As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.

—HARRINGTON EMERSON, RENOWNED EFFICIENCY ENGINEER AND BUSINESS THEORIST

You’ve likely purchased this book (thank you very much) because you’ve read the headlines about how the Internet of Things, or IoT, will transform business and society. Or perhaps you are curious about the world’s most powerful retailer, Amazon, and how it is approaching the heralded technologies and strategies behind IoT.

The Internet of Things is in its early days, truly “Day 1.” Land grabs are being made by many companies trying to establish strategic positions, including Amazon, Microsoft, IBM, Google, and General Electric. Lots of devices are being connected. Some devices make sense and add value to the customer, and many more are either poorly conceived or poorly executed. The situation reminds me of the early days of e-commerce when the first generation of websites and technologies in the late 1990s were driving the hysteria of the Internet bubble.

The tsunami of opportunity and threat that IoT creates has been written about and forecasted from most every angle.

• There will be nearly twenty billion devices on the Internet of Things by 2020, by which time product and service suppliers will generate revenue in excess of $300 billion.¹
• Between $4 and $11 trillion per year will be saved through newly found efficiencies by 2025.²
• There will be a “redefinition of industry boundaries as the basis for competition, shifting from discrete products to product systems.”³

The evidence is clear—IoT is going to be a game-changing technology and business strategy.

I spent four years launching and then running Amazon’s Marketplace business, the company’s monumentally successful platform-play for third-party retailers. I also ran the Amazon Enterprise Services business. Those experiences taught me that it’s not the scale of an opportunity that’s important but how you approach it.

Since my last book, The Amazon Way: 14 Leadership Principles behind the World’s Most Disruptive Company, was published in 2014, I have had the opportunity to talk to hundreds of leaders and teams about innovation and the things that get in its way. I’ve learned about how great companies create systemic change and improvements and about their frustrations as they drive toward innovation and growth.

I’ve spoken with companies in many industries of every business model and of different sizes, ownership structures, and missions—from insurance companies to utilities to technology-infrastructure companies to nonprofits—and they all look to companies like Amazon in both admiration and fear.

With this book, I started out to create a specific roadmap—a description of how companies and their leaders should approach this transformative opportunity. But the more I thought about it, the more prescribing a specific approach seemed like fool’s gold. Even if the approach is a good one and followed to a T, it’s unlikely that any company would have the intended results.

Why? Because methods are situational. In the companies I’ve spoken with, there are few golden rules, but there are powerful leadership dynamics that underlie each organization’s methods. Those dynamics have had an oversized influence on these companies’ successes—or lack thereof.

The leadership philosophies that underlie these companies, however, are much more applicable. They will last over time. And most importantly, there is a clear, winning approach across companies—a common set of principles that are more likely to lead a company to success than failure.

Principles have a vision. Principles adapt to more situations and offer simplifying clarity. Principles can inspire. Principles are durable.

CONNECT THE DOTS

In 2005, Steve Jobs gave a commencement speech at Stanford. In life, he said, one’s career and interests are varied and random; they would be impossible to coherently plan in advance. Studied in hindsight, however, there are subtle connections between our seemingly dissimilar interests and experiences that create a career.

“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever.”⁴

Looking back over my own career, I can see that my dots have connected three distinct passions: efficiency, or creating processes that yield better quality with lower costs; integration across disparate processes, data, systems, and ecosystems to create seamless capabilities; and the development of new business models and capabilities that delight customers.

Those dots started with my degree in industrial engineering, which at its heart is the discipline of building efficient processes and using data for management decisions. They connected to my fifteen years in the systems integration business, designing, testing, and implementing large projects. They’ve carried over into the past fifteen years, which I’ve spent focused on strategy and digital reinvention at Amazon.com and for clients as an advisor at Alvarez & Marsal.

As the Internet of Things emerged and quickly gathered momentum, I read articles and books, listened to interviews, and pondered its trajectory. It didn’t take long for me to realize that “connected devices” are just another dot that combines my three career passions: efficiency, integration, and new business models.

This book connects these three passions to help you unlock the power of the Internet of Things. I’ve given you the keys to the ten most important principles I’ve learned from my many years of experience with Amazon about succeeding in IoT.

THIS BOOK’S ORGANIZATION

Although not required reading, I would recommend reading my first book, The Amazon Way, which is newly revised. It provides useful context about Amazon and the leadership principles that guide Amazon’s pursuit of opportunities like IoT.

In this book, we will explore IoT in ten principles. These principles are not to be confused with Amazon’s own leadership principles, mentioned above. Instead, in this book, each chapter focuses on one principle that will help you move your business successfully into IoT. Each of the ten principles in this book is an important idea or practice that I’ve identified through my many years working with Amazon and other companies and watching the practices and ideas that have made them successful in innovation and their Internet of Things strategies.

In principles 1 and 2, we’ll explore Amazon’s focus on customer obsession and how the Internet of Things has become a key tool for improving Amazon’s customer experience. In principles 3 and 4, we’ll dive into operational excellence through IoT and talk about how to use IoT to power metrics, equations, and algorithms in your business. In principles 5 and 6, we’ll explore how to get started in IoT without betting the barn and how to use your existing products in a platform play. In principles 7 and 8, we’ll explore the new business models IoT enables. And in principles 9 and 10, we’ll talk about how to build disruptive IoT strategies in your industry.

The plan I’ve written here is not in itself a solution for any one company or individual. To create real meaning, you’ll need to ask yourself how these principles apply in your circumstances. But hopefully I’ve succeeded in translating Amazon’s many IoT-related businesses (and some of its competitors) into a set of principles that can start you on your own journey. I encourage you to let me know how it goes.

Let’s start by discussing what IoT is and a couple of simple models to improve our ability to describe and formulate a winning IoT strategy for your organization.

John Rossman

Bellevue, Washington