It came from the back row. The astutely dressed gentleman didn’t disappoint. His well-stated question summarized in 26 words the essence of the previous hour.

“How many mature companies that have found success in the un-connected world have truly pivoted from their traditional business model to that of a connected company?”

This question rang out with force at the Boston-based conference where I led a group of C-level participants through an hour-long discovery of “Can Connected Be The Strategy?” The basic discussion had focused on how “connectivity” should be looked at as a market force that will trigger corporate leaders to assess their firm’s strategy, rather than a technological occurrence. A firm needs to explicitly think through if its “Connected Strategy” will be linked to its:

  • Corporate Strategy – Answering the question: “What business are you in?”
  • Business Strategy – Answering the question: “How do you compete in that business?”
  • Functional Strategy (IT, marketing, CRM, engineering, etc.) – Answering the question: “How do you align your resources to compete?”
  • Product/Service Strategy – Answering the question: “How do you design form and features into your offering to appeal to a new Connected Customer?”

By positioning the connected (i.e., M2M, or Internet of Things) conversation outside of the traditional solution conversation, leaders can see the massive opportunity in front of them.

Change Is Hard
This room was not full of new entrants or entrepreneurs. It was made up of officers of mid and large-sized companies, each of whom has been profitably doing business for an average of more than 30 years.

Many of these individuals confirmed that although they have changed their brand strategy, or a functional strategy, few of them had actually faced a technologically disruptive force like that of “connectivity.”

Entrepreneurs, by the nature of launching a new business venture, look for different ways to bring unique value to customers.

They pivot as the market provides them feedback, and pride themselves on being agile with change. Connectivity is a disruptive force for many established industries. The heart of this question accurately raises another significant question about a firm’s ability to innovate.

Connectivity, like few other forces, cuts across current paradigms. Connectivity affects:

  • Products and Customers: Not only can products become smarter, but customers themselves are changing based on their interactions with them, and now also the data that is generated from them.
  • Adjacent Industries: Industries used to be verticals. Interactions among these industries typically happened through customer experiences. Connectivity is a horizontal force disrupting the traditionally vertical world.
  • Business Models: Some product industries were trapped in the design, build, sell pattern. With product connectivity, these once CAPEx-focused companies now can drive an OPEx program.

This type of change is tough, and firms must decide how they will innovate in this connected era. The funny observation discussed was that it is the “book end” companies that seem to be making the most headway with some of the most significant connected strategies.

On one end, the smallest entrepreneurs are driving new entrants solely enabled through a connected business model. On the opposite side are large corporations with enough budgets to try new models and sponsor official innovations programs.

All established firms (large and small) will need to choose how to innovate as connectivity forces market shifts. Will innovation be an intrafirm activity with internal R&D and employee-based ideation, or rather inter-firm focused with activities linked more towards cross-industry consortiums and venture capital?

The Connected World Fund
For those firms that appreciate working with external innovators, perhaps the right thing to do is to buddy-up and create a little connected world. If companies truly understand connectivity and their customer, they will understand that in order to remain relevant in the current space, their connected strategy will need to be informed by their customer’s connected world. This means companies may wish to help their customers create this world.

For some companies, this may mean strengthening their partnership capabilities and potentially doing some co-development or co-marketing programs. Consortiums focused on the connected world may emerge with corporations as members looking to help common customers understand how the linked brands help to drive more value.

Other corporations may choose to actually apply investment funds and learn from the disruptive entrepreneurs. Referred to as corporate venture capital, the practice of investing a combination of dollars and access to a company’s other resources (customers, supply chain, retail network, etc.), has seen its fair share of cycles. If 2013 is any indicator of what’s to come, CVC (corporate venture capital) is back. A ‘connected fund’ is a great way for companies that appreciate connectivity needs to be addressed, but lack the ability to transform their core business, to put a toe in the water.

Through the investment process, the funder learns about the emerging connected world. In some cases, learning is all that will take place. In others, an investment may be made and the return can be much greater. In these instances the options really open up.

Of course financial return on investment stays in focus. But additionally as entrepreneurs gain success, the sponsoring brands could gain exclusive rights, improve their “connected image” through market association, or even acquire the firm as a new division or differentiator.

The angel and venture community has certainly been very active in investing in companies with connected products and services. Perhaps it is time for more corporations to get in this game and make it a part of their connected strategy.

***Does your firm have a Connected Fund? If so, we would love to hear about it. Contact Gregg at his email below.

Gregg Garrett leads a team that advises clients on how to harness innovation in the connected economy as CEO and president of CGS Advisors. He can be reached at

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