The convergence of physical devices with digital connectivity has the potential to generate trillions of dollars in value over the next decade. In fact, McKinsey estimates that up to $12.6 trillion in global value will be captured by consumers of Internet of Things products and services by 2030.

But this level of massive transformation doesn’t come without hangups. McKinsey identifies change management as one of the areas where IoT initiatives can face resistance within enterprises trying to deploy connected solutions internally or as part of a product.

Why? For starters, plenty of organizations view IoT adoption as a tech venture alone, rather than a multifaceted and disruptive addition to teams and processes.

Here, we explore what change management for IoT looks like—and how organizations can successfully navigate the introduction of IoT into their overarching operating models.

How IoT Changes a Business

When tackling a new IoT project, your first inclination may be to dive straight into the tech: What could we do with X system? Let’s look at our uptime.

But when managing a change, you need to zoom out a bit and look at the broader context of technology, people, and processes. It’s these last two—the people and the processes—that are often forgotten, despite holding the key to smooth implementation.

In business, you rely on processes to streamline tasks from payroll to production lines. But how often do you look at defining those processes in terms of who owns them and what they are supposed to accomplish? An event like IoT implementation exposes the maturity of certain processes in your organization.

Still, you can’t change a process in a vacuum, right? That’s where people come in. The change is going to affect internal stakeholders from your logistics team to your ops team before rippling out to impact external stakeholders such as customers, resellers, and suppliers.

Bottom line: When working with IoT, a small change on the tech side of things can have an organization-wide impact. Shoring up processes (and preparing your team for adoption!) is key to helping everything run as smoothly as possible.

So, How Does IoT Impact Core Business Functions and Teams?

Let’s take a closer look at two specific IoT use cases to see the ripple effect of connectivity across functional teams—from supply chain to finance and beyond.

Example 1: A light electric vehicle fleet

Say a company with a fleet of LEVs is looking to add geotracking technology to quickly and efficiently keep tabs on these assets. Once the company makes a technological change to the console, a cascade effect is set into motion.

Under the old way of doing things, the company may have needed 15 people—and a lot of time—to go out and gather up vehicles. But with geolocation, the process for recovery and management is streamlined.

Suddenly, five or 10 people are enough for the job, the logistics are totally different, and the finance team is looking at reduced capital expenditures for labor costs—all thanks to a single console change.

Example 2: A factory setting

Now let’s turn to another use case: connectivity for monitoring water valves in a factory.

The factory has tons of equipment, and the foreman already has a checklist and set procedures to mitigate risk and comply with safety standards. When IoT connectivity is added, the factory’s maintenance processes suddenly look different, and the foreman’s job—in fact, the foreman’s whole way of doing things—fundamentally shifts.

The change doesn’t stop there, though. Under the foreman, there’s a whole crew of workers whose jobs change as well. Instead of manually checking valve pressures, they’re looking at real-time alerts and using those to be proactive about maintenance.

And then there’s the question of incentivization. The existing incentive structure around metrics like uptime, work orders completed, etc. may now need to be adapted as well, bringing the management and finance teams back into the picture.

Note: Introducing IoT connectivity isn’t the right solution for every business, all the time. A company should have a clear understanding of the use case for the connected solution it’s considering.

With that said, IoT often generates substantial value, whether in the form of internal process improvement or savings for customers via a hardware-as-a-service model. To maximize that value, it’s vital to have a solid change management team and plan in place, which brings us to our next point…

What Does Change Management Mean in the Context of IoT?

IoT change management is a systemic way to account for how people, processes, and technology will be transformed by the deployment of connected technologies.

But if your company has already identified a use case for IoT, then why is change management even necessary?

“Individuals learn and respond better to coherent explanations for change, and do so most readily if presented as part of a storyline,” explained Elise Olding, research vice president at Gartner.

In other words, changing technology isn’t enough; you’ll also need to take existing processes and people—and the wider organizational culture they underpin—into account.

The reality is that the biggest reason IoT-led changes fail is the inability to reach adoption in core teams and via key stakeholders. With IoT in particular, adoption issues stem from the organizational tendency to force people and processes to accommodate a new technology rather than figure out how the tech will add value.

Depending on the scope of the IoT deployment, the new technology represents a potentially seismic shift in the way people do their jobs.

The solution: Key stakeholders and managers need to identify new processes and strategies that they then clearly communicate to process owners and end-users.

Next, they need to incorporate the feedback they receive. In addition to helping the organization improve its processes, this can inspire stakeholders and managers to define a better use case for IoT while allowing process owners and end-users to feel heard and validated.

So, what are the keys to successfully managing an IoT change in your organization? More than anything else, making sure that IoT is truly contributing value—and then communicating this value to process owners—is critical.

5 Steps to Bring IoT to Your Business With a Change Management Mindset

Here are the five steps leaders can follow to systematically navigate organizational change and successfully bring IoT to their organization.

Craft a Vision

The vision your organization has for IoT implementation needs to be specific, value-tested, and distinct from a generic company vision.

IoT isn’t a shiny object to add to your company’s trophy case, nor does it represent a chance for an executive to elevate a pet project. There needs to be a strategic reason behind its deployment, and company leadership must be intentional in its pursuit of an IoT vision. This mix of intentionality and a compelling vision clearly conveyed by leadership to the entire organization is essential.

Prepare Early and Adapt Often

If your vision lays the groundwork for IoT, the preparation you do before implementation can be considered the structure.

Stakeholders, process owners, and end-users should be properly identified and brought up to speed on new roles, governance, and processes. The more exhaustive your preparation, the less space you leave for ambiguity or information gaps that allow negative resistance to form.

Implement

When it comes to IoT implementation, there’s technological success and operational success. The latter can only come to fruition when your team is properly incorporating new processes.

From the perspective of change management, a successful implementation should open bi-directional channels for feedback between leadership and process owners. Work together to facilitate the handoff between old and new processes, be transparent in communication, and focus on specific, targeted skill areas to avoid sapping workforce motivation.

Review Culture and Practices

Adoption only works when your entire team is on board. So, how can you encourage buy-in?

Culture and tone play a big part. Both prior to and following implementation, it’s important to identify cultural leaders in the workplace and leverage their voices to maximize overall adoption and team motivation. Cultural leaders aren’t necessarily managers, either—they’re the ones whose input is valued by stakeholders across the organizational depth chart.

Encouraging a culture of continuous learning and growth is also critical, as no one should simply be along for the ride—especially leadership. By promoting reviews of internal practices and keeping an open mind, leaders can show they’re interested in moving beyond just taking a specific approach because that’s the way it’s always been done.

While they may debate in private, leaders need to speak with one voice when communicating to the rest of the team. Tone from the top matters, and speaking with a unified voice inspires confidence and limits resistance.

Adapt and Iterate

If you’ve executed the previous steps, you’ve done your homework—and adaptation becomes easy. With a full picture of the project in mind, you have a better idea of what your options are when things aren’t working, so you’ll be ready to continue tweaking and implementing iterations as needed. (When processes are working, it’s a good time to have leaders follow up and reinforce them.)

Building a Change Management Team for an IoT Project

Now that you understand what change management means and how to apply this mindset when bringing IoT to your business, it's time to ask: Who should be involved in building your change management team?

Ultimately, the answer to this question depends on what you’re about to do, so before you can answer it, you need to address another question during planning: Who will the IoT project touch?

IoT deployments cause ripples throughout the entirety of an organization’s functional teams, including IT, operations, marketing, product teams, asset managers, and even logistics. The scope of your change management team should be defined by the problems IoT will solve and the organizational goals that the technology will help meet.

As you create the roster for your change management team, make sure it represents mutually exclusive and completely exhaustive sets of people. Each person on the team should be there to provide their unique input on developing the implementation plan, so steer clear of adding a VP to the team only because of their title or the fact that they’ve always been part of these types of decisions in the past.

When it comes down to it, the group of people you bring together should collectively consider what’s best for the organization. They should aim to reduce tension between managers and process owners by communicating the value of the IoT change and opening a transparent channel for process refinement and feedback.

Getting Started With IoT

From the POV of change management, an IoT deployment presents unique challenges—but just like any other organizational change, there’ll be common ground and shared principles.

Beyond focusing on the technology itself, leaders should think about the people and processes set to be impacted. Consider process-owner feedback, engage in transparent communication, deliver a clear value pitch, and leverage internal culture to reduce friction, increase adoption, and execute a successful digital transformation of your company’s technological and business operations with IoT.