Editor’s note: In the age known as Internet of Things, the companies that will be successful are those that prepare to embrace continual innovation, says Technology Business Research Analyst Ezra Gottheil. This is the first of a two-part report.

HAMPTON, N.H. – In the Internet of Things (IoT) era, successful companies will innovate constantly, at all levels of the organization. The most successful of these companies will change their culture and processes to foster this innovation. For many companies, IoT will trigger organizational change, which, in turn, will drive innovation in other areas as well as IoT. TBR believes that IoT is not a technology revolution, but rather a business revolution that will change how companies operate and evolve.

Innovation will occur at every level of the organization, and IoT and IoT-related solutions will proliferate. To prevent sprawl and consequent security and efficiency implications, IT will set standards and provide standard resources where practicable. At the same time, IT will facilitate innovation by being responsive, and by providing and supporting horizontal IoT tools. Successful IT vendors will serve the needs of IT departments supporting distributed IoT innovation. Dell EMC’s concept of “IT transformation,” which is one of supporting innovation, describes this model very well.

IoT everywhere

IoT and IoT-related solutions will proliferate because IoT offers many valuable potential solutions for many business processes, particularly as additional lower-cost solutions become available. Despite its long history, IoT is immature. The near future will bring many more prepackaged solutions, easy-to-use components and more efficient data utilization. These changes will lower costs, improve ROIs and make many more solutions feasible. Many new solutions will require no new data, but will integrate or analyze IoT-generated data to deliver more value.

IoT’s value potential is not confined to companywide transformative projects. There are opportunities for valuable solutions at every scale and in many different business units and departments within each company. Therefore, successful companies will enable the development and refinement of new IoT solutions throughout the organization, not just in designated departments or groups.

Distributed innovation

Successful IoT requires full participation of all the relevant business players within each business unit. Designing each IoT solution, or even choosing a prepackaged solution, requires input from more than one specialty, usually including operations technology (OT), IT, and often general management, product management, services and marketing. The participants must be fully knowledgeable about the specific business processes involved.

TBR believes the discipline of “design thinking” is best suited for this collaborative process. This approach is based on open-ended thinking and multidiscipline collaboration, exactly what is required for IoT. Many major corporations, such as Alphabet (Nasdaq: GOOGL) and Bosch, use this approach for delivering better products and services for customers, but it also can be applied to internal processes.

As IoT solutions continue to become available or cost-justifiable, new projects and integrations will continue, so the process of innovation is continual, and the organizational practices that drive innovation will stay in place. IoT drives organizational transformation, which drives digital transformation. TBR believes many companies will implement a digital transformation in a distributed fashion, starting from business units.

Next: Centralized support and impact on vendors