IoT Business Models

Our research provides theoretically and practically grounded assistance to companies that are today engaged primarily in non‐digital industries in the development and implementation of business models that use the Internet of Things. To that end, we investigate the role of the Internet in business models. The separation between physical and digital industries is now consigned to the past. The key to this transformation is the Internet of Things which makes possible hybrid solutions that merge physical products and digital services. From this, we derive very general business model logics for the Internet of Things and some specific components and patterns for business models. Building upon the St. Galler triangle (Gassmann et al. 2013) our business related research focuses on different topic clusters underpinned with academic publications:

At a very abstract level, the value proposition of an Internet of Things solution can be reduced to a simple formula: Overall value proposition = value obtained from the physical thing + value obtained from digital services (Fleisch et al. 2015; Leimeister and Glauner 2008). A classical non-connected product is upgraded with connectivity and IT. The value of this enrichment is experienced as benefits from the physical product and the digital services associated with it. That process results in a whole that is more than the sum of its parts, building on the original product – in particular due to the simple ability at relatively low cost to combine it with proprietary and external digital services. The connected light bulb, is still a light bulb, even if it includes a motion sensor and is remotely accessible via its own app. The physical and local usefulness remains – providing light. Beyond that, it also allows for a variety of new digital services enabled through sensor and actuator technology. Examples include motion detection, alerts in case of intrusion or presence simulations (Comfylight 2016). The potential of such a hybrid value proposition combined with a growing number of connected objects convince more and more companies to recognize the IoT as a game changer within their industries.

Hybrid Value Proposition

Read our latest publications on IoT business models

Tesch, J., Brillinger, A.S., and Bilgeri, D. (2017). IoT business model innovation and the stage-gate process: An exploratory analysis. International Journal of Innovation Management, 21(5), 1-19. PDF

Fleisch, E., Weinberger, M., & Wortmann, F. (2015). Geschäftsmodelle im Internet der Dinge. Schmalenbachs Zeitschrift für betriebswirtschaftliche Forschung, 67(4), 444-465. PDF

Fleisch, E., Weinberger, M., & Wortmann, F. (2014). Business Models in the Internet of Things. Bosch IoT Lab Whitepaper. PDF

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Prof. Dr. Elgar Fleisch
Prof. Dr. Elgar FleischProfessor HSG & ETH
Felix Wortmann
Felix WortmannScientific Director