Industrial IoT generates real value—if businesses overcome six myths

Image: tulip.co

A new commitment to industrial IoT, or IIoT, can give manufacturers a critical edge in reimagining their operations.
By Mads Lauritzen, Denise Lee, Martin Lehnich, and Kelly Liang @McKinsey & Company

Digital transformation is at the very core of business today, yet many companies still struggle to execute on this imperative. The Covid-19 pandemic has made this imperative even more pressing: companies that don’t act with urgency to get through the crisis and recovery mode risk falling behind at a time when they can least afford to. Among the slow adopters are those companies struggling to implement the industrial internet of things (IIoT), one of a handful of new technologies that the World Economic Forum and McKinsey consider pivotal to the future of manufacturing—and a vital improvement lever to help operations emerge from the crisis. As one executive told us, “Preparation is critical, but extremely difficult. I struggle with knowing how to apply digital-transformation concepts in the real world.”

A common mistake leaders make is to focus on new technologies in isolation, without thinking about the business value the technologies can generate. But implementing IIoT systems and tools before imagining all the possibilities they can create puts the cart before the horse. It can lead companies to squander their investment of money, management attention, and—perhaps the most precious resource of all in this rapidly evolving landscape‬—time.

Effective digital transformations are business-backed and business-led. Digital transformation is about envisioning how technologies like IIoT can redefine value creations by accelerating and scaling existing operations, rethinking how customers are served, and even by reinventing business models. It’s a complete reimagining of the way work is done. Above all, it is about a new way of competing.

So what’s holding some companies back? From surveys and our work with manufacturers throughout the world, we’ve identified six myths about IIoT that are needlessly troubling business leaders. Here, we debunk them, drawing from our experiences in working with a wide range of companies, and from the nearly four dozen manufacturers worldwide that are leading the way in applying Fourth Industrial Revolution technologies to help advance their companies financially and operationally

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