll need to put in place many processes for handling devices and customers through their lifecycle. Whilst it's certainly worth considering which processes you'll need for each stage, the good news is that you don't need to put everything in place all at once. However, you might like to think now about what telemetry to add to your devices now, in order to support those processes well in the future.
6. They find a business model with recurring revenue
Many existing product companies getting into IoT for the first time are used to the classic hardware model where they sell the product once, for a profit, and hope to never see it again.
IoT is very different - a connected product is intrinsically a service and that incurs ongoing costs to deliver the service, but also creates an ongoing relationship with the customer which can be monetised. To ensure that each device makes a profit over its lifetime, it's very important to make sure that "product revenue + service revenue > product cost + service cost".
(Interested in working out how to price and sell in IoT? Check out the results of our own workshop with IoT leaders.)
7. They launch!
In the IoT world, change is a given and technology emerges unpredictably from all directions.
This is incredibly different from the top-down planned economies of conventional telco and IT markets. If you work in a large company, you'll be used to wanting to plan everything to the smallest detail, and then execute. But to keep pace with the rate of change of technology and the market in IoT, Gantt waterfalls have given way to Agile sprints. In short: make something simple that works, release it, then keep making it better.
It's very easy to be paralysed by choices - "Do we build Bluetooth, ZigBee, or WiFi into our device? Or perhaps we need to build all three, plus a USB port for future-proofing? Oh dear, now it's far too expensive!"
Just make your best decision, launch your product, and count on the fact that in a few years time, you'll almost certainly want to change that decision, which will incur some cost and pain. But meanwhile you'll have learned all about the market, be able to make decisions from a position of knowledge, and become a market leader! This is when having a modular architecture really pays off, because you can avoid lock-in and replace technology bit by bit whilst still moving forwards.
Just one thing to be aware of - your early customers will be very useful in shaking out the bugs in your tech and proposition, but they're not likely to be representative of your later, mainstream customers. So be prepared to continually simplify your proposition as you scale up, and for a chorus of complaints from early users as you abandon their more extreme needs in favour of the simpler universal needs of the mass market.